US: Philip Morris Vs. Altria: Diverse Market Or Product Range?

Source from:  Tobacco World  12/21/2012

Philip Morris International and Altria are two of the bigger players by market capitalization in the USA tobacco industry. Until a spin-off in March 2008, Philip Morris International made a part of Altria Group. After a split like Tefis. Both companies are focusing on cigarettes selling diversification. While PM focuses geographical selling diversification in more then 200 countries, Altria focuses on product diversification by selling smokeless tobacco. After our comparative analysis we would be focusing on market share and market size for this moment.

Market Share:

Altria is saying that smokeless products and cigarettes together represent 85% of Altria's stock price and in both segments company holds nearly 50% of market share in the USA. Brand loyalty of consumers in segments is reducing the elasticity of the demand price, which means lower impact of price hike of tobacco. More than this, since hikes of industry wide, one company should overcome market share. We expect Altria to continue to keep its market share in the USA of smokeless tobacco and cigarettes.
 
Philip Morris International mentioned that he has shown a great performance on Japanese markets, and there is a huge potential for firms to grow in Asia.
 
We expect the market share of Philip Morris to increase to 35% in the region, over the Trefis forecast period, with major gains in South Korea, Indonesia and potentially Japan. In European markets, the company has suffered a setback where due to the recessionary conditions there has been a shift towards cheaper brands. Also the growth of illicit trading could potentially lead to a decline in Philip Morris's market share in the region.
 
We expect that Philip Morris market will increase till 35% in the region, over the Trefis forecast with a lot of gains in South Korea, Japan and Indonesia. In European markets, the company has suffered
 
Market Size:
 
Altria holds a handsome market in USA. This means in comparison lower potential of top line grown in Altria. More than this due health consciousness increasing, restrictive marketing rules and legislative controls and restrictive rules of marketing, the volumes is seen for decline in the USA. Philip Morris International has an increasing market in Asia due to more relaxed regulations and growing volumes in markets of the region. Below is a forecast snapshot for volumes of cigarettes in Asia:
 
We feel that Altria would depend upon the performance of its smokeless products and wine as the cigarettes in USA. Is expected to shrink in size over the times. The introduction of electronic cigarettes in its range that could be an opportunity for Altria in its diverse offering.
 
For Philip Morris, will be a way for manages to capture the market of share in Asia that is going to the key of firm's performance. Markets from Asia are grown with time, as the health consciousness is increasing and stricter legislative norms as well, like in the USA. Enditem