Scandinavian Tobacco to build Europe's largest cigar factory

Scandinavian Tobacco (ST) plans to build Europe's largest and most modern cigar factory with a production of more than 1,1 billion cigars annually. The investment, amounting to EUR 30 million, reinforces ST's continued commitment to its cigar business. ST is currently No.3 on the world market for cigars.

ST currently has five cigar factories in Europe: one in the Netherlands, two in Denmark and two in Belgium. When the plan has been implemented, three factories will remain: one in Belgium, one in the Netherlands and one in Denmark.

The new factory is planned to be established in Belgium and is expected to be in operation in 2010. The activities at ST's two existing factories in Belgium, which are located in Leuven and Geel, are expected to be amalgamated at the new factory. The establishment of the new factory will thus have few if any consequences regarding employment for STs staff in Belgium.

The modernisation of cigar production will however involve the closing of STs cigar production in Holme near Århus, Denmark, with the subsequent transfer of all its production to the other factories in Denmark and Belgium. Around 115 staff at Holme will be affected by the closure. On the other hand, jobs will be created for an additional 25 staff at the factory in Nykøbing Falster.

Cigar consumption in some of STs most important markets is either static or declining. The background to the proposed changes is to ensure STs future competitiveness and long-term position by being more cost-effective and keeping expenditure under control.

In recent years, production at Holme has encountered increasingly severe challenges due to the declining markets in primarily Denmark and more recently also in Canada. In the period from 1998 to 2008, sales on the Danish market have fallen from 151 million to 63 million cigars annually, while over a shorter period, sales on the Canadian market have also decreased.

This has resulted in a significant drop in volume at Holme, and it has not been possible to maintain the necessary cost-effectiveness – the cost per cigar produced has simply become too high.

The plan will be presented to the affected local Works Councils and the ST European Works Council will be heard, before it can be finally adopted.


Further information can be obtained by contacting ST's Information Department:
Telephone 00 45 39 55 62 00.