AC Nielsen Study–A Lot of Crap?

Bulacan Based and Filipino owned and controlled cigarette and tobacco manufacturing corporation, Mighty Corporation, has intently avoided a direct competition with the country’s biggest tobacco company, Philip Morris Fortune Tobacco Corp. (PMFTC).  

The Wongchuking Family owned company firmly believes that the Philippine market is big enough to accommodate all foreign and local cigarette makers, provided that they know their respective niches.

AC Nielsen Study–A Lot of Crap?

As per their executive vice president and spokesman, Oscar P. Barrientos, “We’re a small company. We’ve been that way since 1945. We’re very Filipino. We produced La Campanilla, Magkaibigan, La Campana, Quiapo, Ringing Bell and other local brands—all totally and truly Filipino. Our advantage is precisely that—we have no foreign brands and, therefore, [have] no royalty to remit to a foreign master [and] no expensive foreign consultants to retain. We keep our costs low and we are content with low profits. We have always faithfully paid our taxes to the government. Thus, we have had undisputed dominance of the low-end market for several decades now, because we know our place in the industry.”

Barrientos actually made those comments to explain why Mighty Corporation has lately been the target of a demolition job that has been obviously orchestrated and funded by PMFTC.

However, The Mighty Coproration executive also knows exactly what caused the sudden slump in demand for Philip Morris’s internationally famous brands. More specifically, the retired judge knows why there has been a steady “migration” in patronage from PMFTC’s cheapest brands to Mighty’s unadvertised Filipino brands for more than a year now.

The sudden decrease was caused by the passing of Republic Act 10351, or the sin tax reform law, which has pushed up the prices of the giant company’s well-known brands beyond the reach of most smokers.

In other words, PMFTC  was badly hit by the law and has only Mighty Corp. to blame for it.

It is believed that Millions of smokers who used to be fiercely loyal to the famous Marlboro brand have had to change to Mighty Premium Tobacco (Marlboro costs P50 per pack; Mighty, P23.50).

PMFTC has questioned the legality of Mighty’s procurement, manufacturing and sales operations. It has concluded that only through fraudulent and illegal means could Mighty Corp. manage to market P1-per-stick smokes against PMFTC’s P5-per-stick brands.

In relation to this, PMFTC hired the research firm AC Nielsen to do a study of Mighty Corp.’s marketing operations. 

As of this writing, AC Nielsen’s findings has been so far weak.

AC Nielsen cited imports of Virginia tobacco leaves, which Mighty supposedly declared at $0.68 cents per kilo, from Indonesia, Brazil or India, while other cigarette makers paid not lower than $3.39 for their imports from the same places.

All of the foregoing potentially damaging charges were repeatedly published in the media and formally brought to the attention of the House Ways and Means Committee, the Bureau of Customs, and even the Department of Finance and the Bureau of Internal Revenue (BIR).

However,  nobody in the government took any of the allegations seriously. This can concluded that the issues raised in the report do not have any legal or factual basis.

Even the Internal Revenue Commissioner Kim Jacinto-Henares never dared to look into the study seriously.

As a matter of fact, Commissioner Henares was confronted with the possibility that Mighty Corp. may be selling its cigarettes at a loss, she told a leading daily broadsheet, “Can we do anything if they want to sell at a loss? That’s a business decision.”

With this, it only goes to show that the AC Nielsen report is erroneous and baseless, or simply a report full of crap.

Barrientos said PMFTC knows Mighty is a small, purely Filipino company with no global presence, with no clout in the government and that it can do anything at will because of its sheer financial heft. 

"This is typically the attitude of a bully," he added.

“Their problem is they did not do their homework. Now they hate us for doing ours,” Barrientos said.

Elaborating on this, he said, “Consistent with our nationalist bias, even when the new sin-tax law was still under discussion, our competitive intelligence and business war-games already told us that we should brace ourselves for the next battleground—the low-priced tobacco market.... As you know, it was not hard for us to solidify our base, enhance our core competencies and work out on our forecasts—the migration of a big chunk of smokers [is] one of three things. [These are:] One, quit smoking; two, smoke less frequently; or three, migrate to the low-priced alternatives.”

“We knew all along that we needed only to keep on improving our quality, and that we did. If you try our new low-priced ones, you’ll surely like it, especially when you’re a nationalist who loves things that are purely Filipino,” he added.

“Obviously not.” Barrientos said when asked if it was true that Mighty undervalued its imported raw materials. 

"In any case, all our imports are fully documents and open to public scrutiny." he added.