BAT Plans to Build E-Cigarette Factory in Brazil

According to a report by Brazilian media outlet Acessa on June 1st, British American Tobacco (BAT) is planning to build a new electronic cigarette factory in Brazil, while attempting to persuade the country's National Health Surveillance Agency (Anvisa) to change its regulatory stance on such products. Recently, the Vice President of Philip Morris International (PMI) also stated that the company would build factories if Brazil were to lift its ban on electronic cigarettes and heated tobacco products, subject to regulatory approval.

The E-Cigarette Black Market has Grown Tremendously

The Brazilian National Health Surveillance Agency has been reviewing a proposed e-cigarette bill for four years. Until a final decision is made, the Brazilian government will continue to prohibit the sale of e-cigarettes and heated non-burning tobacco products. However, companies such as BAT believe that e-cigarettes are less harmful to humans compared to traditional cigarettes.

Meanwhile, a study conducted by research institution Ipec shows that the number of electronic cigarette users in Brazil has increased from 500,000 to 2.2 million, with 4% of the population in the capital, Brasilia, now using e-cigarettes.

A study by the Industry Federation of Minas Gerais State (FIEMG) in Brazil has revealed that the electronic cigarette black market in Brazil generates an annual turnover of BRL 7.5 billion (approximately RMB 10.5 billion), with the majority of products sourced from China and Paraguay.

Due to the inability to tax illegal products, the Brazilian government loses approximately 2.2 billion reals (equivalent to 3.1 billion yuan) annually, resulting in the loss of 110,000 job opportunities in the country.

BAT and PMI Plans to Enter the Brazilian market

BAT has its largest factory in Latin America located in Minas Gerais state. The company has announced plans to expand the facility in order to accommodate the production of electronic cigarettes, initially using imported components for assembly.

Lauro Anhezini Jr, the head of science and regulatory affairs for BAT Brazil, has stated that...

British American Tobacco (BAT) cannot understand why electronic cigarettes are banned in the country when more harmful tobacco products are legally sold. Over 80 countries have already regulated electronic cigarettes. Compared to traditional cigarettes, they have a 95% reduced risk.

Previously, Gregoire Verdeaux, the Vice President of Philip Morris International (PMI), also stated that if the Brazilian National Health Surveillance Agency lifts the ban on e-cigarettes and heated tobacco products, PMI will plan on building a new factory in Rio Grande do Sul (a southern Brazilian city).

According to Weiduo, PMI is interested in investing in Brazil because it is the largest tobacco exporting country in the world. However, PMI will not add factories in the country until e-cigarettes are legalized.

It is worth noting that in March 2023, PMI held discussions with the Brazilian National Health Surveillance Agency regarding obtaining a license for the production and sale of their heated tobacco product, IQOS, in Brazil.

It is reported that PMI currently has a factory located in South Santa Cruz with 1800 employees responsible for producing tobacco products, including cigarette brands such as Marlboro, L&M, and Chesterfield.

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The electronic cigarette industry is already worth R$7.5 billion in Brazil, but the major players in the industry are not involved.