Philip Morris, La Suerte end licensing agreement

Philip Morris Philippines, Inc. (PMPh) and La Suerte Cigar and Cigarette Co. have mutually agreed to terminate their licensing agreement when it expires on Dec. 31 this year, according to PMPh managing director George Farah.

PMPh cigarette brands Marlboro and Philip Morris have been manufactured and distributed under license by La Suerte in the Philippines since 1955.

PMPh is taking full control of its business here in the country, according to Farah.

La Suerte is owned by the Telengtan brothers.

PMPh had been trying to negotiate with La Suerte to continue with the licensing agreement by entering into a joint venture in which La Suerte would be given a minority shareholding in addition to compensation for having built up the Marlboro and Philip Morris brands.

PMPh is now looking for another sales and distribution company.

In the meantime, PMPh will start manufacturing its flagship brand Marlboro and other cigarette products in its new state-of-the-art plant in Sto. Tomas, Batangas beginning Jan. 1, 2003.

The PMPh plant is located in a 25-hectare compound inside the Lopez-owned First Philippine Industrial Park. PMPh invested $300 million for its new plant.

PMPh had tried to register its investment with the Board of Investments (BOI) to be able to avail of fiscal incentives.

However its investment was not deemed eligible for incentives since its production is not intended for export.

PMPh’s new plant aims to export only 30 percent of its production with the bulk intended for the domestic market.

The new plant projects to manufacture 30 to 40 billion sticks of cigarette annually. – Marianne Go