Mighty Corporation Assured Farmers of Tobacco Leaf Purchase

Pangasinan and Ilocos farmers have expressed relief that their tobacco leaves will have a sure market this year because of local cigarette manufacturer Mighty Corporation or Mighty Corp.

The National Federation of Tobacco Growers and Cooperatives (NFTGC) President Mario Cabasal was elated after learning that Mighty Corporation has made commitments to initially buy at least 10 million kilograms of tobacco leaves at an average price of P70 per kilo and buy all the excess tobacco leaves that farmers could not sell to other buyers.

“We limited to minimum areas fields planted to tobacco last year in anticipation of depressed demand due to the scheduled implementation of the sin tax,” Cabasal said. “good thing, some farmers were able to sell part of their low-grade harvests to Mighty Corporation in 2013,” he pointed out.

“Now that we are assured of an alternative market, besides other tobacco companies, our members will again be inspired to devote larger areas to the cultivation of Ilocandia’s most important cash crop,” he added.

Fearing that tobacco prices and demand for the yellow leaf would dive as a result of the new excise tax law on cigarettes, many farmers in the Ilocos Region shifted to planting yellow corn.  Profits from corn are, however, lower than tobacco.

BIR Rakes in 8 Billion Pesos From Mighty Corporation

According to the Bureau of Internal Revenue, the excise tax paid by Mighty Corporation or Mighty Corp made a quantum leap from P300 million in 2012 to at least P8 billion for the whole year of 2013.

Mighty Corporation Spokesperson Oscar Barrientos added that the tax paid for the year 2013 by the Filipino-owned cigarette manufacturing company just past reflects the jump in the market share of the company and their fair share in the increased taxes on “sin” products.

Barrientos, a retired regional trial court judge, said the facts should put to rest false accusations that Mighty Corporation has not been paying its taxes faithfully.

He further pointed out that despite charges in the news media and by some members of Congress against the company, no case has been filed in court.

In fact, Barrientos pointed out, the BIR and the Bureau of Customs have cleared his company of any tax deficiency this year.

The company paid P300 million in 2012, the former judge explained, when its share of the local market of cigarette was a measly 3%.  This share shot up since the government put into effect Republic Act 10352, otherwise known as the new sin tax law.

The law has synchronized a five-year adjustment of taxes on cigarettes for it to become a uniform P30 per pack in five years covering all brands.

Records of the Bureau of Internal Revenue (BIR) had shown that excise taxes from both cigarettes and alcohol products increased by 81.5 percent despite a decline in the number of sticks sold.  Total tax take from January to November hit an all-time high of P91.6 billion from P60.4 billion in 2012.

Taxes from cigarettes represented 61.6 percent or almost two thirds of sin tax collections for 11 months.

Mighty Corporation which until the year 2012, was a minor player, pitched in more than P8 billion of the excise tax, not to mention the income tax the company will have to pay for the same year come deadline time.

THE CHAIR: Mighty Corporation Executive Vice President OSCAR BARRIENTOS

Retired Regional Trial Court Judge OSCAR P. BARRIENTOS has found himself on the other side of the defence as defender of the cigarette manufacturer Mighty Corporation.

As the executive vice president of Mighty Corp., Barrientos also doubles as company spokesman. He has become the face for the low-profile owners of the wholly-owned Filipino cigarette company, who have been doing their business for 68 years quietly and away from the prying eyes of the media and even from competitors.

But the former judge, who also leaches marketing and finance, sees his role in Mighty more of a battle in actual grassroot marketing rather than a courtroom drama.

Chinese migrant Emmanuel Wong Chu King founded La CampanaFabrica de Tobacos Inc. in 1945 as his way of helping Filipino war victims.

At first, Wong Chu King, married to Nelia, a Filipina, did everything from blending the tobacco to working as salesman, delivery man, collector, cashier and promoter of his products. The Company specialized in producing native cigarettes. The iconic La Campana and Magkaibigan were the company’s original brands.

In 1985, Mighty Corporation was established and became the American blended Virginia Cigarette Manufacturing Co. In 2001, Mighty entered into a cigarette manufacturing agreement with Sterling Tobacco to produce the latter’s trademarks. In 2004, the company entered into a cigarette manufacturing agreement with the Philip Morris Philippines as the latter brought the trademarks of Sterling Tobacco.

The rest is history. What used to be just a simple native cigarette manufacturer has expanded to become not just an industry pioneer but a force to reckon with under one name Mighty Corporation.

Barrientos, who joined Mighty Corporation a year ago upon the encouragement of the owners who happened to be good friends of his, can only at least in the best position that this company has to offer and will continue to offer.

While Mighty focuses on the non-premium cigarette brand, it does not lose focus on what makes it stick all these years. It has remained faithful to what it does best, producing cigarettes for the Filipinos market content with a 3 percent market share.

“Mighty has good taste, good price and good packaging,” stresses Barrientos.

While both prices for premium and the non-premium brands were adjusted to account for the increase in excise tax, the non-premium has a lower tax increase and therefore it has lower price hike while the premium brands have to endure with the huge price hike making them more expensive to the ordinary smoker.

As prices of cigarettes become more expensive, most smokers can no longer afford the premium cigarette brands so they shift to the non-premium brands benefitting Mighty, which has a total of 23 brands.

But Mighty has another big edge: Its clear understanding of the domestic market, which it has been serving well and faithfully for the past 68 years.

 “We have a very good distribution system focusing in the rural areas. Our distribution system touches system right down to the grassroots,” says Barrientos.

In fact, Mighty is very strong in the Zamboanga area. Its premium competitors though have been concentrating in the big cities and their distribution are mostly in big supermarkets.

 “We understand the market better,” says Barrientos, who finishes his MBA at the Asian Institute of Management.

Another unique strategy is the company’s credit line offer to the rural sari-sari stores. This strategy does not only ensure that small stores carry Mighty products, but also augment the poor Filipinos capital to enable them to continue their small business.

This has endeared them to the sari-sari store owners, who now prefer Mighty grateful for the lifeline provided to them.

According to Barrientos, 70 percent of Filipino smokers buy by the stick, not packs.

The company has also tapped the direct selling network to further beef up its market.

Barrientos explained that at the end of the day, the price of a merchandise will redound to the cost of production plus margin.

In the case of Mighty, it has never gone overboard in its expenses. Its operation has remained low cost with not much overhead cost.

“In the first place, we don’t have expats personnel to pay for. An expat can easily command $10,000 salary a month,” says Barrientos. Maintaining expats is expensive because the employer must also consider they have a lifestyle to keep.

All these years, Mighty has remained a low maintenance firm. It holds its headquarters in Makati, along the Pasig River which also serves as the residence of the company owners. Most traditional Chinese businessmen also reside in a building where they do their business. This lean organization is simple and bereft of the trappings of the high-end offices in Makati. It operates in an old but well-maintained

building.

“Our strategy at the plant is to produce low cost but quality cigarettes, but we go for volume because there is a strong demand for our products,” says Barrientos.

Its CSR program is mostly providing education to poor but deserving students. Now, it’s scholars are mostly children of tobacco farmers numbering 100 and is expected to reach 500 this year.

This scholarship program, which is geared for the tobacco farmers or through the Federation of Tobacco Farmers, has been going on for the past ten years already.

Part of its CSR program is to help improve the quality of local tobacco produce so they will not import anymore in the long run.

“Why is the imported tobacco has better quality than the locally grown when they come from the same seeds,” says Barrientos.

The company also extends assistance to affected families during calamities without any fanfare. Barrientos relates that his father was a chain smoker who could consume three packs a day, but he does not smoke nor his seven other siblings.

“But I don’t feel guilty being in this industry,” says Barrientos of his work in the cigarette industry, which is known to cause lung cancer.

“The health warning that cigarette is addicting is right although it has no effect to some,” notes Barrientos.

His being in the industry does not give him also the license to encourage others to smoke.

“I will not encourage anyone to smoke, but let them find their own stick. Parents are only there to guide, although children may not follow them 100 percent,” says Barrientos, who used to play golf until he joined Mighty.

“I was supposed to be enjoying my retirement, but I was called to this job, something that I cannot refuse because it is very challenging. Aside from that, one of the owners is a good friend of mine and they treated me well and that’s what they’ve been doing with the rest of the employees,” says

Barrientos, who finished law and management from the Pamantasan ng Lungsod ng Maynila and the Philippine Christian University.

“This is a family-owned corporation, but the owners are very fair and professional. I enjoy this job, otherwise I should have left already. It’s good to meet new people and become part of this company,” says Barrientos.

“I am happy here. Definitely, I am in the right company,” says Barrientos.

Mighty Corporation Makes it Double

Local cigarette manufacturer Mighty Corporation or Mighty Corp said that it will buy 10 million kilograms of tobacco products worth millions of pesos from farmers in Northern Luzon and elsewhere in the country.

Mighty Corp executive vice president Oscar Barrientos said to National Tobacco Administration (NTA) administrator Edgardo Zaragoza that it would buy tobacco from farmers 100% more than the 5 million kilograms his firm bought in 2013.

That means double income for the farmers.

“This is to assure our tobacco farmers of our willingness to help in response to the published report of the market leader in the tobacco industry to lessen production this year,” Barrientos said.

This debunked critics’ allegations that Mighty Corporation has been importing raw materials from foreign countries at low prices and is no longer buying tobacco from local farmers.

Barrientos said that Mighty Corp critics had been resorting to a disinformation campaign using convoluted data in an effort to undermine Mighty Corporation's tremendous increase of the tobacco industry's market shares.

Might Corp's shares surged to almost 20% of the low-priced cigarette brands last year from in 2012, resulting in the payment P8.2 billion in excise taxes.

Barrientos said the company’s market shares shot up after the government effectively implemented Republic Act 10352, or the new Sin Tax Law, that levelled the playing field in the multi-billion peso tobacco industry which was controlled by Philip Morris and Fortune Tobacco.

The new law that took 14 years to pass caused a tremendous migration of smokers from the expensive premium and sub-premium brands to low-priced cigarettes.

It also resulted in some smokers, because of economic reason, to simply quit the vice and thus validated health authorities’ estimate that the sin tax law would result in the decrease of the number of smokers in the country.

Mighty Corporation Pushes For Organic Agri Pesticide

Aside from cigarettes, tobacco leaves can also be used as organic pesticides against aphids, leaf rollers and stem borers.  It is also said to be more effective and much safer than chemical-based pesticides which destroys soil productivity and harm the environment.

Filipino-owned cigarette manufacturing company Mighty Corporation or Might Corp plans to develop and promote the alternative use for tobacco, to help reduce Filipino farmers’ reliance on chemical-based pesticides, increase tobacco farmers’ income, and protect the environment.

Mighty Corp executive vice president Oscar Barrientos said that the move was part of the company’s corporate social responsibility.  He noted that a small but growing number of Filipino farmers were shifting from chemical-based to organic pesticides to organic agri pesticides, or a combination of the two.

The company coordinated with key agencies like the National Tobacco Administration (NTA), Fertilizer and Pesticide Authority (FPA) of the Department of Agriculture (DA) and the University of the Philippines in Los Baños, Laguna (UPLB) in this effort.

Filipino farmers make up 11.55 million of the country’s 38.6-million-member labor force and contribute 20% of its gross domestic product.  Insects and other pests have adversely affected farmers’ production of main agricultural crops, including rice, corn, coconuts, sugarcane, bananas, pineapples, coffee, mangoes and abaca.  Also affected are secondary crops like peanuts, cassava, sweet potatoes, garlic, onions, cabbages, eggplants, calamansi, rubber, and cotton. Nicotine from tobacco has been used on crops as a natural insecticide that does not have the health and environmental risks of chemical-based pesticides.

Church Officials Backs Owners of Mighty Corporation and Wong Chu King Foundation

Cagayan church officials expressed support to the owners of Bulacan-based cigarette manufacturer Mighty Corporation or Mighty Corp, who have currently been under siege for its low prices.

Competitors and even some legislators have thrown all kinds of accusations to Mighty Corporation in the past months but earlier this year, the local tobacco company finds an ally in church groups as well as with BIR and Customs who already said that allegations against the corporation are baseless and therefore dismissed. 

Bulacan Archbishop Emeritus Diosdado Talamayan of the Archdiocese of Cagayan said that the Wongchuking family, which owns Mighty Corporation, were great devotees of the Our Lady of Piat.

“For the past many years, I have known personally Mrs. Nelia Wongchuking, chair of the board of trustees of Wong Chu King Foundation Inc.,” said Talamayan, “She, together with the entire family, are great devotees of the Our Lady of Piat.”

Bishop Talamayan said that the Wongchukings even built a chapel dedicated to the Our Lady of Piat in Malolos.

Oscar Barrientos, Mighty Corp executive vice president asked the firm’s competitors to do battle in the sales market and not resort to dirty tactics.  

Mighty Corporation Increases Market Shares and Excise Tax Payments

According to a Bureau of Internal Revenue (BIR) report, excise tax payments of cigarette companies rose from 60.4 billion pesos in 2012 to 91.6 billion pesos in 2013 (January to November).

According to Oscar Barrientos, executive vice president of local cigarette manufacturer Mighty Corporation of Mighty Corp, his company's excise tax payments alone rose from 300 million pesos to 8 billion pesos.

“The tax we paid for the year 2013 reflects the jump in our market share and our fair share in the increased taxes on “sin” products." Barrientos explained.

Barrientos, a retired regional trial court judge, said that the facts should put to rest false accusations made on Mighty Corporation that it has not been paying taxes correctly. He also said that despite charges and negative publicity circulation in the news and media by some members of the congress and of course their competitors, no case has been filed in court.  Which only strengthen the fact that the allegations were malicious and untrue.

In fact, BIR and the Bureau of Customs have already cleared Mighty Corporation of any tax deficiency earlier this year.

Mighty Corp's shares shot up after the government put into effect Republic Act 10352, otherwise known as the new sin tax law.  The law has synchronized a five-year adjustment of taxes on cigarettes for it to become a uniform P30 per pack in five years covering all brands.

BIR records also shown that excise taxes from both cigarettes and alcohol products increased by 81.5 % despite a decline in the number of sticks sold.  Taxes from cigarettes represented 61.6 % or almost two thirds of sin tax collections for 11 months.

Mighty Corporation Delivers More Help to North Luzon Farmers

Mighty Corporation and organized tobacco farmer groups signed an agreement to pursue projects designed to uplift the lives of farming families of Northern Luzon.

With the theme “Sama-sama Tayong Pilipino sa Pagyabong ng Industriya ng Tabako” Mighty Corporation executives, retired general Edilberto P. Adan and retired judge Oscar P. Barrientos, and Mario Cabasal, head of the National Federation of Tobacco Farmers and Cooperatives, Inc. (NAFTAC) recently celebrated the partnership with all 200 tobacco farmer leaders in Pangasinan, La Union, Abra and the Ilocos provinces.

Mighty Corporation executives through the Wong Chu King Foundation handed over 16 units of hand tractors worth P2.5 million and 90 units of water pumps worth P1.1 million to chapter delegations from seven provinces in Northern Luzon during the event.

“We are happy that Mighty Corporation has stood firm on its commitments to help the 65,000 strong tobacco farmers in the Philippines with their pronouncements this year to purchase 10-million kilograms of tobacco leaves and the P10-million outreach projects for tobacco farmers,” said Cabasal after the agreement was signed by the new partners. “This is definitely a big help to us, tobacco farmers,” added Cabasal.

Cabasal lauded Mighty Corporation for the P10-million three-pronged programs that will directly help tobacco farmers produce better quality tobacco that included the donation of support farm implements like irrigation pumps and tractors, sponsoring new 100 college scholar grants for the sons and daughters of tobacco farmers and the institutional support for the annual search for outstanding tobacco farmers and cooperatives.

Mighty Corporation Helps Thousands of Fish Pond Owners and Tobacco Farmers

Local cigarette manufacturer Mighty Corporation or Mighty Corp donates tobacco dust, a known fish pond conditioner that protects local ponds from predators, to Filipino fish pond owners and operators and help as well tobacco farmers all over the Philippines.

Mighty Corp executive vice president Oscar Barrientos said that they are helping the National Tobacco Administration (NTA) to promote the use of tobacco dust by donating to our thousands of fish pond owners. In doing so, the Filipino-owned cigarette manufacturing company are also helping tobacco farmers increase their yield. 

Mighty Corp said that NTA was promoting tobacco dust to control the population of snails and other fish pond predators, as that this was “an effective and economic option to replace highly toxic and cyanide-based chemicals used in the preparation or sterilization of fishponds.”
The dust promotes the growth of lablab, an algae and natural fish food, and serves as pond floor conditioner. Pond owners and operators use it to prepare or sterilize fish ponds before stocking fingerlings there.  Fish stocking is the practice of raising fish in a hatchery and releasing them into a river, lake, or the ocean to supplement existing population, or to create a population where none exists.

The cigarette company also aims to increase the income of the tobacco-growing industry by buying 10 million tobacco leaves from local farmers all over the country.  It allotted P700,000 for the purchase of green leaves.

NTA manufactures Tobacco Dust Plus at a plant in Sto. Tomas, La Union, where leaves are re-dried and pulverized.

Other studies headed by the government agency showed promising results from the use of tobacco dust as a substitute to chemical fish pond fertilizers.

BIR stops PMFTC’s cheap cigarette variant

The Bureau of Internal Revenue (BIR) has stopped Philip Morris Fortune Tobacco Inc. (PMFTC) from manufacturing a variant of Marlboro cigarettes called “Marlboro Flavor Code” due to alleged error in the printing of its case, it was learned yesterday.

In revoking the permit it issued last May 3 to PMFTC , the BIR’s Large Taxpayer Service (LTS) said the “aforesaid brand can no longer be manufactured and distributed in the market without securing a prior permit from this office.”

The cancellation stemmed from PMFTC alleged failure to come out with right color printed in the flip-top-box of the cigarette.

“Please be informed that upon verification and comparison of the approved label of the subject brand name against the commercial label being manufactured and distributed in the market, it was found out that the actual color scheme was not in conformity with the approved color scheme for the particular brand,” LTS Chief Alfredo Misajon said.

He said “the color of the approved sample label bears shade of dark gray while the color of the actual commercial label found in the market is black.”

Misajon’s letter added PMFTC blatantly violated the condition of the permit (ELTRD-(T)-011-05-13-87598) it issued to the firm with an explicit prohibition that: “No changes/alteration of the color scheme on the approved commercial label shall be made without prior approval from the Commissioner of Internal Revenue.”

A BIR official who declined to give his name said PMFTC’s permit was revoked because it failed to meet the specifications as stated in its application like the color and other details to be put in the pack, or carton cover.

She said PMFTC has already signified its intention to appeal the adverse decision, adding that the error was due to the kind of paper used which could not meet the color specified in its permit application.

“If an applicant applies for a bright red or blue color he must come out with the right coloration, not a shade of red or blue,” she said.

She said a manufacturer must specifically state the unique and distinct detail of its packaging and color scheme, otherwise the application will be rejected outright.

This way, she said, infringement of patent and unfair competition can be avoided as provided for under Revenue Regulations Nos. 3-2006 and 17-2012.

A manufacturer should not also ride on the popularity of a brand that was previously registered, the same official said.

PMFTC has been trying to employ various schemes to regain its market dominance, including the attempt last January, to sell in Mindanao and elsewhere at P245.00 per ream or P1.23 per stick of the same label with a black shade of color which the BIR subsequently banned, claiming that PMFTC cannot sell low-priced Marlboro because it is classified as premium brand.

In its letter-request to the BIR on Nov. 25, 2013, PMFTC claimed there was a need to introduce new cigarette brands to reverse the current decline in its sales due to stiff competition.

“What is more worrying, we expect the down-trading to continue, with the Marlboro volume further decreasing to 7.9 billion sticks in 2014,” PMFTC President Paul Riley said.

Riley wrote the BIR requesting permission to allow PMFTC to introduce to the market low-priced Marlboro cigarettes at a time when it is already selling at one-peso-per stick three cigarette brands it acquired from Fortune Tobacco Corp. in a joint-venture agreement in 2010, namely Westpoint Filter Kings, Jackpot Menthol 100s and Jackpot Full Flavor.

But these brands of cigarettes did not sell as much, a BIR official who requested anonymity said.

Its request to the BIR to produce Marlboro variants and sold them at lower retail prices to avail of lower excise tax rates was rejected because Marlboro has been classified as premium.

by Jun Ramirez
May 27, 2014-Manila Bulletin