The upper house of the Czech Parliament, the Senate, yesterday approved an amendment to a law that further restricts tobacco advertising in the Czech Republic. As of July 2004, 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).
While the restriction will make it difficult for tobacco companies to launch new products and to attract new smokers, it may be, however, somewhat advantageous to Philip Morris CR (PM CR), given its more than 80% of the current market share, as the ban will effectively prevent PM CR's competitors from using advertising to increase their market share. Overall, mounting legal and social strictures against smoking are negative for PM CR stock, but they have been largely expected.
Jan Hájek