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BAT to invest €1 billion in Italy in next five years

by Luca Orlando

Tobacco giant British American Tobacco (BAT) will invest €1 billion in Italy during the next five years in everything from production to research, and from machinery to communications.

BAT will invest €650 million of the total in machinery that produces, processes and packages tobacco for its plants throughout the world.

“We continue to grow in Italy,” said Marc Lundeberg, chief executive of BAT in Italy. “We notice how there's a willingness at the highest institutional levels to make the country more competitive and attractive. There are also a number of global excellences on which we want to focus.”

BAT acquired former state-held tobacco monopoly Ente Tabacchi Italiani (ETI) in 2003 for €2.33 billion, making it the biggest foreign investment in Italy at the time. BAT is present in 200 countries with a 20% share of the global tobacco market.

Angelos Papadimitriou, head of Coesia of Bologna, is only one of the many beneficiaries of this big investment plan in Italy, which was announced on Oct. 2.

Coesia, with annual revenues of €1.5 billion and 2,700 employees in Italy, is the world leader in tobacco packaging. It will get an order worth €500 million for the next five years, while other orders will go to companies in Umbria, Veneto and Emilia-Romagna.

“Of course we are still hiring, and thanks to this order we continue to grow,” said Papadimitriou.

Notwithstanding the drastic drop in recent years, Italy remains the biggest producer of tobacco in Europe with an annual output of 60 million kilograms and BAT as a secure client.
BAT will buy 4.5 million kilograms annually from national producers for three years extendable to five, for a global commitment of €100 million.

“We are a multinational and we could acquire anywhere in the world,” said Vice Chairman of BAT Italy Giovanni Carucci. “If we chose Italy it is because we found the right expertise. When it comes to machines, Italy is already our prime supplier.”

Another €300 million will be destined to support communications, quality and research.
BAT aims to reach an agreement with IRBM in Pomezia, Istituto di Ricerca Biomolecolare, which gained notoriety for the production of a vaccine against the Ebola virus.

IRBM is conducting research on new products that are less harmful to the health of smokers, with first results expected to come soon.

The five-year plan of BAT, unveiled a few weeks ago by company officials to Prime Minister Matteo Renzi, will create 300 jobs and have a positive effect on the local industry.

“This investment in Italian industry is important,” said the managing director of Assolombarda, Michele Angelo Verna. “Especially because it isn't a one-shot operation and it allows companies to plan for the long term.”