The tobacco industry: the last breath
Rigid rules and anti-smoking campaigns advance are decreasing tobacco companies’ incomes in developed countries. Governments of China and India are intended to fence in regional companies from supplies of cigarettes from Western countries. Thus, Big Tobacco has several large markets that have growth potential and absence of control. That is why South-East Asia searches for the most hopeful companies.
Indonesia and the Philippines are in a cleft stick. Indonesia is one of the least adjusted markets and it is one of Asian countries which did not approve the World Health Organization’s contract on tobacco control. Cigarette advertising is widely used. One in four children aged 13-15 smokes.
10% of the Indonesian government’s incomes refer to raising and marketing of tobacco products. There are millions of people who work in this field. Roger Quarles, president of the International Tobacco Growers’ Association, underlines that one of the government’s essential purposes consists in that “those people have a job, even if it is at low education levels,” in some measure to escape social mess. Roger Quarles estimates that a restriction on the tobacco industry is very improbable in Indonesia.
The largest Western companies are disappearing. Indonesia’s Sampoerna was sold for $5 billion to Philip Morris International in 2005. Today Philip Morris International supervises 30% of the market. PMI reports that it is “optimistic” about its outlook in the region. In 2009, 85% stake in Bentoel was sold to British American Tobacco for nearly $500m. The two companies had commodity circulation in Indonesia last year, especially for Kretek clove cigarettes, which comprise 90% of the Indonesian market.
The growth in the Philippines is as well with light control. Philip Morris International is a big investor in the country. Last year it established a cooperation management enterprise with Fortune Tobacco, which produces cigarettes for Filipinos with low and middle revenues. Nowadays both companies have 90% of a $1.7 billion market, in what regional news media expressed a “kiss of death” to Filipinos.
Tobacco companies observe growth potential of women smokers. In South-East Asia, one in ten women and nearly 40-70% of men smoke. It is more than in Africa and Latin America. In 2009 the South-East Asia Tobacco Control Alliance conducted a research in seven countries. It revealed that smoking was increasing significantly among 14-15 aged girls in the Philippines, Vietnam, Indonesia and Malaysia. In Indonesia and the Philippines smokers buy cigarettes in small right-angled packs.
Countries which fight against poverty and joblessness can be forced to stop an industry that enables so much income and so many jobs. These countries, maybe, will realize soon the costs of health-care regarded to smoking, and the human suffering from tobacco-related disease.
- Philip Morris Earnings Preview
- Philip Morris Increased Its Market Share
- Indonesia – a paradise for tobacco companies and hell for people
- Philip Morris International, Leading Maker of Cigarettes
- Philip Morris Stays Neutral