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Migrating customers to premium class Cigarettes slowed down - expert
Wednesday, March 25, 2009 (GST)
From the Managing Director of affiliated companies Philip Morris International in Russia Leo McLoughlin on the outcome of the Russian units in 2008, and state regulation of the tobacco industry correspondent interviewed said Maxim Nabokina.
- What is the volume of production units in 2008 and IV quarter of what the dynamics compared to 2007?
- 2008 year was very successful for our company. Sales volume in Russia grew by almost 8% and the ratio of brand portfolio has improved due to the transition of adult consumers of Cigarettes to more expensive brands.
We ended the year with a record market share for the entire period of our activity in Russia, which, according to independent market research agency "Business Analytics (BA) was more than 27%.
Despite the financial crisis, our company in the fourth quarter saw growth in shipments of almost 5% and market share - by 0,5% compared with the previous year and by 0.2% compared with the third quarter of 2008.
- How much of investment in 2008 and where they were sent?
- To date, investment affiliates of Philip Morris International in Russia more than 900 million dollars. The company continues to invest in innovation and improvement processes to support the growth of our business.
Only in 2008, more than 40 million dollars were invested in the factory Philip Morris Izhora, which included installation of new equipment for the launch of Cigarettes "L & M KS SS", "Marlboro Gold Edge" and "Parliament Reserve".
- What is your outlook for the market in 2009?
- Our view on the prospects for 2009 can be characterized as cautiously-optimistic. Our confidence is based on the demonstrated rate of business development and the power of our brands. However, the year just started, hence my caution in the estimates.
- No Do you plan to increase the production of cheaper Cigarettes, the demand for experts who predicted increase due to reduced income?
- During 2008, we observed a tendency of transition to adult consumers of more expensive Cigarettes. By the end of last year, the rate of switching to more expensive brands began to slow. This is what we see today.
To date, our two Russian factories producing 100% of the products supplied to the Russian market, which makes us independent of imports.
Thus, we can quickly respond to changes in consumer preferences and set competitive prices.
- How do you think, should develop legislation to regulate the tobacco industry in Russia?
- Those countries that join the Framework Convention on Tobacco Control, showing a trend of significant strengthening of the regulation. In particular, the appearance of the package. For example, significantly increases the size of warning markings on the boxes, there are also restrictions on tobacco advertising and smoking in public places.
We support the efforts of the Russian government to establish a transparent management of a comprehensive, based on the principles of harm reduction smoking. Regulation - an important aspect of any industry, but the tobacco companies, it is of paramount importance.
- How can you comment on the increased inspection of tobacco companies?
- I can only say that all the affiliated companies Philip Morris International in Russia operate in full accordance with Russian legislation. All our products are fully consistent with existing standards.
- Do you have a new tehreglament on tobacco, which come into effect at year's end, acceptable that you think it needs to be changed?
- This bill reflects the basic provisions of World Health Organization Framework Convention on Tobacco Control. In particular, the paper significantly reduces the maximum levels of tar and nicotine regulates new inscription warning the dangers of smoking (the standards adopted in the EU), and introduces for Cigarettes with the filter requirement is to minimize the content of carbon monoxide. It should be noted the uncertainty of individual provisions of the law, due to a number of reference standards that have no direct effect.