Sampoerna launches regular cigarettes

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)