Philip Morris going to expand activity in Armenian cigarette market

Sargis Tsaghikyan:

Philip Morris going to expand activity in Armenian cigarette market

PanARMENIAN.Net - In 2010, Armenian government took some measures to regulate the cigarette market and determine approaches to local manufacturers and importers. Regional manager of Armenian representation of Philip Morris Management Services B. V., the major cigarette importer in Armenia, Mr. Sargis Tsaghikyan commented on the company's future plans in an interview with PanARMENIAN.Net.
What performance indicators did the Company have by the end of 2010? Does it manage to get the pre-crisis level of sales?
According Philip Morris Management Services B. V. Representative Office (PMA) is an affiliate of Philip Morris International Inc (PMI)3. With having strong and balanced brand portfolio in Armenia, presented in most price segments and consumer preference categories, we have responded to adult consumer needs. Our distribution partners provided high level of service to our customers. We are pleased with our business performance and will continue to work to grow our market share in Armenia.

How do you estimate the tobacco market in Armenia? What is the share of Philip Morris International in the Armenian market?
Armenia is a highly competitive and a very dynamic market. According to AC Nielsen September ‐ October 2010 retail audit, PMI brands’ share of market in Yerevan is 19.5%, the largest among international tobacco manufacturers.

How many brands of PMI cigarettes are imported to Armenia? Are there any plans to increase the given stock/volume? Which products of the Company enjoy popularity in Armenia?
Currently PMI portfolio in Armenian market consists of 9 brand families: Marlboro, Parliament, Virginia Slims, Muratti Ambassador, Assos Slims, Chesterfield, L&M, Bond Street and Red&White. L&M brand family is being the most sold among PMI brand portfolio.

Is the Armenian regulatory environment favorable for the tobacco market? How do the recent amendments to the RA Law On Excise Tax affect stiffening competition among the local and international manufacturers?
Armenia has a well-established legislative framework to regulate tobacco products and we are keen to work with state authorities and public health officials to agree on rules and regulations for the industry. It is important that regulation is comprehensive, evidence based, is applied to all tobacco products and all tobacco manufacturers and that adequate enforcement is in place. Such tobacco regulation can help achieve government’s public health objectives.

On October 21, 2010 the President of Armenia signed amendments to the Law on Excise Tax and the Law on Presumptive Tax for Tobacco Products which provide for annual gradual reduction of tax rate differences for imported and locally produced tobacco products as of 01.01.2011 and for full unbundling of presumptive tax for tobacco products as of 01.01.2014 thus establishing equal treatment for both locally produced and imported cigarettes.Philip Morris Management Services B.V. Representative office in Armenia welcomes recent tax changes, provided that they are implemented in due course without any further delays, and welcomes Armenian government initiatives to amend Tobacco Products Taxation to bring it in line with WTO and FTA requirements.

Does the Company consider the possibility of establishing a raw material base of its own in Armenia and manufacturing tobacco in the Armenian market?
Currently there is no such intention. We do not discuss our future plans to that end.

Nowadays more and more people are giving up smoking all over the world, and is this fact has been noticed by Philip Morris proceeding from its production volumes? In this regard what campaigns and programs have been conducted and implemented by the Company in Armenia, including smoking preventive measures?
PMI is the leading international tobacco company, with products sold in approximately 160 countries. In 2009, we held an estimated 15.4 percent share of the international cigarette market outside of the U.S., or 26.0% excluding the People's Republic of China and the U.S. There is no data on 2010 yet. For more information, see www.pmintl.com.

Cigarette smoking is addictive and causes serious diseases in smokers; we recognize that there is no such thing as a safe cigarette and support strong and effective tobacco regulation. We agree with public health authorities that cessation should be an integral focus of a comprehensive tobacco policy. We do not target non-smokers or underage, and our marketing activities are directed to adult smokers in order to encourage them to choose our brands instead of competitor's brands.

We believe that tobacco manufacturers can and should take action to prevent youth smoking. Tobacco company actions can range from supporting effective regulation to implementing their own youth smoking prevention programs. Since 1999 Philip Morris Management Services B.V. Representative office in Armenia has been implementing youth smoking prevention programs informing trade about legislative prohibition to sell cigarettes to minors and liability in case of law infringement. In 2010 the program covered 2,500 trade outlets.

Tell about the plans the Company has for 2011...
We are confident that as a Company we have a strong potential and we’ll continue to work to grow our market share in Armenia through further development in our brand portfolio, distribution system, investments in brand building and development of our employees.

Hripsime Hayrapetyan / PanARMENIAN News
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