Price Cuts in Malaysia

[Robert Weissman <rob@essential.org>]

Malaysian Star
Friday, April 23, 1999

 Tobacco firms cut prices as
 sales dip

 By Jane Ritikos 

 KUALA LUMPUR: All major cigarette companies in the country have
 reduced prices following a price cut for Marlboro. 

 Philip Morris, R.J. Reynolds Tobacco Company, Malaysian Tobacco
 Company and Rothmans of Pall Mall (M) Sdn Bhd have reduced prices
 for small and medium packs by between 10 sen and 30 sen. 

 However, prices for 20-stick packs remain unchanged. 

 The decision was seen as a move to maintain market share for the
 companies' more popular brands following a drop in total sales as a result
 of the economic downturn. 

 Even Rothmans, which recently said it would assess the situation before
 making a decision, climbed on the bandwagon on Monday. 

 The company lowered prices for the seven-stick and 14-stick packs of
 its Dunhill and Peter Stuyvesant brand. 

 Both brands are now sold at RM3 for the 14-stick pack (down by
 10sen) and RM1.50 for a pack of seven (down by 20 sen). 

 An industry analyst said the companies could afford to reposition prices
 as the small and medium packs were more expensive, on a per-stick
 basis, than a pack of 20. 

 "This is just a matter of repositioning price and is a wise move for the
 industry. I guess you could say the industry wants to standardise prices. 

 "It's also possibly to maintain their market share for the seven-stick and
 14-stick packs, following the move by Marlboro," he said. 

 R.J. Reynolds last week reduced the price for its Salem and Mild Seven
 brand, but only for the 14-sticks pack. The new price is RM3, down
 from RM3.10. 

 Its corporate affairs director Sulaiman Hassan said the decision to reduce
 the price was for comparative positioning. 

 The company, however, maintained prices for its Winston and More
 brands because these were already cheaper brands, he said. 

 "This is not the first time we are doing this as we reduced the price for
 Salem cigarettes a few years ago," he said. 

 Sulaiman also said the industry was affected by the economic downturn,
 with a decline in sales of between 5% and 15%. 

 He also said smuggled cigarettes, which were sold at about RM2 per
 pack, had also affected the industry. 

 On Tuesday, Malaysian Tobacco Company came up with a new retail
 price for its Benson & Hedges Special Filter brand. 

 A six-stick pack now costs RM1.30, down by 30 sen, and the price of a
 14-stick pack is reduced by 10 sen to RM3. 

 Its consumer and regulatory affairs department director Sharifah Rozita
 Syed Sulaiman said the reduction was to ensure the brand remained
 competitive in the market place. 

 However, prices are maintained for its Kent, Pall Mall and 555 brands.