It manufactures Mevius, Winston, Salem and Camel cigarettes in Malaysia has warned of a tough year ahead from Jan 2014 given an expected further decline in sales volume and higher marketing expenses amid inflationary pressures.
Following the latest excise duty hike of 14% in Oct 2013 which saw tobacco companies raising cigarette prices, the tobacco industry saw a more than 10% drop in sales volume in the fourth quarter of 2013 and this is likely to drop even further in 2014.
It will see further contractions in 2014 as more smokers switch to buying illicit cigarettes which accounted for 35% of the market. As such the tobacco industry outlook and the overall industry depends very much on the legal market size.
Inflationary pressures have also led consumers to cut back on their spending.
While the group is optimistic about its efforts to offer consumers more for their money with new product launches, it remains cautious as the size of the market and its development are not within its control.
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