Tobacco Asia

44 tobaccoasia MANUFACTURING NEWS 制造新闻 Greece: Papastratos Expands Production, Green Energy Papastratos, one of Greece's oldest and largest tobacco companies, reported strong business results for 2025, with higher turnover and expanding exports, c.e.o. Giorgos Margonis said during an event marking the com- pany's 95th anniversary. The company manufactures heated tobacco products, cigarettes, and alternative nicotine products in Greece. It exported about 90% of its domestically produced output to more than 30 international markets. Heated tobacco sticks produced by Papastratos have become Greece's leading export product to Japan. Papastratos continued its investment program at its Aspropyrgos factory in 2025 and launched the fourth phase of a €200 million expansion. The project raises the company's total investments since 2017 to €700 million. The expansion will add 4 new heated tobacco stick production lines, a tobacco processing line, and a new warehouse. The factory will increase its total production lines from 12 to 16. Papastratos said it expects export value to exceed €600 million in the coming years once the project boosts capacity. The company also completed the first milestone of its largest "green" investment as part of its sustainability strategy and the Zero Carbon Tech program of parent company Philip Morris International. In 2025, Papastratos connected a new rooftop photovoltaic system installed on its production buildings. The project includes 4,000 solar panels with a total capacity of 2.4 megawatts. The company said the system will generate about 3.5 gigawatt hours of clean electricity each year, enough to cover the average annual consumption of roughly 1,000 households. Papastratos said the project marks the first step in a broader energy upgrade at the Aspropyrgos facility aimed at reducing carbon dioxide emissions. Future upgrades will include improvements to factory systems, an electric industrial boiler, and heat pumps. The company said 2026 will mark a milestone for its shift toward new products, as it will be 10 years since IQOS launched in the Greek market. Papastratos said more than 750,000 adult users of tobacco and nicotine products in Greece have chosen IQOS. The company added that more than 70% of its net revenue in 2024 came from innovative products. The company also highlighted efforts to prevent underage access and combat illicit trade. Since September last year, Papastratos has run the initiative "It's in our hands so it won't be in theirs" with the Ministry of Health of Greece and the Ministry of Digital Governance and Artificial Intelligence of Greece. The program promotes responsible practices, public awareness campaigns, and digital tools that use artificial intelligence to verify age during online and in-store purchases. Papastratos also supports enforcement efforts against illicit tobacco trade. The company signed cooperation agreements with authorities and donated about €7 million in equipment and public awareness support. According to an independent report by KPMG for Philip Morris Interna- tional published in June 2025, illegal cigarette consumption in Greece fell to its lowest level in a decade in 2024, even as the European Union recorded its highest rate of illegal consumption since 2015. BAT to Halt South Africa Production British American Tobacco (BAT) plans to end cigarette manufacturing in South Africa within this year after years of warning the government about the rapid growth of illicit cigarette sales. Chief executive Tadeu Marroco said the company repeatedly cautioned authorities that it could shut down local production if officials failed to curb illegal trade. Illicit cigarettes now account for about 75% of the country's market, according to BAT. The company intends to close its Heidelberg manufacturing facility and supply the South African market through imports, ending more than a century of domestic cigarette production. The Heidelberg plant, which opened in 1975 and ranks as BAT's eighth-largest factory globally, currently operates at only 35% of its capacity as legal cigarette volumes decline. The planned closure could affect about 230 jobs. "They cannot say they didn't know," Marroco told Bloomberg News. "Every time we did a downsize, we went back to the government and said, 'Look, we are doing all we can," he said, adding that the problem was never effectively addressed. Illicit cigarette sales have increased in South Africa for more than a decade, with the trend accelerating during the presidency of Jacob Zuma, which ended in 2018. During that period, often described as "state capture," enforcement institutions weakened significantly. As enforcement declined, illegal manufac- turers expanded their operations, under-declared production, and avoided paying excise duties. These practices fueled the growth of a parallel market that undercut legal producers. The weakening of the country's revenue service also played a key role. Once regarded as one of Africa's strongest tax authorities, the agency lost specialist units and experienced investigators, which allowed organized networks to expand. Untaxed cigarettes gained a larger share of the market, reducing sales for compliant companies such as BAT and costing the govern- ment billions in lost revenue. BAT c.e.o. Tadeu Marroco said the company repeatedly warned South African authorities it might shut down local production if officials failed to curb illegal cigarette trade. Credit: BAT.

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