Philip Morris Strengthens its Presence in Emerging Markets

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Imperial Tobacco, Philip Morris International and British American Tobacco are top cigarette makers in the world. In the last quarter of 2013, the implementation of anti-tobacco laws which restrict cigarette usage along with sagging demand for cigarettes because of economic crisis reduced profits for major tobacco makers.

However, in these conditions British American Tobacco managed to stay ahead of both of its major competitors.

Regardless of firm pricing, the latest quarter was difficult for Philip Morris, famous Marlboro maker. Company’s revenue and clear profit lowered by 2.5% and 7.3%, respectively. This occured because of lowering of cigarette volumes in major markets.

The lowering of shipment volumes are noted in Europe because of excise-tax increase and  European economy being in recession.

Philip Morris managed to lose 5.7 % in its revenue in the increasing Asian market caused by higher costs which made company incur losses. For example, in Philippines there was increased tobacco tax by 60% and this made Philip Morris suffer a loss because of its large market share in the country.

In spite of this, Philip Morris has made a several important moves in order to improve its presence in the developing markets. Thus it bought back 20% of its stake held by Grupo Carso in its Mexican business. So today Philip Morris owns 100% of its Mexican business. Besides this, the company’s sales were increased in Japan. It established its brand in the country since Japan’s tobacco’s manufacturing stopped as a result of a seismic disaster and tsunami.

Besides this it bought Fortune Tobacco in the Philippines, which will help to build its stronghold in the growing Asian and developing markets. These moves will offset the lower demand in Europe.

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