ZAGREB, 27 July 2022 - The Hrvatski Duhani company specialised in tobacco wholesale trade, which operates within British American Tobacco (BAT), has opened a regional logistics and distribution centre in Pitomača, northeastern Croatia, BAT said in a press release on Wednesday.

The 4,000-square-large facility will store tobacco supplies from 26 countries and will be the central point for the provision of tobacco supplies to BAT's factories in Augustow, Poland, Bayreuth, Germany and Pecs, Hungary.

The capacity of the Pitomača-based logistics and distribution centre is 18,500 standard boxes of tobacco.

This investment in the centre ensued after BAT recently invested HRK 400 million in new production lines in its factory in Kanfanar and employed 70 more people at that plant. Last year, it also invested 200 million kuna in the Kanfanar factory.

By investing a total of HRK 600 million in its factory in Kanfanar, Istria this and last year, BAT has positioned Croatia firmly at the centre of transformation in line with the group's strategy aimed at building a better tomorrow, Tamás Nyaka, Head of Operations at BAT Adria was quoted as saying. 

The Kanfanar factory is one of the four factories in Europe that will be producing new categories of tobacco products.

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ZAGREB, 8 April (2022) - BAT Group is continuing its investment cycle in the Kanfanar factory with an additional HRK 400 million (€53 million) to be invested in new categories of tobacco products, which confirms its status of a leading private foreign investor in Croatia, company officials said on Friday.

BAT Adria director-general Zvonko Kolobara said the new investment built on last year's HRK 200 million (€27 million) investment in new production lines for heated tobacco products.

Kolobara said the new investment would require new hiring but he could not specify how many new workers would be employed.

Speaking of the black market, he said it was still rather big but that it had been on the decline in the past two years owing to the efforts by the customs service and border police.

Kolobara said that BAT executives had met with Prime Minister Andrej Plenković on Thursday to inform him and the government of the company's investment plans.

Asked about the issue of increasing excise taxes, of which the company had warned, Kolobara said that excise taxes were within the remit of the government but that they would prefer if there existed an excise tax calendar to enable better business predictability and sustainability.

Speaking of inflation, he said that it would definitely have a negative impact on the company's results.

BAT South Europe Director Roberta Palazzetti said that the total investment of HRK 600 million in new production lines had additionally strengthened Croatia's position on BAT's global production map, with the Kanfanar factory being one of the few in the world to produce, apart from cigarettes, heated tobacco products, which have the potential of significant risk reduction for adult smokers.

BAT acquired the cigarette factory Kanfanar, Istria, in 2015 when it took over local tobacco producer Tvornica Duhana Rovinj (TDR).

In the coming years BAT plans to increase the production of heated tobacco products in Croatia in light of growing demand.

BAT said that since the 2015 acquisition it had invested nearly HRK 1.1 billion (€135 million) and continued to increase production, employment and exports.

BAT pays HRK 3.5 billion in taxes and contributions annually and employs 1,500 workers in Croatia. Every year the company contributes more than HRK 1.4 billion in added value to GDP, and the biggest increase in contributions to GDP has been generated by the Kanfanar factory, which has continually increased production and exports, BAT said.

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ZAGREB, 21 Jan 2022 - The Croatian tobacco processing company Hrvatski Duhani (HD), a member of the British American Tobacco Group, has begun negotiations on the new production season, the company said on Friday.

The new season is the continuation of the successful purchase of tobacco in 2021 when a total of HRK 81.6 million was paid out to tobacco producers, which is as much as HRK 6 million more than in 2020, HD said.

This is the largest volume and value of production in the last four harvests despite major challenges last year when inclement weather, including draught, hail, and frost, affected the quality and yield of tobacco. Given that HD had ensured the most favorable insurance terms, producers were paid more than HRK 16 million, the company said.

The company said that last year it had invested over HRK 18 million in machine harvesting and that about 50 percent of tobacco had been harvested mechanically. New technology helped reduce costs and increase yields while at the same time helping producers to overcome the problem of labor shortage.

HD said its goal was to continue to increase the quality and yield of tobacco and the profitability of producers in 2022.

(€1 = HRK 7.5)

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ZAGREB, 21 Sept, 2021 - Despite the big risks in the sector - shortage of labour force, age structure and health - primary tobacco production has a future in Croatia, Agriculture Minister Marija Vučković said on Tuesday at the 21st Tobacco Fields Day, held near Virovitica.

Minister Vučković said that tobacco production is valuable and that in Croatia it has its organisers, relatively secure purchase, the possibility of processing and a closed cycle to the production of almost finished products, which any country would support.

Besides income support, we will endeavour to support all investment initiatives through the rural development programme, said Vučković. She added that the government and ministry advocate retaining support at all levels in the European Union, specifying that an envelope valued at HRK 42 million is envisaged for the tobacco sector, the same as last year.

The Hrvatski Duhani company, which organised Tobacco Fields Day, has 360 producers in Podravina and Slavonia who cultivate 2,700 hectares of tobacco land.

The total annual value of buying tobacco amounts to about HRK 90 million and tobacco is one of the rare agricultural cultures with which Croatia has high competitiveness and a significant production at the EU level, given that Croatia produces about 5% of the EU's total tobacco production.

President of the management board at Hrvatski Duhani Imad Ud-Din Muhammad said that the company was one of the first to introduce sustainability in agriculture in Croatia, which has now been strengthened at the BAT Group level.

We are additionally strengthening investments in environmental protection, health and safety within the entire supply chain, he underscored.

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ZAGREB, 29 May 2021 - Businesses in the Croatian tobacco industry posted the net profit of 81.9 million kuna in 2019, a rise by 72.5% compared to 2018, according to the data provided by the Financial Agency (Fina).

In 2019, only the three entreprenuers -- TDR, Hvatski Duhani and Tvornica duhana Udbian -- were registered in this business activity in 2019.

They had 902 people on their payrolls.

The total revenues in the tobacco industry were HRK 1.1 billion, and for instance in 2017, they totalled 1.4 billion while in 2003 and 2004 they reached more than 2.6 billion.

The number of workers in this sector fell from 1,106 in 2002 to 720 in 2010, while in 2019 there were 902 employees.

The average monthly salary per employee in this sector rose 64.6% from HRK 6,566 in 2002 to HRK 10,809 in 2019.

The average monthly salary in this sector in 2019 was by 85.9% higher than the Croatian average.

In terms of the total revenues, the best performer in 2019 was the TDR company with 715 employees and HRK 871.4 million in revenue.

(€1 = HRK 7.5)

ZAGREB, 12 May, 2021 - During a visit on Wednesday by Prime Minister Andrej Plenković to the British American Tobacco (BAT) factory in Kanfanar, BAT revealed an investment of HRK 200 million in the production of a new category of heated tobacco products (HTP), underlining the importance of the new logistics centre in Rijeka.

"By expanding production in Kanfanar and opening a hub in Rijeka, we are continuing with BAT's significant investments in Croatia. With the introduction of production lines for new product categories, Croatia is additionally strengthening its position on the global map of production sites in the tobacco industry. We are continuing to expand our selection for consumers in Croatia," BAT Adria director Zvonko Kolobara said in a statement to the press.

He added that the increased capacity in Kanfanar would help BAT meet growing demands for HTP in Europe and northern Africa.

Kolobara thanked the government and Prime Minister Plenković for their efforts in creating an investment climate that stimulates further investments.

Plenković expressed satisfaction that BAT is continuing with its investments in Kanfanar and ensuring jobs. BAT's announcement of the investment comes after its announcement that it could leave Croatia due to unfavourable business conditions.

Plenković underlined that the new investment was an example of a good business climate and that BAT did not exert any pressure on the government to meet its demands to continue doing business in Croatia.

"The new, HRK 200 million investment in new products means a new impetus, enthusiasm and a new generator of business and with that, a contribution to Croatia's economy. The company employs 1,600 people and another 800 cooperate closely with BAT and make a living that way. The investment plans have been coordinated with their headquarters in London and all the employees at the factory will be satisfied while the entire economy of Istria County will benefit from BAT's operations," said Plenković.

He noted that the government was open to large global investors.

"It is excellent that BAT has established a hub in Rijeka for products from China that are distributed throughout Europe. That is additional confirmation of Rijeka's attractiveness as an exceptionally important transport and commercial port in the country. As far as BAT's staying is concerned, the government took account of the Croatian economy and creating conditions for all foreign companies doing business in Croatia and investors to have the same treatment. It is obvious that BAT has decided that the Kanfanar factory is important and that it wants to invest and that Croatia is important to it. There was never any pressure," said Plenković.

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As Poslovni Dnevnik/Darko Bicak writes on the 22nd of September, 2019, Helio Moura is the tobacco development manager for British American Tobacco Corporation (BAT) and the owner of Croatia's TDR in Kanfanar.

Tobacco is an important crop for Croatian agriculture with stable production conditions and constant growth in terms of value, and tobacco worth a massive 124 million kuna is produced annually in Croatian fields.

Statistics show that a mere 400 tobacco farmers account for as much as 62 percent of the total value of Croatian potato production, as well as fruits, with it accounting for as much as 55 percent of the value of grapes and 48 percent of the value of Croatian olive oil production.

Most domestic tobacco production is concentrated through the system of the company Hrvatske duhani, which is within the system of the British American Tobacco Corporation (BAT), which took over the domestic TDR a year ago. Poslovni Dnevnik sat down and spoke with Helio Moura, BAT's tobacco development manager, about the trends in tobacco production and what Croatian farmers can expect in the coming period.

How important is Croatian tobacco production in the context of its total production in Europe, of course for BAT?

Tobacco production exists in many European countries, but as far as BAT is concerned, Croatia is the only country in Europe where we're developing our tobacco production. Production in Croatia is very important to us in this context, because from here we deal with our supply from the factory in Kanfanar, as well as our other factories in Europe.

How much does your factory in Kanfanar satisfy the tobacco raw material needs from domestic sources, ie from Croatian tobacco?

Tobacco from Croatia is used not only in the factory in Kanfanar but in many of our other factories in Europe. It is important to know that tobacco products consist of special blends of tobacco, a blend of various types of tobacco that give the characteristic aroma of the product.

This means that different tobacco from many countries is mixed to produce the final product. As regards the use of tobacco produced in Croatia at the Kanfanar plant, it is estimated that between one third and 40 percent of local tobacco is processed in Kanfanar and the rest is exported.

To how many European countries does BAT export its raw material from Croatia?

Tobacco from Croatia is exported to six of our factories in Europe.

If you use about 40 percent of your home-made tobacco in your Croatian factory, how many countries, or how many other types of tobacco do you supply in Kanfanar?

We want to give all our consumers the same quality, the same taste so that all of our final products are blends of tobacco from a number of sources but standard quality. In the blends, as a rule, we use European tobacco, but just as we do with Brazilian and Oriental. There are almost no finished products which are made from only one type of tobacco.

How profitable is tobacco leaf production for farmers?

Tobacco is one of, if not the most profitable, agricultural crops in Croatia as well as in any other country in the world.

I can say with certainty that growing tobacco is at least three or four times, and somewhere around five or six times, is a more profitable agricultural crop than any other. However, it is our rule that we ask the farmers we cooperate with to engage in other crops, with the aim of optimising their overall agricultural production, with tobacco being just a kind of ''cash flow'' to their total agricultural business.

How many farmers do you have under contract in Croatia and what is your cooperation with them?

We have more than 400 subcontractors in Virovitica-Podravina County and the area around Kutjevo. Tobacco cultivation takes place on approximately 3,000 hectares of agricultural land.

Does the popularisation of new smoking technologies, such as e-cigarettes, threaten agricultural tobacco production?

The fact is that the use of such ''new generation'' products globally reduces the use of classic tobacco products. However, these new products are focused on the elimination of tar and most other harmful substances generated by the burning process, but many of them still use nicotine. And nicotine is obtained from the tobacco leaf. So we don't really expect production to fall in that part.

What are your specific plans for tobacco production in the future in Croatia?

We plan further investments in tobacco production in Croatia. Tobacco production is one of the best organised [types of production] in Croatian agriculture, and we support our subcontractors financially, also through the continued support of our agronomists, but also by transferring a lot of know-how and practices that we have in our global centres of excellence.

Croatian Tobacco financing subcontractors finance more than two-thirds of the total value of production each year in advance, amounting to more than 60 million kuna, they grant favourable long-term loans for investments in various equipment and irrigation systems, and last year, they opened new long-term credit lines for the procurement of mechanical pickers.

29 tobacco harvesting machines have already been invested in, and the plan is to continue at the same time pace in the forthcoming period. Machine harvesting will certainly help our subcontractors to address the problem of labour shortages, which have been the biggest impediments to increasing tobacco production.

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