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Local cigarette industry shrinks 15.6% in 2013.

Cigarette manufacturing giant Philip Morris International Inc. (PMI) said that its shipment volume in the Philippines declined by more than a quarter last year due to higher excise tax and consumers' shift to cheaper brands.

In its full-year 2013 financial report released yesterday, PMI disclosed that the decline in total cigarette output of its local-unit PMFTC Incorporated was much faster compared with the drop in the country's industry cigarette volume last year.

PMI said that the country's cigarette industry fell 15.6 percent in 2013, while PMFTC's output dropped by a hefty 26.2 percent.

The company estimated that the industry produced 86.3 billion cigarette units last year. Of that total, PMFTC cornered 68.5 billion units, equivalent to 79.3 percent of the total tobacco sector.

"The total industry cigarette volume decreased by 15.6 percent to an estimated 86.3 billion units in 2013, primarily reflecting the unfavorable impact of the disruptive excise tax increase in January 2013 and a surge in the prevalence of domestic non-duty paid products," PMI said.

While PMFTC maintains its market leadership, PMI noted that the company's market share decreased by 11.4 percentage points due to down-trading to competitors' brands.

PMI said PMFTC's main-brand Marlboro's market share decreased by 4.2 percentage points to 16.7 percent, while share of Fortune fell by 17.8 percentage points to 31.6 percent, but the decline was partly offset by gains from its other local brands.

"In the fourth quarter of 2013, the total estimated industry cigarette volume of 25 billion units decreased by 8.9 percent, reflecting a partial, but insufficient, improvement in declared tax-paid volume by PMI's main local competitor as well as government tax enforcement," PMI said.


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Title Annotation:Business News
Publication:Manila Bulletin
Date:Feb 7, 2014
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