Vaclav Klaus

Philip Morris ČR expands despite EU

October 6, 2010

President Klaus on hand to cut ribbon, criticize regulation

President Václav Klaus officially cut the ribbon on the Philip Morris expansion in Kutná Hora, citing the importance of the company to the country’s economy and criticizing European Union moves to further regulate the industry.

Klaus, a nonsmoker according to the Czech News Agency (ČTK), attended the event Sept. 29 to support the company as an example of the success of privatization, Jindřich Preis, a spokesman for Philip Morris ČR, told The Prague Post.

“[Klaus] highlighted the stability and reliability of Philip Morris ČR in the Czech economy,” Preis said. “He noted the developments of the factory within the past 15 years since he inaugurated a factory upgrade in 1995.”

Several spokespeople for Klaus’ office declined to comment on the president’s attendance of the event.

The expansion of the factory, which is the only cigarette and tobacco production site in the country, will allow 40 billion cigarette units to be produced annually, compared with 30 billion before, Preis said, and employ 250 more people, bringing the total number of employees to around 1,130. The expansion will also allow the factory to produce more innovative tobacco products like tobacco blocks, used for at-home rolling devices, and the company’s new Marlboro Flavor Plus cigarettes.

Philip Morris ČR was created in 1992, and has grown to hold a 54.3 percent market share in the Czech Republic and a 52.3 percent share in Slovakia. The company exports to more than 50 countries.

“The company has since functioned in a quite extraordinary way, so it is the success of our industry,” Klaus said at the event, according to ČTK, which reported the president denied attending the event to support smoking, but rather to support the factory’s contributions to the economy.

Nevertheless, Klaus spoke quite strongly against EU initiatives to regulate the industry and tobacco use.

“I support the fight against restrictions on smoking. … This is something other than the promotion of smoking,” Klaus said. “This is stupid; it is unreasonable and something that politicians should not do.”

The EU has worked to implement a number of initiatives to reduce tobacco use and regulate its sale, mostly through the Framework Convention on Tobacco Control, which includes price and tax measures to reduce the demand for tobacco; initiatives to regulate labeling, packaging and advertising; and provisions to support cessation programs and programs for alternative activities.

The cigarette industry in the Czech Republic has been under stricter regulation, and April’s value added tax (VAT) hike brought the total market in the country down 5.8 percent in the second quarter of 2010, according to a Philip Morris ČR midyear report, but the loss is offset by a total market increase of 8.5 percent in the first quarter.

Czechs are among the heaviest smokers in the EU. Around 36 percent of people smoke in the Czech Republic according to a survey published by the EU last year, compared with 26 percent EU-wide.

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