JTI Romania and Gallaher merger eyes second place on the cigarette market

Gallaher officials were not available for comment before the close of this edition.

According to the main companies operating in , 36 billion cigarettes were sold last year on the local market, for about €1.4 billion. The companies forecast that the market will increase to €1.7 billion in 2007.

The current market leader is British American Tobacco (BAT), with a 39.3 percent market share, followed by Philip Morris, with 31 percent, JTI Romania (22.4 percent) and Gallaher (4.6 percent). In terms of cigarettes sold, BAT is market leader with a 37.2 percent quota, followed by Philip Morris, with 29.5 percent, JTI, with 24 percent and Gallaher, with 5.5 percent.

Multinational cigarette producer JTI bought Gallaher this spring for €14.7 billion, an all-time record on the cigarette market. International economic analysts say the takeover could help JTI recover losses caused by lower sales in , and strengthen its position as third worldwide producer, after Philip Morris and BAT.

JTI Romania posted net sales worth RON 794 million (€220 million). Its best selling brands are Winston, Camel and Monte Carlo .

Gallaher, ranking fifth worldwide, has a production plant in Bucharest . Its best selling brands are Saint George, Ronson and LD. “The merger of the two companies will lead to “a fierce battle for second place in ,” BAT Romania Corporate & Regulatory Affairs Director Adrian Popa told Business Standard.

However, the portfolio of the two merging companies will include brands sold in Romania, brands which, “according to our latest February-March research make up 47% of total counterfeited products, bringing losses to the state budget of some €100 million in 2007 in VAT and excise taxes,” Popa added.

The average annual consumption in is 1,392 cigarettes per person, according to World Health Organization statistics. Bulgarians smoke twice as much, at 2,793 cigarettes per year, while Hungarians smoke an annual 2,152 cigarettes.