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. Last Updated: 07/27/2016

Major Tobacco Firms Intend To Make Cigarettes Locally

Major tobacco companies Philip Morris and RJ Reynolds plan to start producing Marlboro, Winston and Camel cigarettes in Russian plants next month in a move to take advantage of low manufacturing costs and in keeping with their worldwide strategies, officials from both companies said Tuesday.

Philip Morris intends to begin producing Marlboro cigarettes in Russia for the first time since 1986 when its new $330 million factory, Philip Morris Izhora, opens in the Leningrad region in mid-February, the head of the company's external relations department, Pyotr Lidov, said Tuesday.

The company plans to produce 25 billion Marlboro cigarettes at the new plant per year. All Philip Morris brands, apart from Parliament and Virginia Slims, will then be produced locally, Lidov said.

Both Philip Morris and RJR, which plans to launch production of Winston and Camel cigarettes at its RJR-Petro plant in St. Petersburg in February, say they will continue to import tobacco from abroad and the quality of the cigarettes will be maintained at the local modern production facilities.

Sales of imported cigarette brands were almost sliced in half after the August 1998 financial crisis.

Marlboro was the sixth-largest brand on the Russian market in November, with 16.83 percent of the market, after falling from a pre-crisis position as the second most-smoked cigarette, just below LM, which had 30 percent of the market, according to market research firm COMCON.

Camel and Winston had 7 percent and 6.4 percent of the market, respectively, in November, COMCON said. Cheaper Russian brand Pyotr Pervy, also produced by RJR at its St. Petersburg plant, is now Russia's most-smoked cigarette, with 30 percent of a very dynamic market.

One-third of Russians smoke and the Russian market is considered to be the fourth-largest cigarette market in the world after China, the United States and Japan.