TOBACCO VALUE CHAIN

GROWERS

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Tobacco leaf production in the EU totals over 213.000 tonnes and represents around 4% of the global production [1].

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Tobacco is grown on approximately  55.000 farms [2] located in 12 member states: Italy, Greece, Spain, Poland, Bulgaria, Hungary, France, Croatia, Germany, Romania, Belgium and Portugal, and provides employment for a labour force of around 390.000 people (full time and seasonal workers and family members).

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On these farms, all the different varieties of raw tobacco are grown: flue cured (Virginia, Bright), classical orientals (Basmas, Katerini, Kaba Koulak), light air cured (Burley, Maryland), dark air cured (Badischer Geudertheimer and Havanna) and fire cured (Kentucky).

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After the growers harvest the tobacco plant, they cure (dry) tobacco leaves using completely natural methods, subject to the tobacco variety. The cured leaves are then delivered to the first processors.

EU “coupled” tobacco subsidies (ie directly linked to production, per variety) have been progressively phased out since crop 2005 (completely in Greece, Austria and Belgium) and were terminated everywhere after 2009.

For the period 2005 – 2014, part of the “coupled” tobacco subsidies were converted into “decoupled aids” (so, disconnected from tobacco growing) for farmers on a per hectare base. Some marginal, specific support was provided until crop 2014 to tobacco farmers, in a small number of member States, to improve the quality of the crop or to restructure the farms.

According to the new Common Agricultural Policy (2015 – 2020) there will be no longer coupled payments of any kind for tobacco growing in the EU. Some co-financing of tobacco growers at local level may still be foreseen by the rural development fund but this would not be linked to tobacco production.


[1] CECCM estimate based on DG AGRI data December 2015 
[2] Nomisma report “the EU tobacco sector monitor 2015/16”, February 2016 

FIRST PROCESSORS

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There are around 35 industrial scale tobacco processing plants in Europe which employ over 7.800 workers [1].

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There are also many small scale facilities which cover only a part of the process. They are located in the same tobacco areas of member States where tobacco is grown.

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The first processing is essentially a series of physical proceedings during which no additives other than water are used.

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The processors sort and grade the tobacco leaves and then separate the lamina from the stems (“threshing”), herewith reducing the lamina into small strips.


[1] Nomisma report “the EU tobacco sector monitor 2015/16”, February 2016 

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They then condition tobacco leaves in bales, in order to be able to store them prior to delivering them to the manufacturers. In some cases the first processors also conducts the fermentation of the leaves (Kentucky), the pre-blending and casing of the strips, according to the manufacturers’ requests. By-products like leaves’ stems and scraps are also collected, sorted and delivered for use by the industry.


MANUFACTURERS

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In total, the tobacco manufacturing industry in the EU employs over 53.000 people [1].


[1] Nomisma report “the EU tobacco sector monitor 2015/16”, February 2016 

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About 250 companies produce cigarette, smoking tobacco, cigars and cigarillos, chewing tobacco and snus.

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Cigarette manufacturers make or purchase tobacco by-products for inclusion in the final blend such as reconstituted, expanded or toasted tobacco and treated stems. They then blend the tobaccos, adding casings; they cut the tobacco and add the flavourings.

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Then it is wrapped in paper and; a filter and glue are added before cigarettes are cut to size; packaged in packs, cartons and cases.

SUPPLIERS

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A significant number of companies supply the tobacco industry with components and ingredients for cigarettes and other tobacco products.

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The flavouring industry supplies additives, including casing and flavourings.

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Other manufactures supply the filters (acetate), the paper, inks and glue.

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The packaging and the printing industries are also an important supplier. A broad estimate of the money spent by tobacco manufacturers (only cigarettes) for the supply of board and paper materials, filters, fine papers and additives/flavours is  3.000 – 3.500 Mio [1]


[1] Nomisma report June 2012  “the European Tobacco sector an analysis of the socio-economic footprint” based on Philipp Morris International estimates  (pg 23)

WHOLESALERS

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Generally, manufacturers do not put their products directly in the market but sell them to wholesalers and distributors. In some member states distribution is handled by one operator, in others it is extremely diversified. It is therefore difficult to estimate the number of operators involved, but we believe it directly and indirectly involves a very high number of companies employing in 2014 over 47.000 people.[1]


[1] Nomisma report “the EU tobacco sector monitor 2015/16”, February 2016 

RETAILERS

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Retailers sell the goods to the consumer. Also in this case, the distribution pattern is very diversified and the exact  number of operators involved is difficult to be calculated. It covers large supermarkets, convenience –food stores, HoReCa, gas stations as well as small specialised tobacconist outlets. According to the Nomisma report of February 2016, there are over 1.095.000 people employed in the different points of sales [1]

Tobacco products are also sold via vending machines whose number is estimated at 656.000 [1] across the EU.  


[1] Nomisma report “the EU tobacco sector monitor 2015/16”, February 2016 

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