British American Tobacco South Africa (“BAT South Africa”), South Africa’s largest tobacco manufacturer, is set to retrench a number of its staff.
This comes as the company announced that it has begun a consultative process with staff in line with Section 189 (1) of the Labour Relations Act around the restructuring of the business.
BAT South Africa explained that the company has embarked on this process given further losses in cigarette volumes in South Africa. It is expected that around 200 company jobs may be affected by the proposed restructuring.
The company further stated that BAT South Africa’s cigarette volume loss is almost entirely a result of the continued impact of the growth in illicit cigarette trade in South Africa, and the unconstitutional ban on cigarette sales implemented during the national Covid-19 lockdown in 2020.
“The 2020 tobacco sales ban resulted in an explosion of growth for the illicit market. This has continued even after the ban on tobacco sales was lifted. In 2019, BAT South Africa permanently employed around 1,800 highly qualified staff across its South African operations. Since 2020, we have been forced to retrench more than 30% of our workforce,” it said.
Over the same period, the company lost around 40% of its cigarette sales as the illicit market accelerated.
BAT South Africa estimates (based on independent studies) that the illicit cigarette trade accounts for up to 70% of South Africa’s total cigarette market.
“This illegal trade has severely impacted the sustainability of the legal tobacco industry and is a source of funds for criminal organisations in South Africa.”
While BAT South Africa said that it applauded recent efforts by the South African Revenue Service (SARS) and law enforcement agencies to clamp down on the illicit cigarette market, it was also calling for even stronger action, given that the current approach has not stopped the growth of illicit cigarettes.
“SARS has issued important new policies, but now it is time to audit manufacturer policy compliance. To support law enforcement agencies and increase their effectiveness, as well as help consumers differentiate between illicit and legal market offers, a Minimum Retail Price Policy is required,” BAT South Africa said.
The company stressed that the illicit trade robbed South Africa of billions of Rands in much-needed tax revenue, and the impact of this was now clearly being seen on legitimate businesses, their operations, and, unfortunately, the livelihoods of those in their value chains.
“Legitimate businesses cannot operate competitively if the country’s laws are not enforced,” the company concluded.
It must be noted that trying to contact or deal with BAT through their reception desk has been near to impossible for some time. Newcastillian News, on numerous occasions, has tried to speak with a brand or marketing manager with not one returning a call in two years. Our editorial team has tried to seek answers for Newcastillians beyond these press releases.
Hopefully, we will be able to obtain an in-depth understanding once a marketing person makes contact with our editorial department.
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