Huge Philip Morris investment in Romania: EUR 490 M to convert the Otopeni factory into smoke-free product unit

Philip Morris International (PMI) chose Romania to make one of its milestone investments at global level. The US tobacco manufacturer will invest EUR 490 million to transform its cigarette production factory in Otopeni, near Bucharest, into a high-tech facility to manufacture HEETS, the tobacco units used with the electronic tobacco heating device IQOS.

The conversion process of the factory into a HEETS production facility has already commenced and is expected to be completed by 2018. The unit will be fully operational by 2020.

“The Otopeni unit is one of the most effective PMI’s factories at global level. The investment will create about 300 additional jobs for highly-skilled employees at the Romanian facility in the next two years, which currently employs approximately 670 people, Thus, Romania is joining a growing list of countries where PMI products heated tobacco units for IQOS,” Branislav Bibic, Managing Director Philip Morris Romania, stated during ‘Together for Romania’ event on Tuesday in Bucharest.

This is the ‘significant investment’ announced by the US tobacco giant Philip Morris heads in April, who paid an official visit in Romania.

The factory in Otopeni will exclusively produce sticks for IQOS. Part of the production will fully cover the needs of the Romanian market, where the number of IQOS users is estimated at tens of thousands and the rest will be exported mainly to European Union (EU) countries.

“Romania is an attractive country for big investors, but also for those who are already in Romania, in terms of stability, but also for potential investors, because the big companies are watching one another and what made this company in Romania can be and will be an example for other investors,” Romanian PM Mihai Tudose stated, attending the event.

IQOS and HEETS have been available for adult smokers in Bucharest since November 2015 and in 16 cities throughout Romania from the beginning of this year. IQOS is currently available in key cities in more than 27 markets around the world and is expected to be available in 30-35 markets, either key cities or nationwide by the end of 2017, as capacity permits.

“Our investment in Romania further demonstrates our commitment to a future in which smoke-free products ultimately replace cigarettes. We are encouraged by the 2.9 million smokers around the world who have already given up smoking and switched to IQOS. We expect this momentum to continue and the conversion of the Romanian facility will help us to meet the growing demand from adult smokers for better alternatives to cigarettes,”André Calantzopoulos, PMI’s CEO, said commenting on the announcement.

On the other hand, Christos Harpantidis, Managing Director Philip Morris Balkans, said the first test products will be on the production line in August.

“By the end of the year we will start exporting,” Harpantidis announced.

Earlier this month, PMI announced plans to install two new high-tech production lines in Neuchâtel, Switzerland, to produce HEETS.

In June, PMI announced it would expand capacity at the company’s heated tobacco unit manufacturing facility in Bologna, Italy and also announced plans to build a new facility for HEETS in Dresden, Germany. In addition, PMI will also convert its cigarette factories in Greece and Russia and by the end of 2018, PMI plans to have a total annual installed capacity of approximately 100 billion heated tobacco units.

IQOS is one of four scientifically substantiated smoke-free product platforms that PMI is developing to address adult smoker demand for better alternatives to cigarettes.

PMI hired more than 400 scientists and experts and invested over USD 3 billion in research, product development and scientific substantiation for smoke-free products. Results of scientific research conducted by PMI to date indicate that IQOS is likely to reduce the risk of harm compared to cigarette smoking, and is a better choice for those who would otherwise continue to smoke.