• February 22, 2024

Innovation Hub

 Innovation Hub

Photo: Stefanie Rossel

Photo: Stefanie Rossel

Northern Italy provides the perfect business environment for pioneering tobacco companies and their suppliers.

By Stefanie Rossel

Sale et tabacchi, the inscription on the logo of Italian tobacconist shops, still speaks of tobacco’s long history on the peninsula. It calls to mind the country’s monopoly on salt and tobacco in colonial times. Today, Italy is the European Union’s largest producer of leaf tobacco, with an annual production of 50 million kg, representing a market share of 27 percent.

Statista values the country’s tobacco products market at almost $25 billion. Italy is also one of the few countries in the Western world where the tobacco business is expected to grow, albeit only slightly, over the next few years. Novel nicotine-delivery products play an increasingly important role: In Europe, the heated-tobacco products (HTP) category is expected to expand at a compound annual growth rate of 24.9 percent until 2025, according to Research and Markets. With sales of 9 billion heated-tobacco units, Italy ranked third among the world’s HTP markets in 2021, behind Japan and Russia, according to Euromonitor International.

After transforming from an agricultural economy into one of the world’s most advanced industrial nations after the second World War, Italy today has the third-highest GDP in the EU and the 10th highest in the world, as estimated by World Economics at $2.57 trillion at the end of 2022.

The country’s economic powerhouse in the north is home not only to leaf tobacco cultivation but also to leading cigarette companies’ and suppliers’ manufacturing sites—and for a good reason: The industrial core of the region, one of Europe’s richest, is the industrial triangle between Lombardy, Veneto and Emilia-Romagna.

The area is home to a vast engineering sector that develops process innovations for a variety of industries. The regional capital, Bologna, which will host this year’s TabExpo, May 10–11, houses many producers of machinery for the production of food, pharmaceuticals and tobacco along with a large concentration of suppliers for electronics and mechanics that cater to these industries.

The area is also renowned for its automotive industry—exclusive brands like Ferrari, Lamborghini, Maserati and Ducati are among the many trade names that come from Emilia-Romagna, and they have attracted to the region a large number of suppliers linked to the production of engines. Food processing equipment is an important economic pillar in the region that is world famous for its prosciutto di Parma ham and its equally well-known hard cheese parmigiano.

Research laboratories specialized in strategic technological areas, such as design, prototyping and testing, are another part of this high-tech regional network, where constant exploration of new technological solutions has become ingrained in the local work ethic. It’s an ecosystem that sparks innovation—the perfect place for players in the tobacco industry seeking to drive transformation.

In the runup to TabExpo, Tobacco Reporter’s Stefanie Rossel visited several of these pioneers. On the following pages, she reports from Philip Morris International’s state-of-the-art tobacco-heating factory, BAT’s innovation hub, Montrade’s expanding operations and Tobacco Technology Inc.’s regional flavorings lab.