Mighty Corp revealed its trade secret

Mighty Corp. said Wednesday it is willing to reveal its trade secret on how it captured a large share of the low-end cigarette market if its foreign competitor stops bullying them and monopolizing the market.

“We’ve eaten their market because their people have not been working and that their down-the-line distribution is gone,” said MC executive vice president Oscar Barrientos, referring to Philip Morris-Fortune Tobacco Corp.

“Gone is the key word,” he said, “because while MC anticipated the possible effects of the Sin Tax Law and drew up its own strategy, its giant competitor relied mostly on its traditional marketing style of pushing premium and sub-premium brands and invariably neglected equally promoting its joint-venture partner Fortune Tobacco’s six different brands of P1 per stick cigarettes and, thus, many of its country-wide network also switched, largely for economic reason, to MC’s sales force which continued to expand.”

“You see it’s not only consumers shifting from premium and sub-premium brands which PMFTC dominated for many years but also some of their salesmen and other cigarette vendors to MC network now selling our products which admittedly are more tasty, smooth and aromatic,” the MC executive said, adding that in addition “we have an efficient workforce, no foreign obligations and most of all the ability to apply the knowledge and wisdom of comparative and managerial economics.”

“Not really so much on knowledge though because it’s practically unlimited. What is important is wisdom because it gives you the ability to perceive what is important and what is not in the crucial three stages of business operations which are sourcing of cheap but quality raw materials, manufacturing and marketing of products,” Barrientos said.

MC’s excise tax payments to the government increased 1,677 percent to P8.2 billion in just one year as against PMFTC’s only 110-percent increase for the same period after the effective implementation of the 2012 Sin Tax Law.

MC’s excise tax payment the previous year was more than P500 million.

MC’s shares in the market increased to more than 20 percent from a measly 3 percent as a result of the successful implementation the Sin Tax Law that saw the field leveled between local cigarette producers and PMFTC, which controlled 94 percent of the premium, sub-premium and low-priced brands.

“We are happy with the result of our intelligence research and business war-games which we had at the advent of the Sin Tax Law,” he said, adding that: “we had anticipated the advantages of the tax measure, prognosticating at the same that there was going to be a major shift in the smoking preferences of the majority of the Filipino consumers, either migrate to low-cost brand or entirely quit the vice or reduce the frequency of smoking for economic and health reasons.”

Mighty Corp slammed over smear campaign by rival company

Mighty Corp. slammed the smear campaign against it by competitors, saying there may be a bigger agenda behind the mudslinging.

“Mighty continues to be vilified for having stood up to industry giants. Since last year, the smear campaign has been nothing more than a rehash of the same lies and allegations,” executive vice president and spokesman Oscar Barrientos said.

“It is puzzling and alarming that our critics have resorted to recycling old issues against us. And we have to ask, why?”

He said Mighty’s strong performance in the past 13 months appeared to have unsettled its competitors, notably Philip Morris Fortune Tobacco Corp., which controlled 94 percent of the market in 2012 until its share dropped to about 70 percent by the end of 2013.

Barrientos credited the government’s move to reform the country’s excise tax system and Mighty’s own corporate reforms for its strong performance.

“Our competitors have thrown everything, including the kitchen sink at us, and we have just become stronger and better. Obviously, Mighty has proven that even a small local company can go toe to toe with a giant monopoly like PMFTC. But is the smear campaign really just their way of dealing with their failures in the market or is there something more to it?” Barrientos asked.

“There may be a bigger agenda behind the anti-Mighty smear campaign. Reforms in the excise tax system have obviously dealt a heavy blow to PMFTC. It is a fact that they waged a campaign to stop the passage of RA 10351, because it would mean losing their monopoly. This could be a reason why they are now trying to pin us down, so that they can say the sin tax Law doesn’t work,” the Mighty official said.

Barrientos cited a claim by critics that Mighty was evading payment of P4 billion in excise taxes.

“We paid P8.2 billion in excise taxes last year. We were accused of evading tax payment because we were supposed to have paid P12 billion based on a 20 percent market share. We only hit 20 percent in December 2013, and yet our critics made it appear that we were doing 20 percent year-round which was totally untrue, Barrientos said.

 

Mighty Corp bought tobacco leaves to farmers

Local cigarette manufacturer Mighty Corp. said it is out to save the local tobacco-growing industry from feared collapse by buying more tobacco leaves and helping three million tobacco farmers and their dependents increase their yield in the Ilocos and CagayanValley regions.

Mighty Corp. executive vice president Oscar Barrientos said in a statement the company’s share of the domestic market dramatically increased from a minimal 5 percent in 2012 to 20 percent in 2013. This increased help to millions of tobacco farmers whose lives were dependent on the tobacco industry.

“We have earned our fair share of the market by making quality but affordable cigarettes that were smartly packaged, creatively and ingenuously sold to the mass market. That is the secret of our success in breaking the cigarette monopoly in this country and we’re mighty proud of our modest success coming from a homegrown and Filipino-owned cigarette company,” said Barrientos, who also serves as Mighty’s spokesman.

“With a bigger share of Mighty Corp. in the market today, we are giving the tobacco farmers a fair share of our success by offering competitive prices to their crops,” said Barrientos, a retired judge.

He said over the years, Mighty had consistently championed the cause of the Filipino tobacco farmers by buying a larger share of the low-grade tobacco leaves at good prices.

“Last year alone, we have bought even the low-priced tobacco leaves. Had Mighty Corp. not done that, it would have created a great economic dislocation for tobacco farmers,” said Barrientos.

“We will be happy to offer better prices to tobacco farmers and are willing to tie-up with the Department of Agriculture and the National Tobacco Administration to cement our partnership with the farmers,” he said.

Barrientos said it was not only the tobacco farmers who were benefiting from Mighty’s growth but the whole country as well through the company’s payment of taxes from the sale of cigarettes.

“Our contribution is in the form of taxes, because it helps the development of the country, with taxes. We were paying P300 million before, now we are paying more than P8 billion in excise taxes and that helps the economy. We also employed more factory workers. Now, we have more than 2,000,” he said.

Barrientos said with bigger contribution, Mighty was also expanding its corporate social responsibility projects to help tobacco cooperatives increase their production.

“As far as CSR is concerned, we will have irrigation pumps in their area and provide mini tractors. This will come in the form of grant. We will have scholarship grants,” he said.

“We have other plans. Aside from scholarship, by next year, we plan to give awards for outstanding farmers, in cooperation with the National Tobacco Administration,” he added.

Barrientos said Mighty Corp. had a long-term plan to further improve its market share and help hundreds of thousands of tobacco leaf growers’ workers.

A 2011 data of the National Tobacco Administration put at about three million the number of people employed directly and indirectly in the tobacco industry. The number also includes their dependents.

Social action arm of Mighty cited by the church leaders

 

The Roman Catholic prelate of La Union has commended the social action arm of cigarette manufacturer, Mighty Corp (MC), for giving top priority to apostolic work and Catholic education in its programs and projects.

Bishop Rodolfo Beltran of San FernandoCity said MC’s Wong Chu King Foundation (WCKF) has donated to chruch projects and funded the education of poor students in Lagawe, Bontoc, including four seminarians.

“The parents of these students are low-income farmers producing only for local consumption. You can imagine the positive impact this kind of support has for them,” Beltran said.

The foundaion renovated the Basilica Minore of Our Lady of Piat Church in Piat, Cagayan in 2012 and the Diocesan Shrine of Immaculate Conception in Naic, Cavite last year.

Created in 1990, the foundation aims to perpetuate the memory of Wong Chu King, the family patriarch, a philanthropist known for his generosity to the poor. The foundation’s thrust include sholarship programs and raising funds for charitable causes.

Auxiliary Bishop Ricardo Baccay of TuguegaraoCity described WCKF’s work as “a step in the the direction … if WCKF is out to help schools, putting up libraries is the best form of help it can give.”

Archbishop emeritus Diosdado Talamayan of the Archdiocese of Tuguegarao City said: “I have personally known Mrs. Nelia Wong Chu King, WCKF chariman of the board of trustees. She and her family are great devotees of Our Lady of Piat. They have erected a chapel in MalolosCity, Bulacan, dedicated to Our Lady of Piat, which was blessed by many Bishops led by Cardinal Gaudencio Rosales in 2012.”

Mighty Corp, CSR arm gave educational assistance

“Education is known to be a powerful equalizer. It gives children from low-income families a fighting chance to uplift themselves and their families from poverty and lead productive and meaningful lives.”

This was stressed by Mighty Corp President Edilberto Adan as he announced the Wong Chu King Foundation’s (WCKF) educational assistance, consisting of 100 college scholarship grants, to poor but deserving students who are children of tobacco farmers in Northern Luzon.

“Formal schooling is often too expensive and priced well beyond the reach of the poor, including tobacco farmers,” Adan, a retired general said, adding that the new scholarship program is one of three components of a P10-million joint CSR project of Mighty Corporation (MC) and the National Federation of Tobacco Farmers and Cooperatives Inc. (NAFTAC) that aims to benefit 65,000 farmers in Pangasinan, La Union, Abra, Cagayan, Isabela, Ilocos Norte and Ilocos Sur.

WCKF is the corporate social responsibility (CSR) arm of MC, which the Wong Chu King family owns.

“This is our way of thanking the farmers for helping to make our company what it is today,” said Adan at the formal signing rites for the project at a hotel in Bauang, La Union last February 8.

“We are happy that Mighty Corporation, through its Wong Chu King Foundation, has stood firm on its commitment to help 65,000 tobacco farmers in the Philippines,” said Mario Cabasal, NAFTAC national president, at the signing, attended by top MC executives and 200 farmer leaders.

Retired judge Oscar Barrientos, MC executive vice president and spokesman, said the WCKF initially offered scholarships to the dependents of active MC employees but later expanded this to include dependents of retired MC employees and poor but deserving students with excellent academic records.

“Through this program, we hope to help the farmers and their children become competitive in the global market and earn sustainable incomes,” Barrientos said.

The scholarship program is in support of the National Tobacco Administration’s scholarship program for poor but deserving graduating high school students and dependents of tobacco farmers.

Other components of the project include agricultural production assistance, consisting of 16 hand tractors worth P2.5 million and 90 irrigation pumps worth P1.1 million; and institutional support for the annual search for outstanding tobacco farmers and cooperatives by the National Tobacco Administration (NTA).

Currently, the foundation has six high school and 14 college students on scholarship in various schools nationwide. Two of its college scholars graduated last year.

James Rommel Silao graduated Magna Cum Laude with a B.S. Chemistry degree from the University of the Philippines in Diliman, Quezon City. He is now employed as a chemist at MC’s manufacturing facility in MalolosCity, Bulacan.

Abigail Punongbayan, daughter of Conching Ong Punongbayan, MC head of production, graduated Cum Laude with a degree in Medical Technology at the University of Sto. Tomas. She is now completing a degree in medicine at the same university.

“Education is known to be a powerful equalizer. It gives children from low-income families a fighting chance to uplift themselves and their families from poverty and lead productive and meaningful lives.”

This was stressed by Mighty Corporation President Edilberto Adan as he announced the Wong Chu King Foundation’s (WCKF) educational assistance, consisting of 100 college scholarship grants, to poor but deserving students who are children of tobacco farmers in Northern Luzon.

“Formal schooling is often too expensive and priced well beyond the reach of the poor, including tobacco farmers,” Adan, a retired general said, adding that the new scholarship program is one of three components of a P10-million joint CSR project of Mighty Corporation (MC) and the National Federation of Tobacco Farmers and Cooperatives Inc. (NAFTAC) that aims to benefit 65,000 farmers in Pangasinan, La Union, Abra, Cagayan, Isabela, Ilocos Norte and Ilocos Sur.

WCKF is the corporate social responsibility (CSR) arm of MC, which the Wong Chu King family owns.

“This is our way of thanking the farmers for helping to make our company what it is today,” said Adan at the formal signing rites for the project at a hotel in Bauang, La Union last February 8.

“We are happy that Mighty Corporation, through its Wong Chu King Foundation, has stood firm on its commitment to help 65,000 tobacco farmers in the Philippines,” said Mario Cabasal, NAFTAC national president, at the signing, attended by top MC executives and 200 farmer leaders.

Retired judge Oscar Barrientos, MC executive vice president and spokesman, said the WCKF initially offered scholarships to the dependents of active MC employees but later expanded this to include dependents of retired MC employees and poor but deserving students with excellent academic records.

“Through this program, we hope to help the farmers and their children become competitive in the global market and earn sustainable incomes,” Barrientos said.

The scholarship program is in support of the National Tobacco Administration’s scholarship program for poor but deserving graduating high school students and dependents of tobacco farmers.

Other components of the project include agricultural production assistance, consisting of 16 hand tractors worth P2.5 million and 90 irrigation pumps worth P1.1 million; and institutional support for the annual search for outstanding tobacco farmers and cooperatives by the National Tobacco Administration (NTA).

Currently, the foundation has six high school and 14 college students on scholarship in various schools nationwide. Two of its college scholars graduated last year.

James Rommel Silao graduated Magna Cum Laude with a B.S. Chemistry degree from the University of the Philippines in Diliman, Quezon City. He is now employed as a chemist at MC’s manufacturing facility in MalolosCity, Bulacan.

Abigail Punongbayan, daughter of Conching Ong Punongbayan, MC head of production, graduated Cum Laude with a degree in Medical Technology at the University of Sto. Tomas. She is now completing a degree in medicine at the same university.

 

Mighty Corp pursued their corporate social responsibility projects in the country

Bishop Rodolfo Beltran of San Fernando City, La Union has commended the Wong Chu King Foundation (WCKF), the corporate social responsibility (CSR) arm of Filipino cigarette manufacturer Mighty Corp. (MC), for helping the church to spread the faith in the Philippines and for prioritizing apostolic works and education in its programs and projects.

According to Beltran, the foundation has so far donated to church projects funding the education of poor but deserving students in Lagawe, Bontoc. This includes four seminarians and students of vocational courses like sewing, weaving and hairstyling.

“The parents of these students are low-income farmers producing only for local consumption,” the bishop said. “So you can imagine the positive impact this kind of support has for them.”

Beltran also commended MC and WCKF for the outreach project recently launched for 65,000 organized tobacco farmers of Northern Luzon.

The bishop has witnessed the signing of an agreement on the project between MC and 200 farmer leaders of the National Federation of Tobacco Farmers and Cooperatives Inc. (NAFTAC) from Pangasinan, La Union, Abra, Cagayan, Isabela, Ilocos Norte and Ilocos Sur at a hotel here recently.

Under the agreement, MC donated to the farmers 16 hand tractors worth P2.5 million     and 90 irrigation pumps worth P1.1 million.

“I’m quite happy about all these projects. It’s a big lift for our farmers, not only in La Union but also the whole of Northern Luzon,” Beltran said. “This is something very beautiful as the hand tractors and water pumps encourage our farmers to use modern methods of agriculture.”

The foundation was also commended for the renovation of the Basilica Minore of the Our Lady of Piat Church in Piat, Cagayan in 2012, and the renovation of the Diocesan Shrine of Immaculate Conception in Naic, Cavite last year.

Auxiliary Ricardo Baccay of TuguegaraoCity described WCKF’s work as “a step in the right direction. My diocese, like all dioceses, have serious concerns. If WCKF is out to help schools, putting up libraries is the best form of help it can give.”

“For many years, I have personally known Mrs. Nelia Wong Chu King, WCKF chairman of the board of trustees,” said Archbishop Emeritus Diosdado Talamayan of the Archdiocese of Tuguegarao City. “She and her family are great devotees of Our Lady of Piat, and they have erected a chapel in Malolos City, Bulacan, dedicated to Our Lady of Piat, which was blessed by many bishops led by Cardinal Gaudencio Rosales in 2012.”

Archbishop Rolando Tirona of the Archdiocese of Caceres in NagaCity, Camarines Sur, described the Wong Chu Kings as an upright family and said it was “highly uncharacteristic for them to be involved in the illicit trade practices of technical smuggling and tax evasion.”

Created in 1990, the foundation aims to perpetuate the memory of Wong Chu King, the family patriarch, an avowed philanthropist who was concerned for the plight of, and provided timely assistance to, the poor and underprivileged during his lifetime. The foundation also aims to encourage and promote education through scholarship programs

and raise funds for charitable, cultural and educational purposes.

Mighty Corp, other tobacco companies eyed on illicit trade

A lawmaker said allegations of illicit trade in the tobacco industry like Mighty Corp, other cigarette makers are mere hype and propaganda raised by some disgruntled industry players and should not be a concern of Congress or other government agency.

“All the data thus far on the alleged illicit trade in the tobacco industry are those culled from studies and surveys commissioned by a private company that holds a grudge against a competitor. This can hardly be considered a basis for any kind of probe or review,” Valenzuela 2nd District Rep. Magtanggol Gunigundo said.

“Corporate battles shouldn’t be a national concern unless laws are being broken. But in the case of the tobacco industry, we haven’t seen any official document or data to support the allegations of illicit trade,” he said.

The lawmaker cautioned against falling prey to “corporate propaganda” after a foreign manufacturer called for third-party monitoring of the production facilities of tobacco companies in the country.

“We shouldn’t  even be entertaining these things. We cannot and should not give credence to such proposals. They are self-serving and manipulative, and the people pushing it must think we Filipinos are stupid,” Gunigundo said.

Internal Revenue Commissioner Kim Henares had rejected the proposal outright, saying there was no need for it.

Henares added that the proposal violates the country’s National Internal Revenue Code, stating that only the commissioner and the officers who can be involved in excise tax functions and doing functions of surveillance (NIRC Section 270 in relation to Section 278).

Gunigundo said the real issue is how to preserve the gains of the sin-tax reform law which Congress passed in 2012.

During the first year of implementation, the government’s total collection of P61.62 billion came from tobacco products alone which exceeded the Bureau of Internal Revenue’s original target of P51.65 billion by 20.94 percent.

BIR records also showed a promising trend in the first quarter of the year as the government’s excise tax collection from tobacco products have already exceeded by 4.5 percent or  P11.34 billion the target of P10.85 billion.

On the other hand, the law has also seen success as a health measure as a national survey by the Department of Health and Social Weather Stations  reported that smoking prevalence, especially among the youth and poor have each had significant drops.

“Republic Act 10351, which reformed the country’s excise tax system, has been a huge success. It has been lauded by international agencies like the World Health Organization. We should not allow vested interests to push their own selfish agenda,” Gunigundo said.

Mighty Corp, British American Tobacco in talks of possible partnership

The British American Tobacco (BAT) has signified its willingness to partnering with another cigarette manufacturing company to cement a strong foothold in the country’s lucrative tobacco industry.

Robert Eugenio, BAT Philippines head of corporate and regulatory affairs, said yesterday that the Lucky Strike cigarette-maker is open to any “beneficial” opportunity in the Philippines.

Since BAT’s return to the Philippine market in 2012, the company’s market share grew at a snail’s pace despite a money-losing marketing strategy of selling imported cigarette packets below the economical price.

BAT, which unveiled a $200- million investment plan for the Philippines in 2012, currently has a weak distribution network in the country, and been incurring an additional cost for the importation of its Malaysia-made Lucky Strike and Pall Mall brands.

“In the process of running a business, we would look at whether partnering with another company would make sense than putting up our own manufacturing facility,” Eugenio said. “In the past, we partnered with La Suerte Cigar and Cigarette Factory, but it was terminated when we left in 2009.”

Meanwhile, industry sources said that BAT has already approached the Wongchuking family of Mighty Corp earlier this year to ask if the latter is open to any partnership.

“I’m not aware and involved in such a transaction,” Eugenio said when asked if BAT is in talks with the Bulacan-based cigarette company.

Sources said BAT wants a partnership with Mighty following its success in snatching up a substantial market share of local market leader PMFTC, a joint venture of LT Group’s Fortune Tobacco Company and Switzerland-based Philip Morris International (PMI).

Since the new excise tax regime took effect in 2013, PMFTC fought tooth and nail to protect its market position against Mighty, which has been very aggressive in offering cheaper alternatives to Lucio Tan and PMI’s premium cigarette brands.

The country’s second largest tobacco company, Mighty, known for the P1-a-stick cigarette, managed to raise its market share from a mere 3 percent in 2012 to nearly 35 percent last year.

However, Mighty’s success is hounded by accusations of tax dodging and smuggling.

Mighty Pays P8 B in Taxes despite Tax Evasion Allegations

The fully integrated Filipino-owned Mighty Corporation has paid P8 billion in excise tax for the calendar year 2013, from its previous P300 million payment for the year before. Mighty Corp. Executive Vice President Oscar Barrientos said that his company’s compliance with tax payment regulations should be enough to put to rest the accusations that they have not been paying its dues to the government.

Retired Regional Trial Court Judge Barrientos explained that the 2013 taxes that the company paid is a reflection of the increase in their market share as well as their fair share on taxes for the sin products during the previous year. He said that despite all the allegations that the company has been bombarded with by members of the social media and even by some members of Congress no cases has actually been formally filed in court—in fact, the Bureau of Customs itself has had the company cleared of any deficiencies in tax payments up until February 2014.

With the implementation of the new sin tax law or technically referred to as the Republic Act 10352, Mighty’s market share skyrocketed, which explains the equally high increase in the taxes that they also had to pay for the current year as opposed to the P300 million they had to pay out in 2012. The same law has effected a synchronization of adjustment on cigarette taxes to make it P30 for every pack for all brands within a five-year period.

Reports from the Bureau of Internal Revenue illustrated that excise taxes both from alcohol and cigarette products reached 81 percent even with the decline in the number of cigarettes marketed. Cigarette taxes comprise 61 percent of sin tax collections for the last 11 months.

While being a minor industry player in the tobacco industry until 2012, Mighty Corporation paid in over P8 billion of taxes, excluding the same tax fees it would have to settle for the same year before the deadline stipulated.

House Group Urged to Take It Slow on Mighty Corp. Case

Government agencies and Congress were asked Monday to take the investigations slowly particularly on the case covering the allegations thrown at an established cigarette manufacturer in the country particularly on the allegedly underdeclaration of its raw materials used for production.

Ako Bicol Party List Representative Rodel Batocabe explained that investigations conducted by the House of Representatives on the “unscrupulous entities” in the country’s tobacco industry should delve into the entire industry and not focus on one company alone.

As a member of the House Committee on Ways and Means, Batocabe said that if they were to investigate, no one company should be singled out so as to eliminate any unnecessary speculations or hidden undertones.

The House Committee member was talking in reference to Mighty Corporation that has been bombarded with allegations of underdeclaration of products. The locally owned cigarette manufacturer sells cigarette brands that sell at P1 per stick, having them included in the low-end tier products incurring the cheapest of sin tax rates.

Batocabe further suggested that the investigation, which is being conducted by the Committee on Ways and Means and spearheaded by Romero Federico Quimbo, Marikina City representative, should look into the issue matter-of-factly to eliminate prejudice and bias. He explained that the probe should be fair and objective and focus on the basic objective of protecting the government.

Kabataan Party List Representative Terry Ridon, on the other hand, warned the Congress to not belittle and underestimate Mighty, a legitimate fully Filipino-owned name in the industry with its solid 68 years of operation.

Established in the 1940s, Mighty is proudly Filipino and has been one of the top distributors of low-priced brands that include Campana Ringing Bell, La Campanilla, Magkaibigan, among others.

Ridon emphasized that they would always be ready to defend national firms especially against foreign companies, in reference to local companies like Mighty who have been strong advocacies of helping the millions of poor Filipinos by providing livelihood programs (aside from paying their dues to the government in terms of paying taxes).

Miguelito Ocampo, Mighty’s legal counsel, earlier denied all the allegations against its client company. He explained that his client company is able to sell one-peso-per stick cigarettes because they do not have any obligations of paying royalty fees as opposed to other companies that need to do so.