British American Tobacco Puts Cost of EU Regulations Up to $277 Million

The company said most of the cost would go to upgrading machinery to comply with new packaging restrictions.

May 02, 2014

BAYREUTH, Germany – British American Tobacco will shell out between $138 million and $277 million changing machinery to meet the new European Union cigarette packaging regulations, Reuters reports. The European market for cigarettes has been dropping as taxes have increased and more regulations have been passed.

The EU is working on implementation of the Tobacco Products Directive (TPD) that includes graphic health warnings on 65% of cigarette packaging and the eventual outlawing of menthol cigarettes.

“What it really means is a significant, additional cost for us, which at the end of the day puts pressure on us to save money elsewhere,” said Bernd Meyer, operations director of BAT Germany. “Every site in the European Union is under pressure in Western Europe, simply because we have currently decreasing volumes.”

The TPD gives member states two years to fully implement its measures, which means BAT and other tobacco firms have until early 2016 to get their machinery updated. The TPD rules say cigarettes must have photos of tobacco-related diseases in a particular size, which means smaller packs of ultra-slim cigarettes, for example, would need retooling.

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