Leaf Growers Assured of P10M Twin Projects

The NAFTAC and Mighty Corporation sealed an agreement via a banner theme: “Sama-sama Tayong Pilipino sa Pagyabong ng Industriya ng Tabako.”executives Edilberto P. Adan and  Oscar P. Barrientos, and Mario Cabasal, head of the National Federation of Tobacco Farmers and Cooperatives, Inc. 

Leaf Growers Assured of P10M Twin Projects

It was highlighted by a consultative meeting between 200 tobacco farmer leaders in Pangasinan, La Union, Abra and the Ilocos provinces and Mighty Corporation in this city, Mighty Corporation's executives through the Wong Chu King Foundation Inc. handed 16 units of hand tractors worth P2.5 million and 90 units of water pumps worth P1.1 million to chapter delegations from seven provinces in Northern Luzon.

This was the initial part of the support delivered out off the twin P10-million projects of the new major player in the cigarette industry.

“We are happy that Mighty Corporation has stood firm on its commitments to help the 65,000 strong tobacco farmers in the Philippines with their pronouncements this year to purchase 10-million kilograms of tobacco leaves and the P10-million outreach projects for tobacco farmers. This is definitely a big help to us, tobacco farmers.” said Cabasal.

The federation president was clearly happy and elated over Mighty Corporation’s commitments to buy at least 10 million kilograms of tobacco leaves.

Cabasal also praised the latest announcement by Mighty Corporation of a P10-million three-part programs to help tobacco farmers produce better quality tobacco.

The said help includes the donation of support farm like irrigation pumps and tractors, sponsoring new 100 college scholar grants for the sons and daughters of tobacco farmers and the institutional support for the annual search for outstanding tobacco farmers and cooperatives.

Mighty Corporation Denies Plant Shut-Down, Answers Allegations

The Filipino owned market leader in manufacture of low-cost cigarettes, Mighty Corporation, slams it's competitors by telling them to observe ethical standards in doing business said by Executive Vice President and Spokesperson Oscar P. Barrientos during the reports that the company has shutdown its operations was a lie.

Mighty Corporation Executive Denies Plant Shut-Down

The retired judge said the company operations were on track and new equipment and facilities have been installed to make the work flow more efficient.
“Our business operations are normal and on track. It is business as usual for the company,” Barrientos said.

As one of the pioneers in the tobacco industry, Mighty Corporation has become the leading low-cost cigarette manufacturer in the country. Mighty Corporation has two major facilities in Malolos City, Bulacan.  

The rumors of company shutdown was started by MC's  recent comprehesnive maintenance work and installation of new equipment on its plant in Mololos, thus, its competitors used the alleged shutdown to attack the company’s image. 

“Rehashed issues that had no basis in fact” but the rumors were disturbing because it appeared to signal “a new low in the mudslinging campaign.” as the retired judge said about the criticism they have received.

“Efforts to cast Mighty Corporation in a bad light, to the point of resorting to outright lies, are pathetic and lamentable,” Barrientos said. 

“Instead of focusing on improving their business processes, our competitors have resorted to waging a smear campaign against us. This is not good coporate practice,” he added. 

In another controversy, Mighty Corporation answers allegations of Tax Evasion and Smuggling through their Counsel Atty. Miguelito Ocampo.

“While our company cannot comment on how other cigarette companies price their cigarettes, what we can say is that our company can sell P1 per stick because aside from having comparatively lower administrative and operating expenses, Mighty does not pay royalty fees to foreign companies for the use of our brands of cigarettes,” Ocampo said. 

Competitors with foreign brands have to pay royalties to their mother companies which adds up to the retail prices of their products, the lawyer explained. 

“Mighty also does not pay service fees or management fees to any foreign company,” Ocampo said, stressing that the Filipino-owned cigarette manufacturing firm uses more local components and inputs rather than import most of them. 

“Finally, it might interest the public to know that Mighty is not the only company that currently sells P1 per stick cigarettes,” the lawyer further said

BIR Neutral in Cigarette Controversy

The Bureau of Internal Revenue (BIR) is staying in the middle over the business war between the giant cigarette manufacturer Philip Morris Fortune Tobacco Corporation (PMFTC) and its less known competitor Mighty Corporation (MC), producer of low-priced cigarettes which was accused of alleged tax evasion, smuggling and other trade malpractices by a foreign research firm.

BIR Neutral in Cigarette Controversy

A bureau tax fraud officer who declined to be named said “we have not received any derogatory confidential information against MC other than what we read in newspapers on the results of the survey conducted by AC Nielsen.”

The Bulacan-based MC said the survey allegedly commissioned by PMTC picturing it as unscrupulous enterprise was “unfair and malicious to discredit and to kill all local brands. It said a foreign-dominated monopoly is geared towards promoting mid-market brands since profit margins in the low-cost category are low."

This way, it said local brands will be faced out to favor expensive brands MC said it was untrue that it was selling its products at a loss to gain more patronage and eat up the low income clientele of PMTC which now control 94% of the cigarette market.

“MC is not selling at a loss and is gaining profit as evidenced by the more than P5.4 billion income and business tax payments to the BIR during the first nine months of the year, which payment is expected to rise to P8 billion by the end of the year,” said MC's Executive Vice President and Spokesperson Oscar P. Barrientos

Local Tobacco Firm Warns Against Foreign Monopoly

Filipino Owned and controlled Cigarette Manufacturer Mighty Corporation released a warning that a foreign dominated monopoly is out to kill all remaining low-priced local cigarette brands in the market.

“Recent moves by our competitors, particularly a multinational company, against MC indicate a calibrated campaign to bring us to our knees and push us out of the picture,” said MC Executive Vice President Oscar P. Barrientos.

Local Tobacco Firm Warns Against Foreign Monopoly

In an earlier report, Finance Secretary Cesar Purisima was quoted as saying, “It is natural for Philip Morris to fight change because you want to keep your monopolistic position. But in this environment, why should we, as a country, allow a monopoly?” 

“These baseless and malicious accusations merely mask the real agenda of our competitor which is to kill off all other local brands, especially the low-priced ones,” as Barrientos said with regards to MCs technical smuggling and tax evasion accusations.

In 2010, The biggest cigarette manufacturer in the country is Philip Morris Fortune Tobacco Corp. merged with local cigarette manufacturer Fortune Tobacco Corp.

PMFTC controls 94% of the cigarette market, making it one of the most successful monopolies in the Philippines.

"A foreign-dominated monopoly of the market was geared towards promoting mid-market brands since profit margins in the low-cost brand category were low," said Barrientos.

“They want to kill off all remaining low-cost local brands in the market by hook or by crook so that the playing field will be cleared for their expensive foreign brands,” the MC executive added.

“This is a critical moment in the local tobacco industry’s history, and in fact for Philippine industry in general as well,” he said.

Barrientos said MC would address all the accusations thrown against them and exhaust all legal means to fight off the monopoly’s alleged efforts to kill off other local brands that it has not yet acquired.

“We’ll fight them for sure. It’s an uphill battle, but we cannot and will not allow a foreign bully to just trample on us and any other Filipino company that it views as a threat to its campaign for market domination. As big as our competitor is, it’s a shame that it has to resort to lies and deceit,” the retired judge said.

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.

Mighty Dares Rival to Bare Merger Terms

The only Filipino-owned and controlled company producing low-priced cigarettes for decades, Mighty Corporation, challenged Philip Morris-Fortune Tobacco Corp. to disclose the nature of their merger.

“In particular, we challenge PMFTC to tell the public the business nature of their closely-guarded monopolistic partnership whether it was a corporate merger or Philip Morris bought Fortune Tobacco’s majority stocks in 2010,” retired judge and MC executive vice president Oscar Barrientos said.

Mighty Dares Rival to Bare Merger Terms

64% of the cigarette market was controlled by Fortune Tobacco before the merger , including the low-priced and premium brands, while Philip Morris had 30%.

Barrientos said the public should know why Fortune Tobacco, the flagship corporation of taipan Lucio Tan’s multibillion-peso conglomerates, gave up its operation and allowed itself to be dominated by Philip Morris.

“The merger is of high public interest issue requiring full transparency because it involves taxation,” Barrientos said.

PMFTC previously asked the BIR to allow the sale of 4 low-priced Marlboro brands under the its name.

Marlboro’s sales significantly decreased due to consumers transfer to low-end brands that sell at P1 per stick, particularly to Mighty Cigarette brands.

Barrientos said PMFTC has registered four P1-per-stick Marlboro brands despite of accusations that Mighty Corporation could not make a profit out Mighty's P1-per-stick cigarettes.

Cigarette Firm Explains Biz Strategy

"We keep our costs low, while the competition has very high costs.” As Mighty Corporation Executive VP Oscar Barrientos explained why they're able to offer cigarettes for as low a P1 per stick.

Cigarette Firm Explains Biz Strategy

“We are satisfied with low profits while they (other brands) need very high profit,” Barrientos said.

He also added that having no foreign equity and no foreign brands, Mighty Corporation do not remit any royalty to any foreign headquarters and do not maintain any high-salaried consultants.

Mighty Corporation is a small company as it has been since the 1940s. “We produce La Campanilla, Magkaibigan, Campana Ringing Bell and other local brands which are totally and truly Filipino.” The retired judge explains.

"Not a stranger in the low-priced cigarettes business, Mighty Corporation didn't find it hard to solidify its base, enhance its core competencies and work out on its forecasts the migration of a big chunk of smokers who were faced with three choices: quit smoking, smoke less frequently or look for low-priced alternatives," the Mighty Corporation executive said.

On charges that Mighty Corporation may have committed fraud, Barrientos said fraud is a serious offense and as such, it should be proven by complete evidence, adduced in an impartial investigation, conducted by a competent authority, with due regard to the due process requirement.

"Imputing fraud against Mighty Corporation is not only unfair but highly libelous and damaging," he added, who is also a retired trial court judge.

Barrientos said that the competitor's claims are baseless, speculative and malicious, on the accusations that Mighty Corporation might have been selling cigarettes at a loss by as much as P4.47/pack or about 30 percent lower than the estimated break even price, as studied by AC Nielsen.

“We’re not selling at a loss; we’re gaining. Why should we continue our business at a loss? Assuming we’re losing, why should the competition be worried? Actually, we’re making reasonable profit. Our concept of gain is not only measured in peso signs; having been patronized by our loyal customers in the low-priced market, we feel duty-bound to keep our price low owing to our company’s nationalistic anchor,” Barrientos pointed out.

"Besides MC’s margin of profit is certainly different from that of the competition. This is so, because being a local brand, it does not pay royalties abroad, it is not required branch profit remittance, it had no foreign consultants and it is purely Filipino." He ended.