The smoking ban in public places directly affects Lucio Tan Group’s (LTG) tobacco earnings. It contributes 32% of earnings second to PNB’s 38% contribution. It is a dampener but not a total one. Victorias Milling Corp. (VMC) has started contributing to LTG, and Eton Properties is back developing two upcoming buildings after a two-year hiatus. These two can partially or totally offset the decline in tobacco earnings leaving PNB, Tanduay and Asia Brewery as LTG’s growth drivers.
The projected decline in tobacco earnings is debatable, but the recent significant contraction of tobacco sales came in 2013 on the jump of excise tax from PHP12 per pack to PHP25 per pack for high-priced brands and PHP2.72 per pack to PHP12 per pack for low-end brands. Tobacco sales nationwide dropped by 13.5% that time. Though not perfect, this can be used as a gauge for the drop in LTG’s tobacco earnings.
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