Sampoerna launches regular cigarettes

JAKARTA (JP): Publicly listed cigarette producer PT Hanjaya Mandala Sampoerna Tbk launched on Thursday its first regular cigarettes which it produces under a licensing agreement with the Paris-based ST Dupont.

Sampoerna's managing director Sugiarta Gandasaputra said that the company, which previously produced and sold mainly clove- blended cigarettes (known locally as kretek cigarettes), expected to sell about three billion ST Dupont cigarettes this year.

"The Dupont sales will account for about 10 percent of the total market for regular cigarettes in the country this year," he told reporters after the launching of the new cigarette brand.

He said that Sampoerna was the first company in the world which had been licensed to produce and distribute cigarettes using the ST Dupont brand name.

ST Dupont, which was previously known only as a producer of men's accessories such as lighters, pens, leather goods, watches, and eyewear, entered into a cooperation agreement with Sampoerna in 1999 to produce cigarettes using its name.

Sudi also said that Sampoerna, the second largest cigarette producer in the country, would also export part of its Dupont cigarette production to Malaysia, Singapore, and Taiwan.

"We're optimistic we'll be able to compete with established cigarette brands," he said, adding that ST Dupont would compete in the same market segment as popular international brands such as Marlboro and Lucky Strike.

Sudi said that Sampoerna had invested about $5 million in building a new plant in Sidoarjo, East Java for ST Dupont production. He added that Sampoerna used Italian tobacco and Australian cigarette paper for the new cigarette brand.

At present, Sampoerna operates several cigarette plants in Malang, Surabaya, and Pasuruan, all in East Java. All the plants are used to produce both its hand-rolled and machine-rolled clove-blended cigarettes.

In addition, it operates factories in Malaysia, Myanmar, Vietnam, the Philippines and Brazil to produce its kretek brands in each of those countries.

Last year, Sampoerna's net profit fell 28 percent to Rp 1.02 trillion (US$97.1 billion) from Rp 1.41 trillion in the previous year due to foreign exchange losses and an increase in its tax burden.

Sampoerna said that its market share in the domestic cigarette market was 19.7 percent at the end of last year, compared to 13.9 percent at the end of 1999.(05)