As of today, an amendment to a law that further restricts tobacco advertising in the Czech Republic comes into effect. Tobacco advertising will be allowed solely (i) at tobacco-product points of sale, and (ii) in the form of motor-racing sponsorships (until year-end 2006).
This restriction will cause a reshuffling of PM CR's marketing mix, with a limited impact on marketing costs. The ban will affect PM CR's ability to attract consumer attention and especially to launch new products (given PM CR's 78% market share, the measure should hit its competitors even more). Overall, we believe that the long-term effect of the restriction will be marginally negative for PM CR (and the entire market).
Jan Hajek