Crisis fails to snuff out smoking in Indonesia

JAKARTA (JP): The country's worst economic crisis of the last 30 years is not impacting on high local demand for cigarettes, with many smokers opting to switch to cheaper brands, a cigarette company executive said on Tuesday.

David Tjokro, brand manager of PT Philip Morris Services Indonesia, producer of international brand Marlboro, said the cigarette consumption dropped less than 1 percent last year.

This was despite the sharp fall in the rupiah's value, the major cause of the crisis, leading to a sharp increase in cigarette prices, particularly international brands.

He believed demand in Indonesia, the world's fifth largest cigarette consumer, would remain high this year at 202 billion cigarettes, almost the same as last year.

David said cigarette consumption in the country grew steadily by 2 percent to 3 percent annually prior to the crisis.

"Smokers keep smoking despite the crisis. They have merely changed to smoking cheaper cigarettes following the soaring price of cigarettes due the rupiah's depreciation against the dollar," David said at a ceremony honoring media which have devoted coverage to Marlboro-sponsored sporting activities.

He said prices soared in the crisis because cigarette makers imported a large portion of their raw materials.

Philip Morris Indonesia, the local subsidiary of the New-York based tobacco giant, imports more than 50 percent of its raw materials, including paper and tobacco, for its factory in Malang, East Java, he said.

David said clove cigarettes still dominated the market, accounting for 89 percent of total sales last year. The remainder of the market is non-clove cigarettes, mostly international brands.

But non-clove cigarettes are likely to increase their market share to 13 percent this year because some of them are cheaper than clove cigarettes, David said.

The non-clove cigarette market is dominated by Ardath, manufactured by PT British American Tobacco, a subsidiary of Britain's BAT, and Kansas, produced by the Indonesian unit of Britain's Rothmans, he added.

Both brands sell for about Rp 2,000 (22 U.S. cents) a pack, compared to clove cigarettes which cost about Rp 3,000 a pack.

David said Marlboro, currently priced at Rp 6,000 a pack, was the best selling international brand on the local market, accounting for between 8 percent and 9 percent of the local non- clove cigarette market.

He refused to reveal annual production figures or Marlboro sales on the domestic market. (jsk)