[Intl-tobacco] Paraguay: BAT to set up tobacco plant in Paraguay (fwd)

[Robert Weissman]

Paraguay: BAT to set up tobacco plant in Paraguay
Source: NewsEdge, Tuesday, 7/4/00

The English tobacco company, British American Tobacco (BAT) will invest
US$7mil to build a plant in Paraguay designed to supply this market and
the Andean countries, Bolivia, Peru and Ecuador, according to sources in
the sector.

The business would employ more than 200 people directly and would produce
around 1.8 million cigarettes per year.

This decision is linked to tax incentives and low duties on capital
investment in the country.

In this way, Nobleza Piccardo, which belongs to BAT and produces brands
like Jockey Club, Camel and Parisiennes, will review its regional strategy
as, for 50 years, it has served the Paraguayan market exclusively through
importing its products from Argentina and other Latin American countries.

This decision could be related to the agreement made by the Government
last week to reduce the 'additional emergency tax' which was raised from
7% to 21%.

In exchange, the tobacco companies committed themselves to reaching a
level of tax collection to US$1.800mil and to stop exporting cigarettes to
neighbouring countries in order to prevent smuggling.

The smuggling trade market is estimated at US$260mil a year.

In Argentina, Nobleza Piccardo has a market share of 41.3%.

In January, when total taxes went up from 68% to 73%, Massalin
Particulares immediately raised the prices of its Marlboro, Parliament and
Benson brands.

However, Nobleza maintained its prices, and managed to raise its market
share by 0.6%.

The brands which benefited most were the most expensive: Camel (with 8% of
total sales) and Lucky (1%), which compete directly with Marlboro,
absolute leader of the market with a share of around 40%, and which went
up by 20 cents for the Box line.

Now Nobleza decided to follow suit and have just raised the price of their
Camel Box by 20 cents.