After Peterson of Dublin closed its doors in 2018, another small pipe tobacco company ceases manufacturing. Planta Tobacco Company from Berlin closed its doors due to the significant costs resulting from the EU Tobacco Products Directive adopted in 2014 and the subsequent EU regulations.
When proposing the EU Tobacco Products Directive, the European Commission admitted that smaller and mid-sized companies would be impacted much more than large multinational cigarette manufacturers, but from its point of view that was a price worth paying. However, few real impacts were calculated and, in the cases, where they were, they hugely underestimated the real compliance costs.
The European Commission and the other EU institutions involved could have simply avoided forcing small tobacco companies out of business, if better legislation had been developed. The adopted regulations were mainly written having factory-made cigarettes in mind, with other niche tobacco products being an afterthought. Differentiation based on product, consumers, manufacturing or companies was simply disregarded.
Pipe tobacco is a niche traditional tobacco product representing less than a one percent of the total tobacco market, enjoyed on occasion by mature adults as a relaxing pleasure, and manufactured, up till now, by several small family-owned companies.
Pipe tobacco is a tobacco product which is not smuggled. Nonetheless, the overly expensive EU track and trace system, aimed at curtailing smuggling of cigarettes, will also apply to pipe tobacco meaning further costs for those small producers.
The introduction of large health warnings meant packaging and machine changes. Again, pipe tobacco was simply disregarded when regulators decided the size of health warnings, designed with cigarette packaging in mind.
Faced with the need to make further machine changes to comply with the new track and trace system and alarmed by the threat of future packaging changes – publicly advocated by the Commission – after the adoption of the law in 2014, small companies simply cannot absorb the costs of continuous disruptions to their manufacturing.
ESTA’s Secretary General Peter van der Mark said: “The EU has failed time and time again to make legislation that does not unduly impact small and medium sized companies. We hope that the Commission’s proposed SME Envoy, announced by the incoming Commission, will be able to ensure that legislation from the Commission does not threaten the viability of European SMEs.”