14.9 Philip Morris (Australia) Limited

In March 1986 Philip Morris (Australia) became a wholly-owned subsidiary of Philip Morris Companies Inc, its parent company based in New York, and was delisted as a public company in Australia. The listing of the parent company in November 1992 on the Australian Stock Exchange has been interpreted as a signal of intended acquisition and expansion in the Asia Pacific region. Long term aims may be growth in the food business, or involvement in any market rationalisation taking place among the tobacco manufacturers.(14)

Philip Morris Inc is the largest international cigarette company in the world, and since its takeover of Kraft Foods in November 1988, one of the world's largest packaged consumer products companies, ranking only behind Nestle and Unilever.(50) Philip Morris Inc also owns the Miller Brewing Company, and in 1990 acquired Jacobs Suchard AG (a Swiss-based coffee and confectionery company, best known in Australia for its Toblerone chocolate range). To compensate for declining cigarette markets in many developed countries, Philip Morris Inc has aggressively manoeuvred itself into growth regions such as Eastern Europe and China.(51)

Philip Morris is the manufacturer of Marlboro cigarettes, which it states is 'the world's best-selling consumer packaged product'.(52) Marlboro apparently holds more than twice the worldwide market share of its nearest competitor. Although Philip Morris is currently holding the highest market share in Australia, it is not doing so through popularity of Marlboro, which only holds around 1.5% of the market (see Table 14.4 below). Philip Morris's best selling Australian brands are Longbeach and Peter Jackson, the second and third most popular brands on the Australian market (see Tables 14.4 and 14.5 below).

Philip Morris has its Australian headquarters in Moorabbin, a south-eastern suburb of Melbourne, Victoria. The Australian branch is relatively autonomous, directing day-to-day decisions for its region.(53) Kraft Foods operates separately from its own offices and relates directly back to international headquarters rather than to the Australian offices of Philip Morris(52); however the companies do interrelate insomuch as the 1993 financial report from Philip Morris (Australia) notes that it has made a short term loan of $91 million to Kraft Foods Limited (Australia).(54)

Financial reporting from Philip Morris' Australian operations are not reported separately in Philip Morris Inc's annual reports. Like the other tobacco companies operating in Australia, Philip Morris suffered a decline in profits due to price discounting during the early 1990s.(55) However the most recent financial statements of the company note that profitability has increased due to price increases, internal productivity gains, growth in export business and a net increase in interest income.(54) The report also states that although Philip Morris has marginally increased market share, overall cigarette industry sales volume has declined.

Companies in the Group(54)

Philip Morris (Australia) Limited
Philip Morris Limited
Statewide Tobacco Services Limited
GPM Cigarette Distributors (Australia) Limited
Regle Proprietary Limited
Tenacity Proprietary Limited
Philip Morris (New Zealand) Limited
Marlboro Tobacco Company Limited

Operations

Tobacco brands(35)

Roll-your-own and pipe tobaccos (locally manufactured): Black & White Imported brand: Purple Pipe.

Cigars (imported): Danneman, La Aurora, La Paz, Ritmeester, Royal Dutch, Willem.

Foodstuffs

Vegemite, Tang, cheeses including Kraft Cheddar, Singles, Coon, Cracker Barrel and Philadelphia Cream Cheese, chocolate brands Toblerone and Milka, and Maxwell House coffee. Kraft also makes a wide variety of salad oils and mayonnaises, pastes, dips and spreads for bread.

Alcohol