Interbrands sees 12% sales rise because of cigarette price increase

Interbrands Marketing & Distribution, the largest distributor of consumer goods on the Romanian market, saw its sales rise 12% against 2008, to 4.8 billion RON (1.13 billion euros). However, the volumes distributed declined, due to the fall in consumption and to the restructuring of the distribution division of P&G products.

“The value of sales of our tobacco division was up 22% last year against 2008 due to the product mix, excise tax, and the overall pricing, and despite the increased inflows of contraband and the slightly declining volume,” specified Rand Sherif, CEO of Interbrands. Sales in euros, calculated at the exchange rate of the Romanian central bank, saw an around 5% decline during that period.

The excise raise operated in April and in September 2009 generated a price rise for these products by an average of over 30% over the course of the year. British American Tobacco, leader of the cigarette market, with almost one billion euros in sales, is currently Interbrands’ biggest supplier, with other big producers on its partner list being Procter & Gamble, Nestlé, and Cadbury.

Last year, P&G dropped outsourcing of its beauty care products distribution in the big store chains, which affected Interbrands’ turnover. Sherif says the decline in the business involving P&G was partly offset by attracting new suppliers.

“Our second-largest division after the cigarettes division saw its sales dwindle in 2009 against the previous year for several reasons: the declining consumption on some categories, the restructuring of part of the business with Procter & Gamble and inflows of contraband products in some categories. The decline was partly offset by new businesses such as Niran Co Products (Bourjois brand) and PSI (Love Plus brand),” Sherif said.

In the first quarter of last year, the decline in Interbrands sales, excluding the cigarette division, was 35% in RON, compared with the similar period of 2008, according to the latest available data.

Over the last 1-2 years, Interbrands has expanded its portfolio of products distributed by entering small market segments, compared with the markets where it derives over 70-80% of its turnover – cigarettes and personal care products.