Three key trends force tobacco companies to continuously re-assess and optimize their manufacturing footprint:
(1) Cost savings: Transferring labor intensive operations to lower-cost countries within a certain geography
(2) Geographical re-balancing: Fast-declining cigarette volume in the Western markets vs. Stable (even, increasing) cigarette volume in the emerging markets (especially, in East & Southeast Asia)
(3) Product mix re-balancing: Transformation from cigarettes to RRP/NGPs
The recent developments on British American Tobacco’s manufacturing footprint:
January 2026: British American Tobacco will shut down the Heidelberg, South Africa plant
British American Tobacco (BAT) will close its only manufacturing plant in South Africa due to the proliferation of illegal cigarettes. As a result, BAT will stop manufacturing cigarettes in South Africa for the first time in more than 70 years, resorting to imports to serve the local market. Illegeal cigarettes reportedly account for 75% of the South African market and BAT’s Heidelberg manufacturing facility is operating at just 35% of total capacity, rendering the operations unsustainable.
BAT confirmed that it is not exiting the South African market and will continue to supply the market through importation. It will also retain its secondary listing on the JSE. The BAT Heidelberg factory is the Group’s eighth-largest factory and accounts for a significant total production for both domestic consumption and export into the wider Southern African area region. It employs at least 1,500 people. The decision to shut the plant comes shortly after the Company decided to cease its Mozambican operations. BAT South Africa has experienced a 40% volume decline since 2020 due to the explosion of availability of illicit cigarettes in the market and, consequently, reduced its overall workforce by more than 30%.
September 2025: British American Tobacco and Philip Morris International plan joint production in Europe as the cigarette volumes decline
British American Tobacco (BAT) and Philip Morris International (PMI) announced plans for a joint venture to optimize cigarette production across several European countries. The move comes as cigarette consumption in Europe continues to decline, prompting manufacturers to seek greater efficiency.
BAT Exports Limited (UK) and Philip Morris Products SA (Switzerland) notified Germany’s Federal Cartel Office of their intended joint venture. The partnership aims to improve capacity utilization at factories in Poland, Croatia, and Portugal by allowing reciprocal manufacturing between the companies. Under the planned agreement, PMI will produce in BAT facilities in Poland and Croatia, while BAT will manufacture in PMI plants in Poland and Portugal. No job cuts or factory closures are currently planned as part of the joint venture.
After closing last the Dresden plant and ending all remaining production in the Berlin plant, PMI no longer manufactures cigarettes in Germany. Despite producing abroad, German law requires joint ventures surpassing certain revenue thresholds and conducting relevant business activities in Germany to be registered with the German competition authority.
September 2025: BAT inaugurates 16 production lines for heated tobacco and herbal sticks in the Trieste plant
Sixteen new production lines for heated tobacco and herbal sticks were inaugurated at the Trieste production site next to the British American Tobacco (BAT) Innovation Hub. These lines join the four existing ones producing nicotine pouches. The San Dorligo della Valle (Trieste) plant currently employs 400 people – a figure set to increase due to the expansion of the production lines.
December 2024: British American Tobacco will invest Tk249 million in Bangladesh to upgrade packaging operations
British American Tobacco (BAT) will invest Tk249 million in Bangladesh to upgrade packaging operations. BAT will purchase and install of laser printers in 36 surface mount device (SMD) packing lines at its Dhaka and Savar factories. With this investment, BAT seeks to strengthen its manufacturing processes, ensuring greater efficiency and quality in its packaging operations.
BAT holds a 87.3% market share (+0.8pp in 2024) in Bangladesh – which is the Group’s single largest volume market. BAT Bangladesh operates factories in Dhaka and Savar, a green leaf threshing plant in Kushtia and a green leaf re-drying plant in Manikganj. Since 2021, BAT invested Tk13.33 billion in its Savar factory to capitalize on the emerging export opportunities in leaf, tobacco cut rag (fine strips for use in cigarettes) and cigarettes.
December 2024: British American Tobacco will invest Tk284 million in Bangladesh to increase its production capacity
British American Tobacco (BAT) will invest Tk284 million in Bangladesh to increase production capacity to meet the growing demand for cigarettes. The investment comes in addition to the TK12 billion already spent in phases in the past four years and will be sourced through a combination of internal resources and bank loans in line with the Company’s cash flow strategy. BAT Bangladesh reported +9% volume growth in 2023. In paralel to the growing domestic demand, Bangladesh is also well-positioned for cigarette and tobacco leaf exports to the international market; consequently, BAT is constantly expanding its production capacity in Bangladesh.
BAT has factories located in Dhaka and Savar, a green leaf threshing plant in Kushtia, and a green leaf re-drying plant in Manikganj. BAT Bangladesh produced 50.3 billion sticks of cigarettes and 41.6 million kilogrammes of tobacco leaf in the first nine months of 2024.
With ~90 billion sticks sold per annum, Bangladesh is world’s 8th largest cigarette market. BAT is the dominant player in the market with more than 70% share. Accordingly, Bangladesh is BAT’s single largest market by volume (~12% of cigarettes sold by BAT worldwide). In 2022, Japan Tobacco alleged that BAT operates a retailer program, directly or indirectly, to prevent competition in the market and stop rivals from gaining more market access. Japan Tobacco acquired United Dhaka Tobacco Company (UDTCL) in 2018 for $1.48 billion. At the time of acquisition, UDTCL had 19.8% market share; by the time of filing the “anti-competitive practices” complaint, UDTCL’s market share slipped to 12.6%. The Bangladesh Competition Commission (BCC)’s investigation has not produced any outcome so far.
April 2024: British American Tobacco expands the nicotine pouch production capacity in Pécs, Hungary plant
British American Tobacco (BAT) is expanding production in Pécs, Hungary, with a new Ft60Bn ($162Mn) investment, to manufacture smokeless products. The investment will create 450 jobs in addition to a thousand already employed by BAT in Hungary.
The new plant will enable BAT to allocate more production to Pécs, turning the carbon-neutral certified plant into a global manufacturing hub for Reduced-Risk Products. More “Born in Sweden, Made in Hungary” VELO pouches will hit the international markets in the coming years.
March 2024: British American Tobacco opens a new Innovation Center in Southampton, UK
BAT opens a new Innovation Center in Southampton. 400 engineers & scientists will be employed at the facility, working across nine technical spaces / labs to develop smoke-free nicotine products and build capabilities beyond nicotine. The £30Mn facility strengthens BAT’s capabilities for device prototyping, consumable development and packaging improvement as well as the development of well-being and stimulation products.
The new Center replaces BAT’s legacy R&D operations in Southampton and complements the Innovation Centers in Shenzhen and Trieste. BAT invests £300Mn a year in the development of our smokeless products.
November 2023: British American Tobacco expands new category production capacity in the Kanfanar, Croatia plant
British American Tobacco (BAT) is expanding the new category production in its Kanfanar, Croatia factory1. Following a €80Mn ($85Mn) investment program, Kanfanar became the become the exclusive European production site for the tobacco-free, rooibos-based veo heatsticks. The factory has created more than 150 jobs in the last two years and will add another 50 jobs in 2024.
June 2023: British American Tobacco (BAT) invests €500Mn in a new Innovation Hub in Trieste, Italy
British American Tobacco (BAT) invests €500Mn in a new Innovation Hub in Trieste, Italy. The Hub incorporates laboratories, innovation labs and and twelve production lines for new nicotine products.
October 2022: British American Tobacco (BAT) closes the Boncourt, Switzerland plant
British American Tobacco (BAT) will shut down its factory in Boncourt, Switzerland and move the production to other sites in Europe2. The Boncourt factory was founded by the Burrus family in 1814 and was taken over by Rothmans in 1996 (- later merged with BAT). Parisienne (second best-selling cigarette brand in Switzerland, after Marlboro) was produced in the Boncourt factory since 1887.
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