BAT Increase Production Capacity Of New Tobacco In Italy

British American Tobacco (BAT) CEO Marroco said that the company will continue to invest in equipment and technology in Italy, and promote the construction of new tobacco product capacity. The Trieste Innovation Hub plans to invest a total of 500 million euros and add 16 new production lines by 2027.

Quick overview of key points
1. Step up Italian manufacturing: continue to invest in equipment and technology, and expand production capacity for smoke-free products.
2. Localization of supply chain: Approximately 80% of global equipment procurement comes from Italy; More than 80% of Italian suppliers are local small and medium-sized enterprises.
3. Limited impact on tax burden: Faced with the annual increase in consumption tax, BAT stated that the impact is controllable and disclosed an annual tax payment fee of approximately 2 billion euros.
4. Tobacco procurement lock: From 2026 to 2028, a maximum of 15000 tons of Italian tobacco will be purchased, covering about 400 enterprises and 6000 practitioners.
5. Expansion and proportion of production lines: Trieste has added 16 new production lines; The proportion of new tobacco revenue: about 18% for the group and about 45% for Italy.

According to Milano Finanza, Tadeu Marroco, Global CEO of British American Tobacco (BAT), stated that the company will continue to invest in production equipment and technology in Italy, and promote capacity building for new tobacco products such as electronic cigarettes and heat no burn. At the same time, maintain local tobacco procurement arrangements. During his recent meeting with government agencies and relevant parties in Rome, Marroco was interviewed.

Marroco stated that approximately 80% of the equipment purchased by BAT’s global factories comes from Italian companies; In Italy, over 80% of the BAT supplier system consists of domestic small and medium-sized enterprises. He also cited Brazil as an example, stating that the ban on electronic cigarettes has led to the spread of illegal products, regulatory gaps, and damage to public finances.
• In terms of taxation, in response to the latest fiscal bill in Italy that increases the consumption tax on cigarettes and tobacco products on an annual basis, and expects the highest tax burden per pack of cigarettes to increase by 0.15 euros in 2026, and is expected to bring in 213 million euros in fiscal revenue this year, Marroco said that the relevant adjustments were “planned in advance” and had limited impact on BAT. He stated that BAT pays approximately 2 billion euros in taxes (including consumption tax and value-added tax) to the Italian government annually. He also stated that a stable tax system helps to curb tax evasion and illegal trade, and mentioned that the illegal tobacco market in Italy accounts for about 4.5%.
• When it comes to long-term investment in Italy, Marroco reviewed BAT’s acquisition of assets related to the Italian National Tobacco Agency for 2.3 billion euros in 2004 and stated that Italy remains one of BAT’s important markets. He stated that BAT will purchase up to 15000 tons of Italian tobacco from 2026 to 2028 to support over 400 small and medium-sized enterprises and approximately 6000 practitioners; This arrangement comes from the three-year agreement renewed by BAT Italy and the Italian Ministry of Agriculture, Food Sovereignty and Forests (MASAF) in 2025.
• In terms of manufacturing layout, Marroco stated that BAT will launch an innovation hub in Trieste in 2023 and plans to invest a total of 500 million euros by 2027. With the 16 newly added production lines announced in September last year gradually operating at full capacity, the base is expected to bring about 2700 job opportunities within five years, and the overall production capacity will double compared to the initial target of the industrial plan; The previous plan was to build up to 12 production lines by 2027.
• In terms of transformation goals and progress, Marroco stated that BAT hopes to achieve a 50% revenue contribution from “non combustible products” by 2035; At present, the proportion of the group is about 18%, and the Italian market is about 45%. He also mentioned that BAT invests approximately £ 350 million annually in scientific research. For the fiscal year 2025 performance, he stated that the results will be disclosed soon and stated that the performance of the US market (which accounts for approximately 50% of the group’s global revenue) has improved; At the same time, it is pointed out that the longer approval cycle of the US FDA may slow down the pace of innovation and increase the share of illegal products.

Reference: Ecco quali investimenti British American Tobacco farà sull’Italia. Parla il ceo global Tadeu Marroco | MilanoFinanza News