Marlboro maker sets sights on Asia

Marlboro maker sets sights on Asia

Marlboro maker Philip Morris said on Monday in Washington that its bid for a major Indonesian tobacco firm would give it vital local knowledge to expand in Asia -- including into the world's biggest cigarette market China.

The Altria Group, whose operating arm is Philip Morris International, said the US$5.2 billion it has offered to buy Sampoerna would earn it handsome rewards, both financially and in product share in heavy-smoking Indonesia.

"Our ambition is that together we become the market leader in Indonesia -- as well as growing Marlboro," Altria chief executive Louis Camilleri told reporters in a conference call.

"To participate fully in the Indonesian market you have to offer what the consumer wants," he said.

For Philip Morris, that means the ability to tap into Sampoerna's expertise in the production of clove or "kretek" cigarettes, which Camilleri said account for 92 percent of cigarettes sold in Indonesia.

"We believe that there are opportunities for kretek elsewhere than Indonesia," he said, noting that the country is a major tobacco exporter to China.

"We believe we can increase the consumption of kretek elsewhere."

In Indonesia, where 70 percent of men smoke and anti-tobacco laws are light, Camilleri said the Sampoerna investment would earn Philip Morris a "double-digit rate of return".

Asked about the health risks attached to the strong clove cigarettes, the Altria boss said: "We assured ourselves that they are not more or less dangerous than conventional cigarettes." -- AFP