Eastern Company has increased production by 20 to 30 per cent
A three-month disorder in the tobacco market has increased the price of a locally produced pack of cigarettes from LE24 to LE60, rendering Egyptian smokers disgruntled.
In reply, the Eastern Company, a leading cigarette producer, said it has initiated a series of measures to rectify the chaos starting 13 August. Concerned state bodies are taking action, too.
“The Eastern Company has increased supply in the market from 20 per cent to 30 per cent,” Hani Aman, CEO of the company, told Al-Ahram Weekly.
The market will not be regulated overnight, Aman said, expecting, nevertheless, that the crisis will be over soon.
The issue is being followed up at the highest level. A meeting headed by Prime Minister Mustafa Madbouli which involved the minister of finance, reviewed the available stock of Eastern Company’s various products, and the plans being implemented to increase production and stabilise the market. Eastern Company has a 75 per cent share of the cigarette market.
According to Cabinet Spokesperson Nader Saad, the meeting looked at the measures being taken to provide the necessary raw materials for the manufacturing of the various products of the company, especially cigarettes. Saad pointed to an increase in the supply orders for raw materials which contributes to increasing the volume of daily production and increasing supply. The current crisis was partially caused by a shortage in hard currency which has affected the import of raw materials needed for the industry.
According to Aman, it will take the efforts of four parties to end the crisis, starting with Eastern Company which has increased its supply in the market. The second is regulatory bodies that are already intensifying efforts to combat monopolisation and traders’ exploitation of the situation to sell cigarettes at exorbitant prices.
“The third party is the merchants whom I call upon to cease stockpiling cigarettes, particularly given the ineffectiveness of such practices in light of the measures taken by regulatory entities,” he added.
“The fourth participant is the consumer. I appeal to consumers to refrain from purchasing quantities beyond their actual needs and to avoid hoarding,” Aman said.
However, Ibrahim Imbabi, head of the Tobacco Division at the Federation of Egyptian Industries, believes these measures are not enough.
According to Imbabi, “authorities have confiscated over 200,000 packs of cigarettes in various locations including Basateen, Matariya, Bab Al-Bahr, Tanta, Alexandria, and Sayeda Zeinab.”
“I have proposed channelling the confiscated quantities to national gas stations [many of which sell different tobacco brands], thereby ensuring that prices remain stable. This approach would also involve a restructuring of the distribution network, with the Eastern Company directly supplying retailers instead of relying on distributors.”
Imbabi has urged smokers to report supermarkets and kiosks selling cigarettes at prices higher than those indicated on the barcode.
Cigarette prices have experienced an unprecedented surge, coupled with their scarcity in the market. Aman reiterated that his company was selling its cigarette brands for distributors for the retail price.
The chaos in the tobacco market has created a parallel market where leading distributors, vendors, and monopolisers announce their prices on social media platforms.
* A version of this article appears in print in the 17 August, 2023 edition of Al-Ahram Weekly