Mighty, a family-owned business, is now the largest independent tobacco manufacturer in the Philippines Mighty Tobacco Corporation, the owners of the most quintessentially Filipino cigarette brand La Campana, is celebrated its 65th anniversary on September 20, 2010.
Mighty, a family-owned business, is now the largest independent tobacco manufacturer in the Philippines after Philip Morris/Fortune Tobacco merger earlier this year.
It is also the oldest cigarette manufacturing concern in the country. Mighty’s product range is well known to Filipinos.
Its brand portfolio includes American-style cigarettes such as Blue Seal Special, Mighty Filter Kings, Mighty Menthol 100’s, LA Menthol 100’s, LA Lights Menthol 100’s, Marvels Menthol 100’s, Marvels Filter Kings, Right Menthol 100’s and Right Filter Kings.
In addition, Mighty specializes in matamis and regaliz, two categories of Filipino-style ‘cigar-type’ cigarettes, a blend of dark, air-cured Philippine tobaccos principally sourced from the Cagayan and Isabela provinces where the stronger flavor tobacco is harvested.
Matamis are wrapped in ‘sweetened’ white cigarette paper and are sold under the following brands: La Campana Matamis, Campanilla Matamis, Magkaibigan Matamis, Cortas La Campana, Rosalina Matamis and Corona Matamis.
Two other cigars in white unsweetend paper are sold under the brand names Magkaibigan Blanco and Albambra Blanco. Regaliz on the other hand are wrapped in dark brown (commonly referred to as black) sweetened paper imported from France and are 120mm long.
Middle-aged women in the provinces are the common smokers of this type of cigarette, which are often smoked with the lighted part inside the mouth of the smoker. Mighty brands in this category include: La Campana Largos, Ms. Philippines Fat, Ms. Philippines Thin, La Flor de Filipinas Fat, La flor de Filipinas Thin, Marka Niyog Fat, Marka Niyog Thin, Malaya Largos, La Dicha, and La Flor de Luzon.
Cigar-blended cigarettes are hand-packed by women factory workers called Kahistas and presented in packs of 30 sticks per pack. The packaging process is done manually with a scoop of hand by these trained Kahistas who used their hand as mold to bundle 30 sticks at a time and then package them in a fiv-angled pack in a swift and continuous motion.
According to Mighty, the 30-stick package is characteristic of the cigar cigarettes such that this phase of the manufacturing cannot by mechanized because if the contents are reduced to 20 sticks in order to facilitate mechanization of the process, the captive market would be misled into thinking that the products are no longer cigar flavored cigarettes but the milder tasting American blends.
With its rich history serving Filipino smokers, Mighty’s first 65 years have positioned it as a major player in the domestic market, particularly in the province where its iconic and economical brands continue to perform strongly. But the Philippines is a dynamic market, and recent events, particularly the merger of Philip Morris and Fortune Tobacco, have created new challenges for Mighty.
“Yes, the merger presents a challenge for us but also an opportunity.” Said Mighty’s Michael Chua told Tobacco Asia. “We are now on the second largest cigarette manufacturer in the Philippines and the country’s only privately owned tobacco company.”
Cigar-blended cigarettes are hand-packed by women factory workers called Kahistas. The Philippines is a majority single stick market, particularly in rural provinces where the local economy remains challenging. Exports Mighty has already expanded into exports and contract manufacturing, and these sectors are proving profitable for the company.
“We are continuously expanding our exports, reaching countries including Singapore, Malaysia, Thailand and Taiwan,” Chua said. “Contract manufacturing is also key component of Mighty’s strategy. Lately we have added contract manufacturing of the Independent Tobacco Company of Dubai’s Business Royal brand.”
Other brands Mighty has entered into contract manufacturing arrangements with include Break cigarettes which it manufactures on behalf of the Singaporean brand owner. “Most contract manufacturing clients are distributors,“ Chua clarified, adding that “As a consequence of ongoing integration and consolidation among manufacturers, distributors look for competent contract manufacturers and develop their own brand.
This appears to be a regional if not a worldwide trend. Our customers realize that Mighty can produce products to international standards, and we present ourselves as a company that can offer a competitive price as well as a quality product.
These factors gives distributors a good incentive to invest with Mighty.” One advantage Mighty has over its competitors is its lower operating costs. “Our cost of production is considerably lower than many other companies, and taxation based on production costs is lower, which provides an added advantage” according to Chua.
When approached by a potential contract manufacturing customers seeking to develop its own brand, Mighty will typically develop the blend based on the target market and specifications, provide samples and once the product specifications are approved and the price is accepted, starts production. In keeping with local and regional trends towards a preference for lower tar and nicotine products, Mighty produces a range of lower tar products.
“The lowest tar product we produce currently is 3mg,” Chua said. “We supply Taiwan and Singapore with 3mg, 5mg, 7mg and 9mg cigarettes. We achieve these specifications through a variety of measures including the use of expanded leaf and this tobacco perforations.Over the last few years, the Philippine tobacco crop has significantly improved
However, the domestic market remains the core focus for Mighty Corporation. “Domestic brands remain a strong part of the Mighty portfolio,” Chua told us “Mighty brands in the domestic market are still the most important facet of our business,” Chua said.
Aside from Philippine tobacco, Mighty imports leaf from Brazil, China and the US as well as a limited quantity of high quality FCV from Croatia.
Most of the flavor components in its cigarettes are sourced from international suppliers. Mighty utilizes Hauni Protos makers, GD packer, and Molins hard pack hinge lid machines. Filter now is supplied by Celanese and Rhodia, plug wrap from Tann and PDM.
The Philippines is a majority single stick market, particularly in rural provinces where the local economy remains challenging for many consumers. It is still common to see Takatak cigarette vendors, usually young men, in crowded market places and streets selling individual cigarettes from a wooden display box with a small compartment for the money collected that is covered with a sliding door.
They attract potential buyers by vigorously sliding the door into the wooden surround repeatedly, creating the takatak noise from which they gain the title. Tobacco has been an economic mainstay of the Philippines for centuries, and despite growing pressure from the anti-smoking lobby , tobacco production remains an important commodity.
Tobacco leaf, cigarettes, and for that matter cigars were introduced by Spanish colonists, and Mighty’s portfolio reflects the types and varieties of smoking products that have been available in the Philippines since the Spanish era, including dark aired cured and other native tobaccos used in traditional cigarettes as Mighty’s leading brand La Campana.
Mighty sources in leaf from Universal Leaf Philippines, Continental and Trans Manila, and from a handful of contract farmers cultivating around 100ha of land. “Over the last few years, the Philippine tobacco crop has significantly improved particularly flue cured and burley,”Chua told us. “Philippine tobacco has become very competitive globally.
Philippine legislators tend to look at tobacco as a cash cow for the often struggling economy, and taxes raised from tobacco and tobacco products continue to be an important mainstay. Taxes on cigarettes in the Philippines are relatively low compared to its Asian neighbours, but pressure from FCTC-inspired anti-smoking groups and Bloomberg Foundation funded lobbyists continues to stimulate an upward trend in excise.
The next increase in the multi-tiered (four level) tax structure is likely to be introduced in January, 2011. Smoking bans are being implemented, and even enforced, in more areas throughout the country, usually at the discretion of the local government authorities, but to date this has not caused too many issues for Mighty.
“Smoking bans have not affected Mighty particularly as most of its products are sold in rural areas where smoking bans are largely irrelevant because there are not so many public buildings,” according to Chua. Mighty’s first 65 years have seen it grow into an iconic, 100% family-owned cigarette manufacturer.
The company’s owners, the Wongchuking family, are looking forward to the next 65 years with a sense of pride and history and recognize the responsibility owed to their employees and their customers alike. Exports will no doubt continue to be an important growth area for Mighty, but it is the intriguing, unique and dynamic domestic market of the Philippines will continue to be the main focus for the Philippine’s second largest and oldest cigarette manufacturing company.