Egypt’s cigarette monopoly Eastern Tobacco Company (ETC) announced that it will raise the price of its local cigarette brands by 0.25 Egyptian pounds ($0.05) a pack. However, the price hike does not apply to ETC’s most popular brand, Cleopatra, whose sales contribute 60 percent of the company’s revenues.
The move aims to compensate for the company’s declining profitability, connected to the devaluation of the Egyptian currency over the past year. ETC was hard hit by the devaluation considering that 90 percent of its Cost of Goods Sold (COGS)—tobacco and various packaging—is imported.
Eastern Tobacco Chairman Mohamed Sadiq Ragab stated that up to 70 percent of the price rise would be passed on to tax authorities, therefore he does not expect a significant impact on the company’s bottom line. Prime Securities brokerage firm estimated that the price hike would yield between EP40-45 million in annual revenues for ETC.
Egyptians smoke five billion locally-made cigarettes each month, bringing in a total of four billion EP in revenue per annum for Eastern Tobacco, according to ETC marketing figures.
Egyptians consumed 1.68 billion Egyptian pounds ($362 million) worth of cigarettes from July 2001 to March 2002, EP 95 million more than figures from the same period in the previous year. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
