On Wednesday, tobacco manufacturer Philip Morris International officially opened a new factory in Lviv region, in which it has invested $30 million.
“The first line is already in operation. The second line is almost completed and will start operating in June… In total, five lines will be installed, 10 billion cigarettes will be produced, which will fully meet the needs of the local market of Ukraine,” said Philip Morris Ukraine (PMU) CEO Maxim Barabash at the opening of the factory.
He emphasized that the focus of the production is to cover the market demand for cigarettes.
According to Barabash, there are no plans to expand production for export or manufacture other products.
According to PMU, 250 jobs will be created at the factory. By now, the company already employs about 100 people relocated from the Kharkiv factory, which was “mothballed” on February 24, 2024, the day of the Russian invasion, and another 150 people are planned to be relocated by the end of the year.
“My dream for the future after the victory is that we have two factories. One would produce cigarettes, and the other would be in Kharkiv, working on new products that would be relevant and relevant at the time when this comes true,” Barabash summarized.
According to him, this year Philip Morris celebrates 30 years of operation in Ukraine. During this time, the company has invested about $750 million in the Ukrainian economy and is one of the largest taxpayers.
Philip Morris was spun off from Altria in 2008 and is one of the world’s largest tobacco manufacturers. The company’s revenue for 2023 increased by 10.7% compared to 2022 to $35.2 billion, and for the first quarter of 2024 – by 9.7% to $8.79 billion. The report states that Ukraine accounts for approximately 2% of total sales in physical terms and 1% in monetary terms.
In 2022, PMI reduced shipments to the Ukrainian market by 30.1% to 11.07 billion cigarettes and tobacco sticks due to the war, but in 2023 it managed to increase shipments of finished products by 8.4%, including 14.9% in the fourth quarter. Last October, the company announced that it had recovered its share of the Ukrainian market to 24% after it fell to 14% from 28.5% in the first months after Russia’s invasion.
Prior to the launch of the new factory, PMU was forced to import products from eight PMI factories outside the country and a temporary partnership with another international manufacturer in Ukraine.
In addition to cigarettes, PMI develops and manufactures smokeless products, such as systems for electrically heating tobacco, POD systems containing nicotine, and nicotine products for oral administration. Sales of smokeless products accounted for 39% of PMI’s total net revenue in the first quarter of 2024.
The international company Unilever has started construction of a new factory in Bila Tserkva, Kyiv region. Today a commemorative capsule was laid at the site of the future enterprise in the industrial park “Bila Tserkva”, the Head of Kyiv Regional State Administration Ruslan Kravchenko said on his Facebook page on Friday.
It is also reported that the amount of investment in the factory is € 20 million. Almost 100 new jobs will be created at the enterprise. The factory will produce personal care products, shampoos and shower gels, the goods will be mainly oriented for the Ukrainian market. Potentially, the enterprise will produce products for other markets in Europe.
The report notes that the total area of the site for the development is 4.2 hectares. The production capacity of the enterprise is more than 5000 tons per year. The construction of the factory is planned to be completed at the end of 2024. Erection will take place taking into account the highest environmental standards. There will be comfortable working conditions, office space is designed to meet the needs of immobile groups. A ground mobile shelter has already been arranged for safe work, and in time an underground shelter will also be built.
“The construction site of the new factory in the industrial park was not chosen by chance – there are all necessary communications and road infrastructure. The development of industrial parks supports the restoration of industry in Kyivshchyna during Russia’s war against Ukraine. The opening of new production facilities contributes to the income and well-being of local communities, increases tax revenues and stimulates the development of small and medium-sized enterprises in the region”, – said Ruslan Kravchenko.
Ruslan Kravchenko thanked the CEO of Unilever Ukraine Vasyl Bovdilov and the founder of UFuture, which includes the industrial park “Bila Tserkva”, Vasyl Khmelnitsky for the example, which “should be followed by other investors and joint efforts to develop the economic potential of Kyiv region”.
Earlier it was reported that Unilever Plc will allocate EUR20 mln for the construction of a factory in the Kiev region to produce personal care products, shampoos and shower gels under the brands Dove, Axe, TRESemmé and Clear,
Kormotech, Ukraine’s largest manufacturer of cat and dog food, will implement a number of investment projects in Ukraine and Lithuania, where it has production facilities, as part of the development of its production capacities in 2023-2024, said the company’s beneficiary Rostyslav Vovk during a Business Breakfast with Forbes Ukraine on Wednesday.
According to him, Kormotech completed a 25% expansion of the company’s factory in Lithuania in the second quarter of 2023. In addition, in the third quarter, it will put into operation a new line at a factory in Lviv region for the production of wet fodder.
“EUR8m was invested in it (the new line at the factory in Lviv region), which allowed us to expand the plant’s production capacity by 65%. If earlier its capacity was 17,000 tons (of fodder – IF-U) per year, now it will be 27,000 tons,” he said.
In addition, according to the information of the company owner, at the end of 2023 Kormotech will start construction of a new factory in Lithuania, in which it will invest more than EUR60 mln.
“This factory will have the same capacity as our two factories in Ukraine. It will be plus 40 thousand tons. We should reach the launch of the first line in the middle of 2025,” Vovk emphasized.
Philip Morris International (PMI) will invest more than $30 million to launch a new factory in the Lviv region, the company’s press service said Tuesday.
According to the report, preparatory work for the construction of the future factory will begin in July 2023. The company expects production to start in the first quarter of 2024. The new factory will employ more than 250 people, mostly in manufacturing. Employment will primarily be offered to employees of the Philip Morris plant in Kharkiv.
“By opening this new factory, we are once again demonstrating our support for Ukraine. This investment represents our dedication as a long-term economic partner of the country. The new production facility at the location proposed by UkraineInvest will create jobs, meet the demand of the Ukrainian market with quality products and support the Ukrainian economy in difficult times for the country,” said Maxim Barabash, CEO of Philip Morris Ukraine.
PMI European Region President Massimo Andolina expressed confidence that the new company will provide a reliable supply of products and employment opportunities for Ukrainians. “This investment is a powerful signal to other international investors – confidence in the Ukrainian economy, the Ukrainian people and the future of Ukraine,” he summarized.
“Philip Morris Ukraine” works in the Ukrainian market since 1994 and during this time has invested more than $700 million in the Ukrainian economy. In 2022, the company paid 25.3 billion UAH of taxes in Ukraine.
As reported in May, PMI said that at the present time considers it unsafe to resume production at its factory near Kharkiv (Dokuchaevskoe village, Kharkiv district, Kharkiv region), which was suspended in February 2022, and intends to run an alternative production in the country.
After the factory was suspended, PMI supplied products to Ukraine from the company’s eight plants abroad for some time. But then, in search of a solution that would allow the production of Ukrainian product in Ukraine, an agreement was signed to produce the company’s products at Imperial Tobacco’s facilities in Kiev, where they are now produced.
Since the start of a full-scale war in Ukraine, the company has ensured a steady supply of its products in Ukraine through imports from PMI’s 8 factories and a temporary partnership with another manufacturer in Ukraine.
According to PMI, the tobacco market in Ukraine in 2022 decreased by 30% and in the first quarter of 2023 by 26.7% due to the departure of some consumers from Ukraine, as well as the loss of some territories that are under occupation. In addition, the company noted the growth of the shadow tobacco market.
In March 2022, in response to Russia’s military invasion of Ukraine, PMI said it was suspending planned investments in Russia, including new product launches, investments in innovation, and commercial and manufacturing activities. In addition, the company has intensified plans to reduce production operations in Russia amid supply chain disruptions and changing regulations. PMI later announced that its board of directors and management were considering opportunities to exit its business in Russia.
Representatives of the State Tax Service (STS), the Security Service and the Prosecutor General’s Office of Ukraine completed a two-month search at the United Tobacco (United Tobacco LLC, Zheltye Vody, Dnipropetrovsk oblast), which resulted in the suspension of its “semi-legal” activities.
About the work stoppage of the enterprise, only during the full-scale Russian aggression did not pay to the state budget of Ukraine more than 5 billion UAH of excise tax, said the head of the parliamentary committee on finance, tax and customs policy Daniel Getmantsev.
“A huge semi-legal tobacco factory finally ceased to exist. Since 2015, the factory became a symbol of Ukrainian corruption, saturating the market with excise-free tobacco under the tacit consent of all law enforcement officers who were blind to the work of the superpowered enterprise. The SBU search of the factory lasted more than two months, during which the crooks tried to delay the actions of investigators and “cut” using their usual tools,” wrote the head of the Committee in his Telegram-channel.
According to Getmantsev, seven ultra-modern cigarette production lines were arrested and dismantled at the factory.
“Two more, which the thieves brought into Ukraine, but did not have time to install, will be found and seized in the near future,” he added.
As reported, earlier Getmantsev said that law enforcement officers have been searching the United Tobacco factory, which is suspected of illegal production of tobacco products, since September. Law enforcers have already identified suspects of the crime and assessed the scale of illegal activities.
United Tobacco has had previous conflicts with law enforcement agencies: in August 2021 officers of the State Fiscal Service (SFS, after last year’s reforms – Bureau of Economic Security) conducted a search at the factory on the case of illegal production of counterfeit cigarettes, but their work was blocked by a group of unidentified persons. The investigators’ entry to the factory was blocked by heavy machinery, a mass gathering of “sports people” and local residents.
In turn, United Tobacco accused the officers of the State Financial Service of exceeding their authority, blocking the work of the enterprise and causing injury to employees.
According to the State Tax Service, during January-August 2021 the officers seized almost 800 thousand packs of tobacco products worth about 13 million UAH, made under the United Tobacco brand without excise tax marks. Factory’s products were repeatedly seized during searches by tax police of warehouses and places of sale of counterfeit.
According to a tobacco market research institute “Kantar Ukraine”, the share of illicit tobacco products in the Ukrainian market in August 2022 increased by 5 percentage points (p.p.) compared with the annual average of 2021 – to 21.9% from 16.9%, the volume of the shadow market was the highest since the independence of Ukraine.
The Institute specified that 56% of the tobacco products illegally sold in 2022 as export or Duty Free products have the mark of production of Vinnikivska Tobacco Factory (Vinniki, Lviv region) and marked as not intended for sale in Ukraine. The share of unidentified producers was 24% (in 2021 – 23%), United Tobacco LLC (Zheltye Vody, Dnepropetrovsk oblast) – 19% (in 2021 – 15%).
TK-Style garment factory (Chernihiv), which is part of the group of companies Textile Contact, early June this year plans to complete the shipment of almost 10,000 jackets (7,000 for men and 2,900 for women) to the mounted police of Germany, the founder of the Textile Contact Group Oleksandr Sokolovsky has said.
“Now, if you meet mounted policemen in Germany, you can ask them to say hello to Ukraine! In December 2020, our TK-Style sewing factory managed to receive a very difficult order for sewing jackets for the German Mounted Police, and from the middle of March 2021 the team factories began to actively sew them off,” Sokolovsky wrote on his Facebook page.
According to him, each unit of the product is under the strictest control. Jackets are multi-piece, with complex technological processing and with a large variety of accessories.
“Since the order with an increased requirement for quality and manufacturing accuracy, during the entire time while it is being sewn, the customer’s representatives have been at the factory,” Sokolovsky said.
At the same time, he expressed the hope that “we will come in handy for our Ministry of Internal Affairs someday.”
The sewing factory TK-Style specializes in sewing outerwear, shoulder and waist garments, and employs more than 150 people.
Textile Contact, one of the largest trade and production groups on the Ukrainian light industry market, was founded in 1995.
