BAT CEO: to ramp up ‘next-generation’ tobacco capacity in Italy, plans €500 mln investment in Trieste plant by 2027

Key points at a glance

• Stepping up manufacturing in Italy: Continued spending on equipment and technology, with expanded capacity for smoke-free products.
• Localised supply chain: Marroco said roughly 80% of machinery purchased for BAT factories worldwide comes from Italian companies, while more than 80% of BAT’s suppliers in Italy are domestic SMEs.
• Limited impact from higher excise duties: BAT expects a manageable effect from Italy’s multi-year excise increases and said it pays about 2 billion euros a year in Italy in excise and VAT.
• Securing leaf tobacco purchases: BAT plans to buy up to 15,000 tonnes of Italian tobacco in 2026–2028, supporting more than 400 SMEs and around 6,000 jobs.
• Capacity expansion and sales mix: Trieste is adding 16 production lines; next-generation products account for about 18% of group revenue and around 45% in Italy, Marroco said.

2Firsts, Feb 3, 2026

According to Milano Finanza, Marroco said BAT will keep investing in production equipment and technology in Italy while building capacity for next-generation tobacco products, including vaping and heated tobacco, and maintaining its local tobacco leaf procurement. He spoke during a visit to Rome for meetings with institutions and stakeholders.

Marroco said around 80% of machinery BAT buys for its factories worldwide is supplied by Italian companies, and that more than 80% of BAT’s suppliers in Italy are domestic small and medium-sized enterprises. He cited Brazil as a contrasting case, saying a ban on e-cigarettes there has fuelled the spread of illicit devices, undermined oversight and public finances, and increased health risks.

On taxation, Italy’s latest budget includes further multi-year increases in excise duties on cigarettes and tobacco products, rising to as much as 0.15 euros per pack in 2026, with an expected 213 million euros in additional revenue this year. Marroco said the measures had been planned and would have a limited impact on BAT’s business. He added that BAT pays about 2 billion euros a year to the Italian state in excise and VAT. He also said fiscal stability helps deter tax evasion and curb illicit trade, noting the illicit market in Italy accounts for about 4.5%.

Looking at BAT’s long-term commitments in Italy, Marroco recalled the group’s 2004 acquisition of Italy’s state tobacco assets for 2.3 billion euros and said Italy remains one of BAT’s key markets. He said BAT will purchase up to 15,000 tonnes of Italian tobacco over 2026–2028, supporting more than 400 SMEs employing around 6,000 people, under a three-year protocol renewed in 2025 between BAT Italy and the Ministry of Agriculture, Food Sovereignty and Forests (MASAF).

On manufacturing, Marroco said BAT opened its Trieste innovation hub in 2023 and plans to invest a total of 500 million euros by 2027. As 16 additional production lines announced last September ramp up to full capacity, the site is expected to generate employment impacts for about 2,700 people over five years, while total capacity is set to double compared with the original industrial plan, which envisaged up to 12 lines by 2027.

On the group’s transition targets, Marroco said BAT aims for non-combustible products to account for 50% of revenue by 2035. He said the share currently stands at about 18% at group level, with Italy at around 45%. Marroco added that BAT invests about 350 million pounds a year in scientific research. On results for 2025, he said BAT would present them shortly and that he was optimistic about growth, citing improved performance in the U.S. market, which he said represents about 50% of group revenue, while noting lengthy U.S. FDA authorisation processes can slow innovation and increase the share of illicit products.

Cover image source: Tobacco Reporter