Philip Morris invests EUR 0.5 bln in making smoke-free tobacco sticks in Romania

Tobacco manufacturer Philip Morris will invest EUR 490 million to convert its plant in Otopeni, close to Bucharest, into a tobacco sticks production unit, the company said. The new unit will employ an additional 300 people, adding to the 670 already working at the plant. The Otopeni plant will manufacture tobacco sticks meant for the company’s smoke-free product IQOS. The IQOS heats specially designed tobacco units to release a flavorful nicotine-containing vapor without burning the tobacco. The process of converting the Romanian plant started its first phase this year, and entails the setup of new equipment that will enable the production. The company expects to fully convert the Otopeni plant with the addition of a new tobacco processing unit by 2020. Part of the tobacco sticks production will cover the needs of the local market and the rest will be exported, mainly to the European Union. The local market is estimated to have several tens of thousands IQOS users. The company has almost 3 million IQOS users worldwide. “The first test products will be manufactured in August. We will start exporting by the end of the year. The IQOS market share in the five most important cities in Romania is of 1%, a rapid evolution considering we weren’t selling it outside of Bucharest until last year,” Branislav Bibic, the general manager of Philip Morris Romania, told News.ro. The Otopeni plant is Philip Morris International’s third one to manufacture the HEETS tobacco sticks, used with the IQOS devices. The company announced this June it will build a HEETS tobacco sticks plant in Germany. In October 2016 it finished the construction of its first tobacco sticks plant in Italy. By end 2018 Philip Morris International is looking to have a production capacity of 100 billion such tobacco sticks yearly. In April, Philip Morris International presented to Prime Minister Sorin Grindeanu the project of a significant investment for the local market but did not disclose its details. Philip Morris Romania had revenues of RON 228 million (EUR 50.6 million) and a net profit of RON 36.2 million (EUR 8 million) in 2016, according to data from the Finance Ministry. The main competitors of Philip Morris in Romania are British American Tobacco (BAT) and Japan Tobaco International (JTI). Earlier this July, BAT announced it wouldinvest EUR 60 million in its Ploiesti plant in 2017 to build a new production unit and upgrade the technology on site. (Photo source: www.pmi.com) editor@romania-insider.com