May 02, 2016 13:30:23
Cigarette: Inside the Pack – Apr’16

Our monthly cigarette survey found that there was an average price increase of +2.5% MOM and +3.7% YTD for Apr’16 period. WIIM recorded another highest MOM price increase, while HMSP, GGRM, and Djarum recorded positive MOM ASP growths in Apr’16. We added a new banderol price analysis within this month's ‘Inside the Pack’ series.

- Apr’16: on the rise. While Mar’16's price increase for retailers has been soft, Apr’16's average price increase was more aggressive. We saw a 2.5% MOM increase in Apr’16 vs. only 0.5% in Mar’16. As of 4M16, the average cigarette price increase is 3.7% YTD.

- HMSP: still growing. HMSP’s price was increased by 2.3% MOM in Apr’16. The main driver of growth came from A Mild 12, which recorded 4.5% MOM increase. We suspect the high growth rate was caused by last month’s decline of 1% for A Mild 12. Sampoerna Kretek (Hijau) came in second with 3.9% MOM increase, as the brand continues to record positive price growth YTD. All in all, HMSP maintains its positive price growth of 4.6% YTD.

- GGRM: back in the green. GGRM recorded 2.3% MOM increase in Apr’16, from - 0.8% MOM in Mar’16. We think it is a normalizing effect from negative growth in the previous month. GG Surya 16 recorded the highest MOM growth of 4.4% in Apr’16, due to negative growth of 2.9% in Mar’16. Overall, GGRM's YTD growth is back in a positive territory, recording 2% YTD growth.

- Djarum: positive growth in Apr’16. Djarum's products have experienced 2.2% MOM ASP increase in Apr’16, from negative MOM growth in Mar’16. Djarum Super MLD experienced the largest ASP increase of 6.8% MOM. The large increase, we suspect, was due to the new banderol price (using 2016 excise) for the brand. Meanwhile, Djarum Black 16 continues to maintain its positive growth YTD, recording 0.6% MOM growth in Apr’16. The Group managed to improve its YTD price increase to 2.8% in Apr’16, from 0.6% in Mar’16.

- WIIM: another aggressive month. WIIM recorded another highest MOM ASP growth in Apr’16, with an average ASP increase of 3.8%. Diplomat 12 recorded the highest ASP growth for the Group, with 8% MOM ASP increase. The large increase in Diplomat 12 price was caused by one modern retail store that increase the price by 28.6% in Apr’16, as they have been selling the brand at below average market price since start of the year. In addition, Wismilak Kretek recorded a flat MOM growth in Apr’16 due to a normalizing effect of high ASP growth in Mar’16.

- Banderol Price. From our sample picks, Sampoerna A Mild 12 and GG Mild 16 still used the 2015 excise banderol in Apr’16. We found that Djarum Super MLD and Djarum Black has started using the 2016 excise banderol, wherein they have banderol price increases of 25% and 13% respectively (vs. 2015 banderol price). Worth noting is that GG International has increased its 2016 banderol price by 4% MOM, from Rp13,000/pack in Mar’16 to Rp13,500/pack in Apr’16.