According to preliminary results of 2007, the tobacco business complex of LLC «GROUP AGROCOM» achieved the planned indices

In 2007, production volume made 18 bln cigarettes, sales volume — 18,1 bln. Gross sales volume is 6,2 bln roubles, net sales made 3,4 bln roubles. EBITDA — 541,6 million roubles.

In 2007 sales, leading «Donskoy Tabak» brands became quantitatively «Prima Dona» (27%), «Donskoy Tabak» (22%), «Nasha marka» (15%), «21 vek» (10%) and KISS (10%). According to gain shares, proportion of the brands was as follows: «Donskoy Tabak» brought 22% of gain, KISS — 20%, «21 vek» — 18%, «Prima Dona» — 8%, and «Nasha marka» — 7%. Sergey Sapotnitsky said the Continent and Sakura brands are planned to rate among top five in 2008, crowding out «Nasha marka» and «Prima Dona».

The average «Donskoy Tabak» company pack price made 11 roubles, having increased by 20% over 2007. In 2008, works on improving the portfolio will be continued. As Sergey Sapotnitsky, deputy of director general of LLC «GROUP AGROCOM» (TBC), executive director of the «Donskoy Tabak» company, explained, «Our task is to make the average cost of pack sold approximate 16 roubles, in order to equal the average pack price in the market. The main aim is to gradually decrease the proportion of non-filtered products in our portfolio, — I believe, we will decrease it to less than 20% in 2008, — and to increase cost by increasing sales volumes of the brands with MRP over 16 roubles.»

In 2007, the «Donskoy Tabak» company expanded into the «above premium» segment and, together with «Innovation Tobacco Company» launched the «Diablo Nero» and «Sabotage» cigarettes. In medium price segment, the «L&G» cigarettes were produced. Together with «Innovation Tobacco Company» the «Donskoy Tabak» company efficiently worked on the «Kiss» family. The «Kiss Fresh apple» version appeared in April, and in summer, the «Kiss Energy» version which was sold as limited edition in the Black Seaside area and in Saint Petersburg. The «Aroma Rich» version was launched together with «Richmond Tobacco Company».

The 2007 export volume made about 1 bln cigarettes. The increase is not significant as compared to 2006, some 2%; yet it grew considerably in monetary expression due to realisation of more expensive products. In 2008, the «Donskoy Tabak» company management faces a more ambitious task: to expand not less than in 1,5 times. «We must get a sort of return from the 2006-2007 activities of going out to new markets such as Armenia, UAE, Abkhazia. First deliveries to Moldova and Kazakhstan took place in the end of 2007.»

In 2007, the company executed a state order rather successfully, producing about 800 million cigarettes for the Ministry of Defence and other security agencies, which made approximately 4,5% of total production volume. Now after tenders, a much smaller volume is expected in 2008, as only 80 million cigarettes were tendered, and the rest of the volume was allocated for production in Kirghizia according to intergovernmental agreement.

The main competitors of «Donskoy Tabak» decreased production and sales volumes in 2007. Conversely, «Donskoy Tabak» managed to expand in the stable market and press the competitors. As Sergey Sapotnitsky pointed out: «If we go on reforming our portfolio and sales structure, we will get enough stability as a business and for work. Now we are faced to following tasks: to concentrate on quality issues, to bring the equipment base up to market demands. And already today to bring them into life too. We hope we will manage to cross the border of 20 bln cigarettes in 2008, to approximate to 9 bln roubles in gross sales volume, and to exceed 4,5 bln roubles in net volume. EBIDTA must make not less than 800 million roubles.»

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