Tobacco maker Continental has spent HUF 1.2 billion to start production of cigarillos at its plant in Sátoraljaújhely (NE Hungary), Continental Dohányipari said.
Continental's Hungarian unit won a HUF 257 million grant in the framework of the New Széchenyi Plan for the investment.
Production of cigarillos was started in Hungary in the interest of retaining markets, the unit said. It explained that a recent European Union directive redefines cigarillos in the structure and rates of excise duty applied to manufactured tobacco.
The directive seeks uniform taxation of tobacco products such as cigarillos, which long enjoyed a lower tax rate than cigarettes.
Hungary, along with Germany, may postpone application of the new definition until January 1, 2015 "in view of the economic difficulties that immediate implementation could cause for the German and Hungarian operators concerned", according to the directive.