BAT to invest €800mn in Romanian plant over five years

BAT to invest €800mn in Romanian plant over five years
By bne IntelliNews June 11, 2018

British American Tobacco (BAT) will invest €800mn in its plant in Ploiesti, southern Romania, over the next five years, the tobacco giant said on June 11. When the investment is completed, BAT’s Romanian production plant will be the sole supplier of glo Neostiks — BAT’s tobacco heating product — across Europe. 

glos are among what BAT calls its "potentially reduced-risk products", which include oral tobacco and e-cigarettes as well as tobacco heating devices. Like its main rival Philip Morris International Inc (PMI), BAT is seeking to seeking to raise its revenues from "next generation" tobacco products to counter the impact of declining cigarette sales. 

BAT’s revenues from e-cigarettes and tobacco heating products reached £397mn (excluding the US market), and it aims to boost this figure to £1bn by the end of this year, and over £5bn by 2022.

The investment in Romania will support the expansion of glo in countries across Europe during the second half of 2018. 

BAT will build a completely new manufacturing hall dedicated to producing the specially designed tobacco sticks, which work with the glo tobacco heating device.  Tobacco heating products are devices that heat tobacco to generate an aerosol that contains nicotine and has a tobacco taste, which the user inhales, according to BAT. 

In total, an additional 7,000 square metres of production space will be created. The investment will generate 200 new jobs in Romania, BAT said in a statement. The tobacco industry is one of the largest contributors to Romania's budget.

The factory will also supply Neostiks for the Romanian market following the launch of glo in December last year. In the six months since its launch, almost 25,000 consumers have bought glos and tens of millions of Neostiks have been sold.

BAT is not the only tobacco company to announce massive investments in Romania. In July last year, Philip Morris International Inc (PMI) announced it is planning to invest around €490mn to transform its cigarette production factory near Bucharest into a high-tech facility to manufacture HEETS, the tobacco units used with the electronic tobacco heating device IQOS.