‘Made by UTC’ breaks into the Egyptian cigarette market – Markets & Companies – Business

The company had received a license from the government to set up a cigarette factory in the country in early 2022.

UTC succeeds Egypt-based Philip Morris Misr LLC, which was formed in 2013 as a licensee for PMI products in the Egyptian market.

Marlboro, PMI’s leading international cigarette brand, has been manufactured by the Eastern Company in Egypt since the 1980s.

Eastern Company CEO and Managing Director Hany Aman told Ahram Online that “his firm has acquired 24 percent of UTC in an EGP 100 billion deal.”

“The two companies are working together in an integrated manner,” added Aman.

“We have not been negatively impacted by UTC’s work in the marketplace. Our acquisition transaction in UTC compensates for the lack of actual PMI in the Egyptian market. PMI products are available in the local market under the Made by UTC label,” he emphasized.

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Eastern Company’s revenue increased six percent to EGP 67.9 billion in fiscal 2021-2022, up from EGP 63.8 billion in fiscal 2020-2021, he noted.

Upon completion of the acquisition agreement, Eastern Company filed a disclosure with the Egyptian Exchange (EGX) outlining the agreed rules for UTC manufacturing operations.

Pursuant to this disclosure, UTC is obligated to lease from Eastern Company the building and current production lines previously dedicated to the manufacture of Philip Morris products for a period of three years. Meanwhile, Eastern Company is committed to manufacturing Philip Morris products on the same production lines through the end of fiscal 2021/2022 in June 2022.

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In a post-transaction statement, PMI reiterated its full commitment to all existing contractual relationships with distributors and suppliers to ensure the availability of its products in Egypt. PMI added that it will continue to offer all of its products at the same prices with no changes to the packaging.

Philip Morris Misr LLC could not be reached for comment on the deal.

Both the Eastern Company and Phillip Morris Misr LLC have hiked their cigarette prices twice so far in 2022 due to increased production costs and the devaluation of the Egyptian pound against the US dollar.

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“Eastern Company is trying to absorb the increase in production costs caused by the recent increase in raw material costs and also supply chain disruptions amid the ongoing conflict in Europe,” Aman told Ahram Online.

Philip Morris products continue to be the leading high-end brand in Egypt, offering a wide range of products priced from EGP 28 to EGP 52 per pack.

According to the results of the first half of PMI 2022, the company’s shipment volume to Egypt recorded 10.2 billion units (9.9 billion cigarettes and 0.3 billion units of heated tobacco) in the first six months of 2022, claiming 22.5 percent of local market share.

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