10.3.2.2 Philip Morris (Australia) Limited
Philip Morris (Australia) Limited is the Australian subsidiary of Philip Morris International, based in Lausanne, Switzerland. Philip Morris Australia was established in 1954, the first overseas affiliate to be set up by Philip Morris International to produce Philip Morris brands outside the US. 24 Philip Morris Australia's head office relocated to South Wharf, Melbourne in 2016 after the 2014 closure of Philip Morris Australia’s manufacturing plant in Moorabbin, Victoria. Cigarette production was then transferred to Philip Morris International’s Korean affiliate. 24 Philip Morris Australia employed 554 people across Australia in 2017. 7 Philip Morris International groups Australia as part of its East Asia and Australia Region—one of six global divisions. This region also covers Japan, South Korea, China, Malaysia and Singapore (New Zealand and the Pacific Islands are not listed), and is headquartered in Hong Kong. 25
Since its delisting as a public company in 1992, Philip Morris Australia has had no formal requirements to publicly lodge annual reports or financial statements specifying results from its Australian operations. No Australia-specific information is reported in Philip Morris International's annual reports, although the following statement regarding the cigarette shipment volumes in the Asian Region (which included Australia at that time) was made in the 2015 annual report: ‘Our cigarette shipment volume of 288.1 billion units decreased by 4.4%, due primarily to: the unfavorable impact of an adjustment in distributor inventories in Japan; lower total market and share in Australia, mainly reflecting the impact of excise tax-driven price increases and competitive pricing in the deep discount segment, Japan and Pakistan, and lower share in Indonesia.’ 26 The 2018 annual report highlights both unfavourable sales volumes in Australia, but also favourable pricing ‘variance’ in the Australian market. 25
Limited information is also available through the annual listings compiled by IBISWorld. Annual financial data for 2013–17 are presented in Table 10.3.4. In 2017, Philip Morris Australia was ranked 558 out of Australia's top enterprises on the basis of total revenue, down from 459 in 2015. 7, 20
† Figures unadjusted for inflation
Sources: IBISWorld Pty Ltd. IBISWorld Company Report: Philip Morris (Australia) Limited. Melbourne: Australia: IBISWorld Pty Ltd, 2018; IBISWorld Pty Ltd. IBISWorld Company Report: Philip Morris (Australia) Limited. Melbourne: Australia: IBISWorld Pty Ltd, 2018.
On the basis of market share, Philip Morris Australia is the second largest tobacco company in Australia with 23% of the tobacco wholesaling market, stable since 2015. 7, 20 In 2017, Philip Morris had the third largest volume share of the Australian cigarette market (28.1%)—overtaken for the first time by Imperial Tobacco—and second largest share of the cigar market (32.2%). 1 Philip Morris Australia's major brands include Alpine, Bond Street, Longbeach, Marlboro, and Peter Jackson.
10.3.2.3 Imperial Tobacco Australia Limited
Imperial Tobacco Australia Limited is the smallest and most recently formed of the major tobacco companies operating within Australia. Imperial Tobacco Australia was established to coincide with the merger of WD & HO Wills Holdings Limited and Rothmans Holdings Limited as British American Tobacco Australia. At the time of the proposed merger, concerns were raised about the likelihood for reduction in competition in the Australian marketplace, thereby potentially causing a breach of Section 50 of the Trade Practices Act (Cth) 1974. The Australian Competition and Consumer Commission agreed to permit the merger to proceed, on condition that another tobacco company enter the Australian market. The UK-based Imperial Tobacco Group—now Imperial Brands Plc—was invited to enter the Australian market and in September 1999, Imperial Tobacco Australia commenced operations. 27, 28 As part of the agreement allowing the formation of British American Tobacco Australia, Imperial Tobacco Australia was sold a portfolio of cigarettes, roll-your-own tobacco and cigarette paper trademarks previously owned by Rothmans or WD & HO Wills for the sum of $325 million. The purchase gave Imperial Tobacco Australia an opening market share of 17.1%. 27
The Imperial Tobacco Group does not make available specific information about its Australian business in annual reports. Imperial Tobacco Group segments its international business by strategy not geography, and Australia is categorised in the ‘Returns Market–North’ division, along with the Belgium, Germany, Netherlands, Poland, and United Kingdom. The focus of Returns Markets is ‘sustainable profit performance while actively managing…strong share positions’. 29
The head office for Imperial Tobacco Australia is located in the suburb of Baulkham Hills, north-west of Sydney. Regional offices operate in Melbourne, Adelaide, Perth and Brisbane. In 2017, Imperial Tobacco Australia employed 327 personnel. 8 Imperial Tobacco Australia has never owned a manufacturing plant in Australia: prior to its manufacturing facility closure in 2015, BATA produced a range of brands for Imperial Tobacco under license. For the year 2017, Imperial Tobacco Australia was rated 502 out of Australia's top enterprises on the basis of total revenue, up from 541 in 2015. 8, 30 See Table 10.3.6 for financial information for 2014–18.
† Figures unadjusted for inflation
Sources: IBISWorld Pty Ltd. IBISWorld Company Report: Imperial Tobacco Australia Limited - Balance Date: September 2018. Melbourne: Australia: IBISWorld Pty Ltd, 2018.
Prior to the closure of Philip Morris Australia’s and BATA’s manufacturing facilities in 2014 and 2015, respectively, Imperial Tobacco had more than 40% of the tobacco product wholesaling market share, but this declined to less than 13% in 2015—behind BATA and Philip Morris Australia. 4 In 2017, Imperial Tobacco Australia’s share of the wholesale tobacco market was 12.4%. 5 Imperial Tobacco Australia dominates the roll-your-own tobacco category, where it had a 67% volume share in 2017—up slightly from 65% in 2016. For the first time, Imperial Tobacco’s share of the Australia cigarette market by volume overtook that of Philip Morris (30.4% compared to 28.1%). 8 Imperial’s key Australian cigarette brands include Peter Stuyvesant, Horizon, and JPS, the latter of which became Australia’s leading brand in 2015 29 —see Table 10.3.7.
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( Last updated June 2022)
References
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19. NSW Retail Tobacco Traders' Association. Retail Forum: What's new? Australian Retail Tobacconist, 2014; 81:4.
20. Euromonitor International. Tobacco in Australia—2015 and 2016. London: Euromonitor International, 2017. Available from: http://www.euromonitor.com/tobacco.
>21. Philip Morris International. Country overview: Australia. 2019. Last update: Viewed 18/04/2019. Available from: http://www.pmi.com/marketpages/pages/market_en_au.aspx.
22. IBISWorld Pty Ltd. IBISWorld Company Report: Philip Morris (Australia) Limited. Melbourne: Australia: IBISWorld Pty Ltd, 2018.
23. Philip Morris International. Annual Report 2018. 2019. Available from: http://media.corporate-ir.net/media_files/IROL/14/146476/PMI-FINALFILES/index.html.
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25. Imperial Tobacco Australia. Joint Select Committee on Tobacco Smoking in New South Wales. Inquiry into tobacco smoking in New South Wales. Baulkhan Hills, New South Wales: Imperial Tobacco Australia, 2006. Available from: http://www.parliament.nsw.gov.au/prod/parlment/committee.nsf/0/468F5DB9395A7382CA257162000F4502.
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27. Imperial Brands PLC. Annual report and accounts 2015. Bristol, United Kingdom: Imperial Tobacco Group PLC, 2016.
28. IBISWorld Pty Ltd. IBISWorld Company Report: Imperial Tobacco Australia Limited - Balance Date: September 2018. Melbourne: Australia: IBISWorld Pty Ltd, 2018.
29. IBISWorld Pty Ltd. IBISWorld Company Report: Imperial Tobacco Australia Limited. Melbourne: Australia: IBISWorld Pty Ltd, 2015.