Philip Morris’ Twin Strategies Keep It Smokin’ Hot
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As the regulatory environment becomes more stringent in the West, Philip Morris International (NYSE:PM) is aiming to diversify its strategy based on the region it operates in. In advanced economies, tobacco companies have accepted the fact that cigarette consumption will decrease and are left with no option but to raise the prices periodically to make up for the declining volumes. In addition, the tobacco companies are pushing for smokeless tobacco products which are generally perceived to be less harmful than cigarettes.
On the other hand, lax regulations and rising disposable incomes in developing and emerging economies present a tremendous opportunity for the company to increase the cigarette volumes by predatory pricing, or cutting prices to grab market share. Philip Morris International competes with British America Tobacco (AMEX:BTI) and Imperial Tobacco Group (LSE:IMT) in its various geographical segments.
