Thailand Tobacco Monopoly Controls Plans to Increase Market Share

The public owned Thailand Tobacco Monopoly (TTM) is still the main giant buyer of tobacco produced locally. The agency acquired about 21,970 tonnes of leaf in 2010, 36% of the expected 60,500 tonnes of leaf grown in the previous year. TTM also imported 3,350 tonnes of leaf in order to produce 28.9 billion cigarettes for home sale and export. Domestic brands occupy more than 75% share of the tobacco market, with the balance imported smoking brands. However, according to estimates, cigarette sales in recent years have been dropping due to amendment to the excise tariff in 2009 that increased cigarette prices.

Also some smokers have switched to cheap cigarettes or even roll-your-own smokes. Anti-tobacco campaigns started by government officials and the private sector have also influenced sales volume. These changes have also forced the state enterprise to underline its main plans in order to ameliorate the performance and stay competitive in the quickly developing market.

According to TTM’s five-year plan, it promises to raise its market share by approximately 0.20% each year to 77% by 2015, with sales profit of about 60 billion baht for net income of 5 billion within the period. All 63 projects were directed on improvement of working efficiency and marketing, permit research and development to create qualitative products, and help more tobacco growers to pass the Good Agricultural Practice (GAP) criteria.

TTM received cabinet approbation in 2007 to construct a second tobacco manufacturing factory for 16.2 billion baht. It was decided to build the factory in more industrial estate as Rojana Industrial Park in Ayutthaya in order to efficiently monitor its environment. But, the last year’s significant inundation made the government officials quite nervous, and Chiang Mai was proposed as an alternative option. Besides TTM, there are also other suppliers that buy tobacco for export. Most of them provide tobacco to Philip Morris International, which bought tobacco from Thailand in 2010 worth more than one billion baht.

As well as other tobacco producers, PMI purchases all sorts of locally grown tobacco such as Virginia, Oriental and Burley that are mixed with its American blend, the most famous of blended tobacco products. Philip Morris Thailand closely cooperates with tobacco farmers in order to advertise its GAP standards. The Thailand subsidiary controls a 20% share of the domestic market.