Philip Morris International Hopes to Gain Profits from Asian Cigarette Market

Published on December 22nd, 2011 00:00

Philip Morris International (PMI), the world’s largest international tobacco company outside of the U.S. and China currently presented rather optimistic estimates of the world cigarette industry volume trends. PMI expects that within the following five years, the volumes of cigarette industry outside the U.S. will raise by 1.3% per each year, which is a better forecast in comparison to previous estimates.

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Philip Morris International is in competition with such leading tobacco companies as British American Tobacco, Japan Tobacco and Imperial Tobacco Group in various geographical segments. The most significant part of the world tobacco market volume increase will come from the developing Asian markets as China, Indonesia and Philippines. For instance the industry volume in Indonesia has been increasing with a Compound Annual Growth Rate (CAGR) of about 3-4%, along with the Philippines growing at 2%.

As about Europe, it is expected that cigarette sales will stabilize in the most powerful tobacco markets as Italy and France within the following years with a CAGR of about 0-1%. Among its international markets, PMI plans to have bigger market share profits in Japan, Vietnam, Indonesia, Philippines and South Korea. It hopes to end 2011 in Japan with a market share of about 28.5% expecting positive retention levels after consequences of earthquake and tsunami in Japan.

PMI already controls about 90% of the Philippines market share and its Korean shipment volumes have increased by 100% in 2006-2010 with a significant growth of 17% in 2010. With 30% market share in Indonesia and tie-up with Vietnam National Tobacco Corporation, a biggest part of PMI’s market share growth will undoubtedly come from Asia.

Tobacco market volume has been decreasing in probably all major markets as Japan, Australia and Western Europe with increasing health awareness among people about the dangerous health risks of tobacco use. Practically all state and local governments introduced taxes for smoking products, allocating money for public health needs. This trend will continue to raise cigarette prices and discourage people from smoking. The advised legislation as bans on smoking public places and compulsory plain packaging for cigarettes are also likely to affect cigarette sales. We have a corrected $75 price estimate for Philip Morris International, 10% ahead of the market price.

By Joanna Johnson, Staff Writer. Copyright © 2011 TobaccoPub.com. All rights reserved.

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