Bangladesh braces for tobacco war as Akij starts selling Marlboro by April

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Mushir Ahmed
Bangladesh braces for the fiercest tobacco war in less than two months' time when volume leader Akij will launch Marlboro in the country, hoping to end the decades-long dominance by British American Tobacco.
Akij's young managing director Sheikh Bashiruddin would not say when exactly the world's biggest tobacco brand will be launched, but add success of Marlboro would be vital for making the sprawling Group a billion dollar company by 2012.
"Marlboro is a premium tobacco brand leader across the globe. I don't see why it would not grab the leadership in Bangladesh," the 37-year chief said.
"Our aim is to make Akij a billion dollar group in sales in less than five years time. Establishing Marlboro as the premium brand in Bangladesh is an important part of that goal," he said
Akij is launching the global tobacco leader Philip Morris's brand as a franchisee. The US-based world's largest tobacco company has audited and validated the factory where the premium brand would be produced using imported roasted tobacco.
The two companies made the deal in August last year, sending a clear message to BAT that its long-held dominance in premium tobacco market is up for a fierce competition.
BAT's Benson and Hedges is the lone player in the Tk 10 billion premium tobacco market. The company sells about 200 million B&H sticks a month, but the growth was stagnant last year because of the slowdown in the economy.
Experts say Marlboro would easily make an early impact in the market because of its global fame, but holding on to the grip in the market where brand loyalty matters most would be tougher.
Bashiruddin, who took over the group after the death of his legendary father Sheikh Akijuddin two years ago, sounded confident, saying after decades in tobacco business his Group now knows how to beat BAT.
"No doubt we will face stiff competition. Our only expectation is that everyone plays a fair game," he said.
Akij had a bitter experience in 2001 when it launched UK-based Imperial tobacco's Thames to compete against the BAT's market leader Gold Leaf.
But the company had to scrap selling Thames in the face of one of the toughest competitions by Gold Leaf.
Since then, Akij has gained in confidence: it now dominates the low priced category and its Castle has made a huge inroad as a two Taka brand.
"We are now the volume leader in the tobacco industry," he said, adding the company also exports tobacco to the Gulf and South East Asia where huge number of expatriate Bangladeshis live and work.
Akijuddin, whose name the group bears, established the company as a top regional hand-rolled bidi manufacturer more than four decades ago. It became the country's first national bidi player in the 1980s.
In late 1990s, the group started to emerge as a low priced tobacco leader when tens of millions of people left bidi and took up Tk 0.50 and Tk1.00 cigarette.
It became a serious challenger to the BAT early this decade, when its one Taka Navy brand trounced BAT's Star. Navy has now been priced Tk1.5, making way for Akij's newly launched Sheikh to dominate the low-priced category.
The company's Dhaka Tobacco is now the second largest tobacco manufacturer in the country with estimated sales of over Tk 18.00 billion. BAT is still the number one, owning over half of the Tk70 billion tobacco market.
With Group sales around Tk 35, Akij is also the country's largest private Bangladeshi taxpayers. Last year it paid VAT and tax worth Tk 14 billion.