PMFTC market share down to 79.3% in Jan

MANILA, Philippines - Philip Morris Fortune Tobacco Corp. (PMFTC), the joint venture firm between American Tobacco giant and taipan Lucio Tan, found its massive market share eroded by cheaper products amid a steep excise tax hike implemented in January last year.

Following the tax hike, PMFTC raised prices of its Marlboro and Fortune brands by around 60 percent and 70 percent, respectively.

As a result,  US tobacco firm Philip Morris (PMI) recorded a 26.2 percent decline in cigarette shipments to the Philippines to  68.5 billion units (equivalent to 79.3 percent of the total Philippine tobacco sector’s output of 86.3 billion units).

Thus, PMFTC ended 2013 with a market share of 79.3 percent or 11.4 points lower than the previous year, largely due to down-trading to competitors’ brands.

Marlboro’s market share dropped 4.2 points to 16.7 percent while Fortune saw its market share decreasing by 17.8 points to 31.6 percent.

The local cigarette industry saw a 15.6 percent drop in sales volume last year.

The Philippines is one of the key markets for Philip Morris as it contributed 22 percent  to the company’s shipments to Asia in 2012.

PMFTC noted the downgrading by tobacco consumers following the approval of the sin tax bill which resulted in higher taxes and cigarette prices.

To remain competitive in the business, PMFTC had sought the government’s approval to launch new Marlboro products with net retail selling prices of below P11.50 per pack. This was aimed at boosting its volumes by an additional 8.9 billion sticks this year, which in turn, can help the government collect more revenues from the industry.