PMI Expanding Philippines Product Portfolio

Source from:  Manila Bulletin  07/04/2014

Tobacco giant Philip Morris International (PMI) plans to further expand its foothold in the Philippines through the introduction of a new product, but the tax authorities said such a plan has yet get any approval from the government.

Matteo Lorenzo Pellegrini, PMI Asia region president, announced the plan of introducing the Marlboro Black Menthol 100s in the local market, which is a high-tiered cigarette brand.

"Going forward, we will continue to complement and further strengthen our portfolio through the introduction of innovative offerings relevant to adult smokers," Pellegrini said.

"We will also leverage a superb nation-wide distribution network that will continue to enable efficient trade coverage and effective penetration of our brands across the country," he added.

Internal Revenue Commissioner Kim S. Jacinto-Henares, meanwhile, said that she has yet seen the application of PMI''s local unit PMFTC Incorporation for the new Marlboro product.

"Before they sell this new Marlboro here in the Philippines, you should ask them if they''ve registered this with the Bureau of Internal Revenue (BIR)," Jacinto-Henares said.

She, however, said that PMI will have no problem with the tax bureau as long as its local unit pays the appropriate taxes for the new Marlboro.

Pellegrini earlier said PMI''s shipment volume to the Philippines grew by 6.1 percent in the first five-months of the year to 28 billion units from 26.4 billion despite the "absence of a level playing field."

"Notwithstanding the ongoing illicit trade issue, we continue to be the undisputed market leader and we are well positioned for future growth, leveraging our outstanding portfolio with which we hold a clear leadership position in all price segments," Pellegrini said.

The PMI Asia chief said key drivers of sales volume growth were Marlboro and other brands, such as Fortune, which increased by 10.3 percent and 5 percent, respectively.

But despite PMI''s improving sales figure, Pellegrini insisted there are strong indications based on official tax statistics and Nielsen data that, in 2013, its local rival declared only about half of its sales volume for tax purposes.

"This continues to prevent us from being able to operate on a level playing field, impacting both our market share and profitability," the PMI official said, noting some local cigarette brands still retail below the level of current excise tax and value-added tax combined.

Pellegri, however, is optimistic that the introduction of tax stamps this month would help address the issue on illicit trade. "With continuous pressure, we remain optimistic that the Philippines will gradually return to a more stable and fair business environment."

"We will continue to encourage the authorities to act decisively and we are hopeful the fiscal tax stamp implementation expected in July will help address this," he added. Enditem