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Sunday, 4 September 2022

Holy smokes

Shifting producer dynamics are shaking up the normally staid cigarette industry on this early September morning.

Eastern Company reportedly plans to raise prices of key brands by as much as EGP 1.50-2.00 per pack today, according to Bloomberg Asharq. The maker of Cleopatra and other popular brands last hiked prices barely six months ago, when it moved to charge EGP 0.50 to EGP 1.00 more per pack at the koushk.

Blame rising raw material prices and the FX situation, Eastern chief Hany Aman told the news service. The company has been hit with supply chain snags and rising production costs.

Retailers had expected Eastern to go for even larger price hikes, and Ibrahim Embaby, the head of the Federation of Egyptian Industries’ cigarettes division, said he believes the price of foreign tobacco brands will rise in the coming months.

MEANWHILE- Eastern appears set to wind down production of Philip Morris brands Marlboro, Merit and L&M, according to a report in Al Mal. The newspaper reports that United Tobacco Company, a unit of Philip Morris, will begin making the international brands after Eastern finishes its current stock of raw materials.

Background: United was the only bidder last year for the nation’s second license to make tobacco products. Eastern said in May of this year that it was acquiring a 24% stake in United as provided for under the terms of the tender for the license, which effectively ended EGX-listed Eastern’s absolute monopoly on the manufacturing of cigarettes. Eastern will have two seats on United’s board. Aman told El Hekaya last night (El Hekaya | watch, runtime: 6:11) that no “sovereign entity” owns a stake in United.

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