According to Ahram Online, United Tobacco Company (UTC) has started producing cigarettes in the Egyptian market, putting an end to the decades-long monopoly of state-owned Eastern Company.
The Tobacco Reporter archive is a collection of past articles and reports related to the tobacco industry.
In 2022, UTC received government approval to establish a cigarette factory. The company is jointly owned by PMI and Eastern Co., with the latter acquiring a 24% stake in the company.
Hany Aman, the CEO of Eastern Co., emphasized that the presence of UTC has not had any negative impact on his company.
We addressed the lack of PMI in the Egyptian market through the acquisition of UTC. The PMI products are being sold in the local market under the label of 'UTC Manufacture'," he emphasized.
According to the agreement, UTC is obligated to lease the existing production line that was previously allocated to Eastern Co. for manufacturing PMI products for a period of three years. At the same time, Eastern Co. is obligated to produce PMI products on the same production line before June 2022.
PMI reiterates its commitment to all existing contractual relationships with traders and suppliers to ensure the supply of its products in Egypt. The company further added that it will continue to offer all its products at the same price without changing the packaging.
In the 2021-2022 fiscal year, Eastern Co.'s revenue increased by 6% to reach EGP 67.9 billion (approximately $3.5 billion). Due to an increase in production costs and depreciation of the Egyptian pound against the dollar, Eastern Co. and PMI have both raised cigarette prices twice so far in 2022.
Eastern Company is attempting to absorb the increased production costs resulting from recent rises in raw material costs and supply chain disruptions due to ongoing conflicts in Europe, explained Aman to Ahram Online.
In the first half of 2022, PMI (Philip Morris International) shipped 9.9 billion cigarettes and 300 million heated tobacco products in Egypt, capturing 22.5% of the local market.
Since the 1980s, Eastern Co. has been licensed to manufacture PMI's best-selling Marlboro brand in Egypt.
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