Colombia: Tobacco market shaken after Philip Morris pullout

Philip Morris International announced earlier this month their intention to end its cigarette manufacturing operations in Colombia, attributing the decision to the increase in contraband in the country, coupled with a global trend away from tobacco products. The decision would directly affect more than 500 tobacco industry workers in the cities of Medellín, Barranquilla and Santander, represented by the National Union of Workers of the Tobacco Industry.

Philip Morris bought about 50% of the national production of tobacco, so its exit will impact 2,300 workers. It is not clear whether Philip Morris’s rivals such as the British American Tobacco (BAT) company will be able to buy the amount of product that PM consumed (1,850 hectares per year).

Colombia has lost about 7,000 hectares of tobacco cultivation as a result of changes in the industry, such as the increase in smuggling and production of illegal cigarettes, as well as changes in consumption habits worldwide. “This is an industry that has been in decline for a while and today is not very dynamic … I think that blond tobacco will soon disappear as a Colombian production,” said José Antonio Ocampo, former Minister of Agriculture and co-director of the Bank of the Republic.