Gudang Garam loses market share

Gudang Garam loses market share

The Jakarta Post, Jakarta

Months after the much-hyped acquisition of cigarette maker PT HM
Sampoerna by a U.S. tobacco company, the landscape of the
domestic cigarette industry has begun to shift.

PT Gudang Garam, the country's largest cigarette maker, facing
an increasing challenge from Sampoerna, has seen its market share
drop from 34 percent last year to 31 percent as of September this
year, a public expose by the company revealed on Tuesday.

In the first nine months of the year, Gudang Garam's sales
volume fell by 5 percent to 48 billion sticks.

Last year, total domestic cigarette consumption was more than
200 billion sticks.

PT Djarum, the country's second largest cigarette maker, also
experienced a slight decline in market share from 18.8 percent
last year to 18.7 percent as of September this year.

Of the big three tobacco companies, only Sampoerna -- owned by
U.S. tobacco giant Philip Morris International since May -- saw
its share of the market increase, from 21 percent last year to
21.7 percent as of September this year.

The company enjoyed significant growth in the non-hand rolled
clove cigarette market, with its share shooting up to 16.6
percent from 14.5 percent last year.

According to statistics from the Indonesian Cigarette
Producers Association, total clove cigarette production in the
first nine months of 2005 grew to 154.4 million sticks from 147.1
million sticks last year.

Production is expected to grow by at least 8.6 percent in
2005.

Aside from tougher competition, Gudang Garam also blamed
falling purchasing power for its drop in market share.

Still, the company did book a 6.85 percent increase in net
profit in the first nine months of the year, to Rp 1.62 trillion
from Rp 1.52 trillion in the same period last year. In the third
quarter alone, its profit was Rp 552.2 billion.

The company's sales as of September totaled Rp 19.4 trillion,
a slight increase from Rp 18.88 trillion last year.

Gudang Garam hopes to maintain its market share next year and
maximize its annual installed capacity of 120 million sticks.

The World Health Organization notes that global tobacco use is
continuing to expand, especially in developing countries where
about 84 percent of all smokers live.

Gudang Garam is controlled by the family of Rachman Halim, one
of the wealthiest families in the country.