The tobacco industry has become a significant sector in Hungary, partly thanks to the Hungarian family-owned Continental Tobacco Zrt. The group’s products are not only known on the Hungarian market, but are now available in more than 30 countries.
Tobacco processing has begun in the new preparation hall of Continental Tobacco Zrt.’s tobacco factory in Sátoraljaújhely, in the North-Eastern part of Hungary, marking another milestone in the company’s nearly HUF 10 billion (EUR 24 million) investment, the company told MTI on Monday. The company started the investment at the beginning of last year, which involves the construction of a three-storey plant hall with a total floor area of 1,800 square metres per floor, and modern machinery.
Once fully completed, the factory’s tobacco cut-to-size capacity will be increased by around 25 percent and the new machinery will enable significantly more modern tobacco production than before, further enhancing the competitiveness of the Continental Tobacco Group.
The development will also help the company to create additional jobs in the region.
The Continental Tobacco Group is an independent, Hungarian family-owned private company that combines several tobacco companies operating in Europe and currently employs around 700 people. According to publicly available company data, Continental Tobacco last year generated sales of HUF 56.414 billion (EUR 138 million) and closed with a profit of HUF 6.354 billion (EUR 15 million).
Although the group is a prominent player in the Hungarian tobacco industry, the sector is facing problems, as Balázs Győrffy, president of the National Chamber of Agriculture, and Sándor Kenyeres, president of the National Association of Hungarian Tobacco Producers, discussed in a podcast earlier.
While around five thousand people were growing tobacco in Hungary when the country joined the EU in 2004, this number has now fallen to around 600.
Sándor Kenyeres said that the sector is ageing, young people do not see their future in tobacco growing, which means that the tradition of tobacco farming, which used to be passed down from father to son, has disappeared. At the same time however, there is a demand for Hungarian tobacco, and the factories would buy much larger quantities than at present from domestic producers.
However, the decline of the sector is not unique to Hungary: producers all over Europe are facing similar problems. The reason is that EU tobacco has to compete with Chinese, African and Brazilian tobacco, which can be produced with less costs due to cheap labour.
As pointed out by the experts, Hungary provides funding for the tobacco sector from the national budget, as it is also of major social policy importance. Many disadvantaged people can work in the tobacco sector, and production is mainly carried out in areas where other agricultural crops would not be profitable.
Featured photo: MTI/Balázs Attila
