They are looking for brands for cigarettes – Kommersant

The fourth cigarette manufacturer in Russia, International Tobacco Group, which was sold to British Imperial Brands to businessmen associated with the Megapolis distributor, is thinking about expanding its portfolio. In addition to brands such as Davidoff and West, the company could launch Manchester cigarettes, which are being developed by the Dubai-based company. Promotion of new products on the market is possible only at the expense of price and wide distribution, experts say.

In April, a large manufacturer of tobacco products International Tobacco Group Volga registered a series of declarations of conformity for the production of cigarettes under the Manchester brand, follows from the Rosaccreditation register. The range includes the names Classic Gold, Classic Blue, Classic Red and Silver. And in February, another structure of the International Tobacco Group registered domain names with the word Manchester. International Tobacco Group did not provide a comment.

International Tobacco Group is the former Russian division of the British tobacco concern Imperial Brands, which sold the local business in April 2022. Now 75% each of International Tobacco Group and International Tobacco Group Volga is owned by Nikolai Tyaka, who is considered a partner of Igor Kesaev, one of the founders of Megapolis, a large tobacco distributor in the Russian Federation. 15% each belongs to another founder of Megapolis, Sergei Katsiev. The company operates a factory in Volgograd with a capacity of 40 billion cigarettes per year, the brand portfolio includes the brands Davidoff, West, Jade, P&S, Maxim. In 2022, the revenue of International Tobacco Group grew by 3.3%, to 72.2 billion rubles, net profit was 11.1 billion rubles.

Manchester cigarettes are distributed by Adam General Trading LLC, founded in Dubai in 2000, and own the JSS Tobacco Ltd brand, the brand’s website says. The geography of sales includes the countries of the Middle East, Africa, Asia and Oceania. The British BBC, citing a KPMG study, called Manchester the most popular brand among cigarette brands sold illegally in Australia in 2013. Maxim Korolev, editor-in-chief of Russian Tabak news agency, says that Manchester is represented at international exhibitions and could be created for markets outside the UAE. International Tobacco Group has likely obtained a license to use the brand in Russia, he notes. Adam General Trading did not answer Kommersant’s questions either.

Andrey Sterlin, head of Business Analytics, says that so far Manchester is apparently being imported into Russia using gray schemes. The expert estimates the current share of the brand in the Russian market at 0.05–0.1%, noting that for a brand sold without official distribution, this is a “good result”. According to the operator of the labeling system TsRPT, in 2022, 7.73 billion conditional packages of cigarettes were sold in Russia against 7.74 billion a year earlier. According to Mr. Sterlin, Manchester should be a good addition to the portfolio for International Tobacco Group, as the brand is already well-known, and Megapolis can significantly expand distribution.

Business Analytics estimates the share of International Tobacco Group brands in the Russian market at about 4-5%. JTI (Winston, Camel, etc.) accounted for 36.6% in 2022, Philip Morris (PMI; Marlboro, Parliament) – 31.1%, British American Tobacco (BAT; Dunhill, Kent) – 23.6% , said in the materials of these companies. As Andrei Sterlin points out, International Tobacco Group may be more interested in expanding its portfolio, while competitors may strengthen existing brands. NielsenIQ in 2022 noted an increase in the share of Chesterfield (PMI) and Camel. Russian JTI, PMI and BAT did not provide comments.

Alexey Popovichev, Executive Director of Rusbrand, says that Megapolis probably sees a niche for the new brand, but given the virtual ban on any marketing activities on the market, promotion is possible only through an attractive price and presence in stores. The cigarette market tends to have a strong brand loyalty, he said, but given rising prices and the desire to save money, the share of consumers willing to try new things may increase.

Anatoly Kostyrev