The Swiss tobacco company Villiger will cease its cigar production in Waldshut-Tiengen, Baden-Württemberg, by the end of 2027. After 115 years, this move will result in the loss of approximately 40 of the current 190 jobs. Manufacturing operations will be relocated to Switzerland and Indonesia, while logistics and distribution will remain in Germany. The announcement was made in mid-October 2026, just before the German federal parliament (Bundestag) voted to drastically increase tobacco taxes. Cigars and cigarillos, in particular, will face significantly higher taxes in the future. However, it has not been confirmed whether the announced tax hike played a role in the decision regarding the site. The company cites changing market conditions and the consolidation of its production capacities as the reasons for the move.
Image: Shutterstock
Villiger Ends Cigar Production After 115 Years
Villiger has been manufacturing cigars and cigarillos at its Waldshut-Tiengen site since 1911. The company is now gradually relocating production to Pfeffikon, Switzerland, and Jember, Indonesia. Manufacturing operations in Germany are set to cease by the end of 2027. The group attributes this move to overlaps in products and production processes, as well as a changing market environment.
However, Villiger does not intend to abandon the German site entirely; packaging, labeling, logistics, and distribution for the European market will remain. Nevertheless, the company is cutting approximately 40 positions—about 21 percent of its current workforce. The reduction in staff is initially intended to be managed through natural attrition, retirements, and internal transfers, though the group has not ruled out compulsory redundancies.
Tobacco Tax to Rise Most Sharply for Cigars
On October 15, 2026, the Bundestag passed a comprehensive increase in the tobacco tax. The new tax rates are set to be phased in between 2027 and 2030. The impact will be particularly severe for cigars and cigarillos. According to calculations by the Federal Ministry of Finance, the average tax will rise from 1.98 cents per unit to 3.80 cents in 2027, with a further increase to 5.05 cents planned by 2030. The new rates for cigars and cigarillos are scheduled to take effect in March 2027.
On October 5, the Federal Association of the Cigar Industry warned the Bundestag of massive economic consequences. The association estimates that the tax reform could trigger price increases of 50 to 60 percent. It also fears a significant burden on manufacturers and specialized retailers—specifically affecting medium-sized enterprises that employ a total of approximately 1,600 workers covered by collective bargaining agreements. Higher retail prices could further reduce legal sales, which are already in decline.
Factory Closure Coincides with Tax Decision
While the timing is striking, it does not constitute proof of a direct causal link. Villiger announced the relocation of its production before the final Bundestag vote took place; however, the plans for a higher tobacco tax had been known for months. The Federal Government had already approved its draft legislation in July, allowing manufacturers to account for the anticipated impact on demand and sales planning well in advance.
A higher tobacco tax increases the cost of selling products on the German market. Consequently, relocating production abroad does not automatically eliminate this financial burden. For Villiger, however, a crucial factor may be how declining sales volumes affect the capacity utilization of individual plants. Smaller production sites often become less cost-efficient when unit volumes fall. The company has not yet disclosed whether such considerations influenced the decision regarding the Waldshut-Tiengen site.
Federal Government Expects Billions in Tobacco Tax Revenue
The federal government is pursuing two objectives with this tax increase. On one hand, higher prices are intended to reduce tobacco consumption and thereby limit health-related harm. On the other, the additional revenue is meant to ease the burden on the federal budget. According to the latest projections, the federal government expects to gain approximately 1.5 billion euros in additional revenue by 2027, with this annual figure projected to rise to around 4.46 billion euros by 2030. However, industry associations have warned of potential losses in sales and a shift in purchasing toward the black market.
For German cigar manufacturers, this creates an economic conflict of interest: the state anticipates rising tax receipts, while the industry fears declining sales volumes and job losses. The trade union NGG (Food, Beverages, and Catering Workers’ Union) has criticized the lack of an impact assessment regarding employment. At the company Villiger, for instance, around 40 industrial jobs are being eliminated, even as production continues abroad. While a direct causal link to the tax reform remains unproven, the case illustrates just how tangible the risks to employment have become for traditional manufacturing locations.
Author: Blackout News
Sources: Bild (17.10.26) – Reuters (16.10.26) – Südkurier (14.10.26) – Der Bundestag (05.10.26)