Factory closure threat

British American Tobacco has said that it might close its South African cigarette plant if plans to ban branded tobacco packaging are implemented, according to a story by Thembisile Dzonzi for Bloomberg News.

BAT’s Heidelberg factory is situated south of Johannesburg.

The proposed ban would threaten the financial viability of the Heidelberg operation, Joe Heshu, BAT’s head of external affairs in Southern Africa, said in an e-mailed response to questions from Bloomberg.

Standardized packaging threatened the closure of the factory and posed a threat to the viability of the legal tobacco industry in South Africa, Heshu said.

The move would make it harder to distinguish licit cigarettes from black-market cigarettes and “the illegal market will benefit from having a cheaper product,” he added.

South Africa is cracking down on industries and products viewed as harmful to consumers, including through a planned tax on sugar-sweetened beverages, which Finance Minister Pravin Gordhan said last month would be implemented later this year.

In his budget speech, Gordhan announced higher taxes on tobacco and alcohol products.

The full story is at: https://www.bloomberg.com/news/articles/2017-03-01/bat-says-planned-south-african-tobacco-rules-may-close-plant.