Competing cigarette companies in RP combined
Posted on February 24th, 2010
Philip Morris International, Inc. (PMPI) joined forces with Philippine a cigarette company forming one big corporation that will control about 90 percent of the country’s lucrative cigarette market. The US-based tobacco giant formed a new company with local rival Fortune Tobacco Corp. (FTC), which is owned by Chinese-Filipino tycoon Lucio Tan.
The new company, to be called PMFTC, will be chaired by Tan, while the day to day operations will be managed by Philip Morris. The two companies, PMPI and FTC, did not disclose the monetary value of the deal. Each party will hold an equal interest in the new business.
Philip Morris said, “The Philippines is one of the largest global cigarette markets with an estimated 2009 volume of 85 billion cigarettes. FTC is one of the five largest privately-owned cigarette companies in the world.” President of Philip Morris Asia, Matteo Pellegrini, sees the transaction as “tremendous strategic fit” for their business that will cement the company’s leadership in South East Asia.
FTC competes mainly in the low-end market. Its leading brands are Fortune and Champion, and holds about 60 percent of the Philippine market. Philip Morris, on the other hand, competes with its premium priced brands, including Marlboro which is the world’s No. 1 selling cigarette.
The current employees of Fortune Tobacco numbers around 4,000, while of Philip Morris are around 1,000. There was no announcement if there will be job losses because of the new venture.
Meanwhile, the World Health Organization (WHO) recognizes smoking as the single biggest preventable cause of deaths worldwide.
According to studies made by WHO, as of 2002, there are 60 percent of men and 40 percent of adolescent boys who smoke in the Philippines. The number of smoking-related deaths in the country reached to about 20,000 every year. Also, WHO said that nearly 20 percent of income in the households of Filipino smokers is drained because of tobacco use.
