The European tobacco industry stands at a crossroads. On the one hand, it continues to provide governments with a stable and predictable revenue stream—second only to income tax in Germany, and accounting for up to 5 per cent of annual budgets in countries such as Romania and Poland. On the other, the industry faces mounting political exclusion, regulatory mistrust, and a growing push for prohibitionist approaches that risk undermining both innovation and consumer choice.
Author: Szilárd Szélpál
In a recent conversation with Philip Hansen of Japan Tobacco International (JTI), the picture that emerged was one of paradox: governments are happy to collect billions in tobacco excise, yet reluctant to engage the industry in shaping policy. Hansen argues this amounts to “taxation without representation,” a dynamic that undermines evidence-based regulation and fuels suspicion among citizens. At the heart of this debate lies a fundamental question: should adult consumers be free to make informed choices about nicotine use, or should public health objectives justify restricting access to less harmful alternatives such as heated tobacco, vaping, and nicotine pouches? Sweden provides a striking case study. With smoking prevalence already below 5 per cent—the lowest in Europe—its harm-reduction approach has proven more effective than outright prohibition. A combination of education and proportionate policy, rather than punitive taxation, has accelerated this shift.
Yet in Brussels, the conversation often leans in the opposite direction. The European Commission has been accused of relying on consultancy groups with explicit anti-tobacco agendas to evaluate legislation, raising concerns about impartiality and transparency. Meanwhile, some policymakers have equated alternative products with traditional cigarettes, a stance Hansen dismisses as “alternative facts” that risk stifling innovation.
Innovation, in fact, has been a defining feature of the sector over the past decade. Tobacco companies are among the leading filers of patents in Europe, pouring billions into research and product development. Hansen describes the industry as a “reluctant innovator but an eager regulator,” compelled by the weight of compliance to reinvent itself constantly. He argues that regulation and innovation should function like “dancing partners”—aligned rather than antagonistic.
The implications extend beyond tobacco. Europe’s determination to become a “regulatory superpower” has, critics contend, left it trailing in emerging industries such as artificial intelligence and platform economies. By contrast, China and the United States have often allowed innovation to outpace regulation, positioning themselves as leaders in global competition. If the EU continues to prioritize control over competitiveness, Hansen warns, it risks missing the next wave of economic opportunity.
For JTI, the path forward lies in a dual commitment: reducing the harm associated with smoking while investing in community development, environmental sustainability, and consumer choice. The company has pledged carbon neutrality in its operations by 2030 and supports educational initiatives to prevent child labour in tobacco farming communities. Recognition as a global top employer underscores its effort to balance commercial interest with wider social responsibility.
Ultimately, the industry’s future in Europe will hinge on whether policymakers choose dialogue over exclusion. Hansen’s liberal stance is clear: no government can predict consumer behaviour indefinitely, and attempts to do so often backfire. The process of creative destruction, he insists, applies as much to tobacco as it does to technology—new products will replace old ones, driven not by decree but by consumer choice.
As the EU seeks to define its economic and social model for the coming decades, the question remains whether tobacco policy will serve as a case study in pragmatic innovation, or as another instance of overregulation curbing Europe’s competitive edge.
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Cover photo credit: Gemini
Szilárd Szélpál served as an environmental expert in the European Parliament from 2014, where he utilized his expertise to influence policy-making and promote sustainable practices across Europe. In addition to his environmental work, Szilárd has a deep understanding of foreign affairs, offering strategic advice and contributing to the development of policy initiatives in this field.
