Philip Morris international brands have 16.4% share of Yerevan cigarette market

Question: What is the market share of Philip Morris International and what are the estimations of Armenian cigarette market?

Answer: PMI is the world’s leading tobacco company, its share of the world cigarette market (outside the USA) being 15.6%. Since 1995, PMI has been represented in Armenia by Philip Morris Management Services BV. The PMI plants in Saint Petersburg and in Kharkov are primary suppliers of cigarettes to Armenia.
Armenian cigarette market is estimated around 5 billion cigarette sticks. Philip Morris International brands have 16.4% share of Yerevan cigarette market (AC Nielsen March-April 2009).

Question: How many PMI brands are imported to Armenia? Do you plan to enlarge this portfolio/volume (which brands and what are their peculiarities)? 

Answer: Currently PMI product portfolio consists of ten brand families, including Marlboro, Parliament, Virginia Slims, Muratti, Assos, Chesterfield, L&M, Bond Street, Red & White, Next, with 46 brand variants. PMI supplies Armenian market through its importer/distributor VIDIS Distribution LLC. About 300 brand variants are supplied to the Armenian market, with PMI’s share being 46 variants. PMI supplies products of a wide price range to the Armenian market, with such brand families as Marlboro, Parliament, Virginia being the most expensive. Last August such brand families as Marlboro Filter Plus, Virginia Uno, Marlboro Gold Edge and Parliament Reserve enlarged the PMI portfolio. Among the mean-price brand variants are L&M, Muratti, Chesterfield, and the lowest-price brand variants include Bond Street and Red&White. In 2009 Q1 and Q2 PMI already enlarged its portfolio with the following brand variants: Marlboro Gold Edge; Parliament Reserve; Muratti Ambassador Superslims; L&M Superslims; Bond Street Superslims; Red & White Superslims.

All of the new brands are in slims format as we are responding to the main consumer demand/preferences which is slims format cigarettes. Moreover, some of those brand variants (Marlboro Gold Edge, Parliament Reserve, L&M) are in most progressive format - King Size Superslims.

Question: What are company’s sales in Armenia?

Answer: The Armenian cigarette market is estimated around 5-5.5 billion cigarette sticks, through last year this figure was 5.71billion cigarette sticks. This January-April the sales totaled 1.48bln cigarette sticks in Armenia – 22.4% less than the targeted number. This January-April we registered a decrease of 11.2% in sales as compared with the corresponding period last year.

Question: Which company brand is most popular in Armenia?

Answer: L&M brand family has the highest 4.5% market share of Yerevan cigarette market among PMI brand portfolio (AC Nielsen March-April 2009).

Question: How does the company evaluate the competition in Armenian tobacco market?

Answer: Armenia is a highly competitive market. It is also a very dynamic market. The brand loyalty is fairly low, compared to some more mature markets. Adult smokers are constantly trying new products. The Company strives to be the leader in every market it operates in. Market dynamics depend on the consumers’ choice. We constantly research adult smokers to find out their preferences and launch products in line with their expectations. E.g, last year we have launched four new brand variants. The expansion mostly concerned the segment of super slims cigarettes.

We will continue to compete for market share increase in Armenia through further investments into brand building, our distribution system development and professional growth of the company’s employees.  The stability and predictability of the business environment, dialogue between the industry and the state authorities and a level playing field are important conditions for business success. We believe PMI is very well-positioned to successfully operate in the Armenian tobacco market in the long term. 

Question: Does the company consider the possibility to set up its own source of raw materials in Armenia and establish cigarette production in Armenian market?

Answer: No, the company does not yet have any plans like this in Armenia.

Question: How does the company evaluate regulations of import, sale and advertising of tobacco products in Armenia?

Answer: One of our important long-term strategies is the pursuit of comprehensive regulation and fiscal policies governing the manufacture, marketing, sale and use of tobacco products. Our support of regulations that are aligned with the public health objective of reducing harm caused by tobacco products does not, however, mean that we support each and every proposal. We do not support regulations that would deprive us of our ability to compete fairly with other manufacturers or deprive adult consumers of the ability to buy and use tobacco products.

Armenia has a well-established legislative framework which regulates how cigarette brands are imported, sold and advertised to adult smokers. One issue of concern to us is a proposal for a total advertising ban. We support clear and enforceable regulation of tobacco marketing and advertising, including bans on certain types of advertising, such as television, radio and outdoor. We believe a total ban on all communication with adult consumers is disproportionate and excessive. Our ability to communicate with adult consumers in venues where they buy cigarettes, constitutes a basic platform for market competition.
PMI accepts cigarettes cause harm to health and cancer. So we consider clear market regulation and control necessary. However, producers must be able to inform consumers of their products, while consumers must get full information on venues where they buy cigarettes.

Question: What programs does the company implement in Armenia, including ones on smoking prevention?

Answer: The company hold regular social actions. In addition, we have conducted issues communication campaign in Armenia since 2006, during which our employees distributed PMI information leaflets for consumers at retail outlets, reminding people about the dangers of smoking and serious issues related to it. The company has made 105mln AMD charitable contributions over the last five years.

Question: What was the impact of the global financial and economic crisis on the company’s activities in Armenia?
 
Answer: No company in the world has immunity to crises. However, it is noteworthy that, as part of Philip Morris International, our company is in a relatively favorable situation as compared with others. I think that cigarette sales will decrease as a result of crisis, and many consumers will start buying less expensive brand varieties. However, represented in wide price range, the company does not yet feel the crisis. P.T. –0--