Philip Morris International announces additional investments in the Otopeni factory of more than USD 100 million for the 2022-2023 period

Philip Morris International, Inc. (PMI) continues its investments aimed at transforming the Otopeni factory into a manufacturing unit of consumables for IQOS, the electronic tobacco heating system developed by the company. Since 2017, when the transformation process for the Otopeni factory started, USD 500 million have been invested in the development of manufacturing capacities, the training of the employees and the implementation of sustainability solutions. Of this amount, nearly USD 100 million was invested in 2021 alone. Throughout the period 2022-2023, PMI will further invest over USD 100 million and continue to develop the IQOS consumables manufacturing capacity for the domestic and external markets, but also to minimize its environmental footprint – the ultimate goal being to become a carbon neutral factory by 2023.

PMI’s vision is to deliver a smoke-free future and replace cigarettes with reduced-risk products that – although not risk-free – are a much better choice than continuing to smoke. The Philip Morris Romania factory in Otopeni is at the center of the strategy behind this vision, along with seven other factories around the world that produce consumables for IQOS. Of these, only three are located in the European Union (Romania, Greece and Italy).

As a result of the investments made so far, the factory in Otopeni has been transformed from a cigarette factory into one that produces consumables for IQOS. Over 300 new jobs have been created since 2017. Today the factory has more than 850 employees.

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„We are fully committed to replacing cigarettes with better alternatives to smoking, and the further investments in the coming years clearly demonstrate this. The USD 500 million invested so far and the emphasis on the development of the smoke-free products category have made the total value of exports of these consumables comparable to Romania’s cigarette exports. We are glad that, through the investments so far, we have managed to put Romania on the map of innovation and to offer hundreds of millions of smokers around the world a better alternative to continuing smoking”, said Daniel Cuevas, Managing Director, Philip Morris Romania

92% of the factory’s output is exported to 54 markets spread over five continents, and 8% covers the domestic consumption, where Philip Morris Romania owns a market share of roughly 80% of the heated tobacco products category in the third quarter of 2021. In Romania, the IQOS consumables represented, in the third quarter of 2021, 3.4% of the total cigarettes and heated tobacco products market, for the same period of time. In 2020, the exports of goods belonging to the group of products “Other tobacco and tobacco substitutes”* amounted to EUR 669 million. These consist predominantly of heated tobacco products and increased almost 20 times since the start of the investment in the transformation of the factory in Otopeni. This category of products is ranked among the top 5 agri-food products exported from Romania, exceeding in 2020 the value of sunflower seeds exports (Romania is the largest producer of sunflower seeds in the EU).

„To continue investing, we need legislative predictability as well as a balanced fiscal framework that fosters innovation. Non-combusted tobacco and nicotine-based products should be taxed according to their health risk and exposure. Combusted products and cigarettes are the most harmful form of tobacco consumption and should be taxed the highest, in order to encourage smokers to quit smoking and for those who don’t quit, to switch to better alternatives of consuming nicotine. An increase of the heated tobacco products excise duty has a real potential to undermine the development of the heated tobacco category that currently is successfully helping adult consumers to switch away from cigarettes. This would be detrimental to public health”, added Dragoș Bucurenci, Director External Affairs, Philip Morris Romania

In 2022-2023, the investments in the factory in Otopeni will continue in order to further develop production capacity and expand the product portfolio, which will include consumables for IQOS ILUMA, the latest generation device recently launched by PMI. The investments will also target strategic sustainability goals as the factory aims to achieve a neutral carbon footprint by 2023.

Heated Tobacco Products have made a significant contribution to reduce the trade deficit.

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* Combined Nomenclature (CN) product group 24.03 – Other manufactured tobacco and manufactured tobacco substitutes; homogenized or reconstituted tobacco; tobacco extracts and essences.

** Source of data: National Institute of Statistics, Tempo Online database, Econonimc Statistics, Exterior Commerce