On June 1st, according to Brazilian media Acessa, British American Tobacco (BAT) is planning to build an electronic cigarette factory in Brazil and is attempting to persuade the Brazilian National Health Surveillance Agency (Anvisa) to change its regulatory stance on such products. Shortly before, the Vice President of Philip Morris International (PMI) also proposed that if Brazil lifts the ban on electronic cigarettes and heated tobacco products, they would establish new factories under regulatory conditions.
Large Scale of the Illicit Electronic Cigarette Market
The Brazilian National Health Surveillance Agency has been reviewing electronic cigarette legislation for four years, and until a final decision is made, the Brazilian government continues to prohibit the sale of electronic cigarettes and heated tobacco products. However, companies like BAT argue that electronic cigarettes pose lower health risks compared to traditional cigarettes.
At the same time, a survey conducted by research institute 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 already using electronic cigarettes.
A study by the Federation of Industries of Minas Gerais (FIEMG) in Brazil reveals that the illicit electronic cigarette market generates an annual turnover of 7.5 billion Brazilian reals (approximately 10.5 billion yuan), with the majority of goods coming from China and Paraguay.
Due to the inability to tax illegal products, the Brazilian government loses 2.2 billion Brazilian reals (approximately 3.1 billion yuan) each year, resulting in the loss of 110,000 job opportunities for the country.
BAT and PMI's Entry into the Brazilian Market
BAT has its largest factory in the state of Minas Gerais in Latin America and has plans to expand the facility to accommodate electronic cigarette production. In the initial phase, imported components will be used for electronic cigarette assembly.
Lauro Anhezini Jr, Head of Scientific and Regulatory Affairs at BAT Brazil, stated, "If more harmful cigarettes can be legally sold, BAT cannot understand why electronic cigarettes are prohibited in the country, as over 80 countries have implemented regulations (on electronic cigarettes). Its risks are reduced by 95% compared to traditional cigarettes."
Previously, Gregoire Verdeaux, Vice President of PMI, also stated that if the Brazilian National Health Surveillance Agency lifts the ban on electronic cigarettes and heated tobacco products, PMI plans to build a new factory in Rio Grande do Sul, a city in southern Brazil.
Verdeaux mentioned that PMI is interested in investing in Brazil as it is the world's largest tobacco exporter, but they will not establish new factories in the country until electronic cigarettes are legalized.
It is worth noting that in March 2023, PMI had official discussions with the Brazilian National Health Surveillance Agency, hoping to obtain a license to produce and sell the IQOS, a heated tobacco product, in Brazil.
Currently, PMI's existing factory is located in Santa Cruz do Sul, employing 1,800 workers and producing tobacco products including brands such as Marlboro, L&M, and Chesterfield.
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