[Intl-tobacco] Philip Morris to Raise Cigarette Production in Russia by 65% (fwd)

[Robert Weissman]

Philip Morris to Raise Cigarette Production in Russia by 65%
by John Varoli
Source: Bloomberg News, Wednesday, 2/16/00

St. Petersburg, Russia, Feb. 16 (Bloomberg) -- Philip Morris Cos., the
world's largest tobacco company, said it plans to boost production of
cigarettes in Russia by 65 percent this year and stop importing them to
the country by the end of 2001.

The New York-based company, which produced 20 billion cigarettes in Russia
last year and imported another 3 billion, will step up output at its new
$330 million factory to meet growing demand.

     ``The size . . . of the Russian market makes it necessary to produce
in the country,'' said Andre Calanzopoulos, Philip Morris's president for
Eastern Europe. ``Our goal is that by the end of 2001, all our cigarettes
for Russia will be produced locally.''

Cigarette makers, such as Philip Morris and RJ Reynolds Tobacco Holdings
Inc., are moving more production of international brands into Russia to
save import and labor costs in a country where about 250 billion
cigarettes are consumed a year.

Since 1992, foreign tobacco manufacturers have invested more than $1
billion in the country. Philip Morris is also completing a $170 million
investment in a plant in Russia's Krasnodar region.

Philip Morris, which makes popular brands such as Marlboro, Virginia
Slims, and L&M, said its share of the Russian tobacco market is about 16
percent.

Other major international companies investing in the region include Ford
Motor Co., which is building a $150 million factory, road equipment maker
Caterpillar Inc., which will soon open a $50 million plant, and
International Paper Co., which has a $35 million plant in the region