[Intl-tobacco] Philip Morris Ramps Up Cigarette Production In Russia (fwd)

[Robert Weissman]

Philip Morris Ramps Up Cigarette Production In Russia
by Kristina Shevory / 7095-974-8055 -0- 24/05/00 08-20G
Source: The Wall Street Journal Interactive Edition, Wednesday, 5/24/00

ST. PETERSBURG, Russia -- Tobacco giant Philip Morris (MO) expects to
produce locally more than 90% of its cigarettes sold in Russia within two
years, company spokesman Yuri Galibov said Tuesday.

Philip Morris intends to increase production in Russia as the company's
new $330 million factory, Philip Morris Izhora, attains full operating
capacity.

The plant, opened earlier this year in the Leningrad region outside St.  
Petersburg, will eventually produce 25 billion cigarettes a year, or 10%
of the total number of cigarettes produced in Russia. The plant currently
produces 5 billion cigarettes a year.

Philip Morris Izhora, the largest of the U.S. company's three Russian
factories, brings production of all Philip Morris brands, apart from
Parliament and Virginia Slims, to Russia, the company said.

"We expect to reduce imports of our mega-brands as our new factory comes
on line. We can't produce 100% of all our cigarettes in Russia, like
Parliament and Virginia Slims, since we don't have the specialized
equipment to make them," said Galibov.

"It's more cost-effective to import those cigarettes than to bring that
very specific equipment to Russia."

The plant is the company's first fully self-contained Russian factory with
operations ranging from tobacco processing to cigarette production.

Its smaller and older Leningrad factory, Philip Morris Neva, currently
makes cigarettes using processed tobacco provided by the company's
Krasnodar facility in southern Russia.

Philip Morris has invested more than $500 million in Russia to date,
making it one of the biggest private-sector investors in the country.


URL for this Article:  
http://interactive.wsj.com/archive/retrieve.cgi?id=DI-CO-20000524-001283.djml