Cigarette firm explains biz strategy

MANILA, Philippines - “We keep our costs low, while the competition has very high costs.”

This was how Oscar Barrientos, executive vice president and spokesman of Mighty Corp. (MC) explained why his company is able to offer cigarettes for as low a P1 per stick.

“We are satisfied with low profits while they (other brands) need very high profit,” Barrientos said, adding that having no foreign equity and no foreign brands, they do not remit any royalty to any foreign headquarters and do not maintain any high-salaried consultants.

According to Barrientos, MC is a small company as it has been since the 1940s. “We produce La Campanilla, Magkaibigan,  Campana Ringing Bell and other local brands which are totally and truly Filipino.”

Not a stranger in the low-priced cigarettes business, it was not hard for MC to solidify its base, enhance its core competencies and work out on its forecasts the migration of a big chunk of smokers who were faced with three choices: quit smoking, smoke less frequently or look for low-priced alternatives, the MC executive said.

On charges that MC may have committed fraud, Barrientos who is a retired judge said fraud is a serious offense and as such, it should be proven by complete evidence, adduced in an impartial investigation, conducted by a competent authority, with due regard to the due process requirement.

Imputing fraud against MC is not only unfair but highly libelous and damaging, he added.

On the competition claims that a manufacturer’s market volume research conducted by AC Nielsen showed that MC might have been selling cigarettes at a loss by as much as P4.47/pack or about 30 percent lower than the estimated break even price, Barrientos said this is baseless, speculative and malicious.

“We’re not selling at a loss; we’re gaining. Why should we continue our business at a loss? Assuming we’re losing, why should the competition be worried? Actually, we’re making reasonable profit. Our concept of gain is not only measured in peso signs; having been patronized by our loyal customers in the low-priced market, we feel duty-bound to keep our price low owing to our company’s nationalistic anchor,” Barrientos pointed out.

Besides, he said, MC’s margin of profit is certainly different from that of the competition. This is so, because being a local brand, it does not pay royalties abroad, it is not required branch profit remittance, it had no foreign consultants and it is purely Filipino.