March's earthquake and tsunami in Japan offered up an opportunity for Marlboro maker Philip Morris International.
Japan Tobacco Inc., the world's No. 3 tobacco maker, suspended shipments of cigarettes within the country because of disruptions in supply. It planned to halt shipments of all tobacco brands, including the popular Camel and Winston, from March 30 to April 10.
That helped brands sold by the world's biggest nongovernment cigarette maker, Philip Morris International Inc. It was able to minimize supply disruptions because all of its cigarettes for sale in Japan are produced outside the country and shipments at ports were being unloaded normally. A small number of its third-party distribution centers were closed because of damage.
The company's ability to keep its supply chain moving allowed it to sell brands like Marlboro cigarettes to customers who normally bought other brands.
Complicating the Japanese market for all tobacco companies is a 40 percent tax hike on cigarettes that went into effect in October last year.
In a conference call with analysts on Thursday regarding Philip Morris International's first-quarter earnings, Chief Financial Officer Hermann Waldemer discussed its business in Japan.
QUESTION: Are you seeing the events in Japan as a potential to grow and sustain market share in the country?
RESPONSE: Japan, of course, in terms of spending overall already before any of that happening was one of our focus markets. ... Our shares are developing very, very nicely. However, really, I think the Japanese situation with the country in trouble will lead to a different average behavior of a consumer. I believe that the retention levels probably will be lower than they would be in another country. Some of them, of course, we will be able to retain, I would think. To what extent, that today is just impossible to say.
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