Online Reporter
Nyore Madzianike
Senior Reporter
THE closure of British American Tobacco South Africa (BATSA) has created a potential niche in the regional tobacco value chain, presenting new growth opportunities for Zimbabwean firms that are well positioned to supply inputs, processing services and finished products to a reshaped market.
BATSA, which employed about 1 500 employees and accounted for a huge chunk of market share across Limpopo, announced its intention to close shop a fortnight ago.
The exit of one of South Africa’s long-standing tobacco players has left gaps, not only in manufacturing capacity, but also in specialised segments such as cut rag processing, blending and contract supply areas where Zimbabwean firms are increasingly competitive.
Commissioned by President Mnangagwa in November last year, Cut Rag Processing (CRP) is one of the companies tipped to seize this opportunity, among other players.
The multi-million cigarette manufacturing plant has been described by analysts as an emerging giant with the technical capacity, scale and proximity to service both domestic and regional demand.
With modern processing facilities, know-how and access to consistent tobacco supplies, CRP is seen as capable of meeting the needs of manufacturers seeking reliable, high-quality cut rag.
Zimbabwe remains Africa’s largest tobacco producer and has, over the years, built deep expertise across the tobacco value chain.
“With BATSA out of the picture, there is a clear vacuum. That vacuum does not automatically get filled by imports,” said Mr Alfred Mutisi, a renowned tobacco farmer.
“It creates room for efficient regional players, and Zimbabwe has firms that understand tobacco better than most.”
BATSA’s exit comes against the backdrop of persistent assertions that smuggled cigarettes, especially those allegedly coming from the region, including Zimbabwe, were responsible for its downfall.
Market analysts continue to dismiss this narrative, arguing that it distracts from the real causes behind the SA’s company’s exit.
According to these analysts, BATSA’s closure was largely the result of internal strategic challenges and an inability to adapt to changing market dynamics, rather than the presence of illicit cigarettes.
“Blaming smuggling is an easy explanation, but it does not hold up under scrutiny. The market was evolving, competition was increasing, and consumer preferences were shifting,” he said.
“BATSA failed to adjust its strategy accordingly. Even without illicit trade, BATSA would still have faced intense pressure.
“The emergence of alternative suppliers and processors, both within South Africa and regionally, fundamentally changed the market.”
Mr Mutisi said Zimbabwean companies should not be viewed through the lens of smuggling accusations but rather as legitimate players responding to market demand.
“The country has scale, experience and increasingly sophisticated processing capacity,” Mr Mutisi said.
“The next phase of the regional tobacco industry will be about partnerships and specialisation. The lesson here is not about illicit cigarettes. It is about adaptation. Those who adapt will thrive.”
Van Loggerenberg, a former SARS executive who testified before the Zondo and Nugent commissions on state capture and corruption, shared the same sentiments.
He said for years BATSA held a monopoly and had no real competition.
Van Loggerenberg attributes the changing dynamics in the tobacco sector to BATSA’s demise.
“The reality for BATSA is this: for years, it held a monopoly when smoking was still cool and socially acceptable. It, Philip Morris and Japan Trading International controlled the market. They had no real competition. It was easy money,” he said.
“Think cowboys lighting a smoke with a burning twig, tough guys in jungles chopping logs to build bridges and end the day with a puff, and beautiful people swimming in crystal clear oceans or skiing down snowy slopes before lighting a fag.
“All of this has changed. Cricket, surfing and Formula One are no longer associated with big cigarette brands. Where smoking was once cheap, it isn’t anymore, and it will become ever more expensive.
“Excise duties will continue to increase exponentially. New entrants have come into the market, and while they all have skeletons in their closets, they are more nimble, cheaper and local.
“Smokers aren’t as brand conscious anymore, but they are far more price conscious. Local manufacturers also don’t have to pay licence fees, agent fees, trademark fees and the like to foreign holding companies.”
Van Loggerenberg claims there could be proportionally fewer SA smokers now than there were in 2002 in SA.
“The pie has not only shrunk, it also has to be shared with many others. That is a reality BATSA has not accepted. It has become too big, too cumbersome and too expensive.
“Its business model no longer works. It would make sense for it to consolidate its production activities in a country such as Kenya, where the game is still in its infancy and there is space to repeat what it did here,” he said.
Another player in the tobacco sector, who spoke on condition of anonymity, said:
“BAT just wants to be a crybaby. Its management failed to put in place strategic changes to cope with changing market dynamics.
“The question is, are these cigarettes illicit because of a definition created to protect BAT by BAT sponsored government during apartheid? They must just open up the market. Imagine quality cigarettes from Zimbabwe, like Madison and Everest, are deemed illicit while BAT cigarettes imported into Zimbabwe from SA are deemed legal?
