The steep increase in excise taxes for tobacco products produced a dramatic reconfiguration of the market. Where once a multinational corporation enjoyed near-monopoly dominance of the market, a Filipino company has now eked out major market share.
Philip Morris-Fortune Tobacco enjoyed almost complete dominance of the local cigarette market before the imposition of more punitive “sin taxes.” In a matter of only a few years, local player Mighty Corp. has taken a significant market share by catering to lower-priced products.
Few might have heard of Mighty until recently. The fact is, the company is probably the oldest Filipino cigarette manufacturer.
Mighty traces its roots to La Campana Fabrica de Tobacos, Inc. This company was founded in 1945 by a highly entrepreneurial immigrant named Wong Chu King and several partners. The company celebrates its 70th anniversary this month, basking in the success of its strategy to win market share.
From its first factory located along Tayabas St. in Manila, La Campana produced native cigarettes as well as locally popular cortos and regaliz cigars. A second factory was built in 1948 along Pasong Tamo, Makati. In 1951, the company acquired the land along Sultana St. in Makati that now serves as the headquarters of Mighty Corporation.
In 1963, Wong Chu King founded Tobacco Industries of the Philippines (TIP) with a modern cigarette factory located in Malolos, Bulacan. From that sprawling nine-hectare factory, the company produced American-blended cigarettes using the brand names Duke, Windsor and Tricycle.
The company went through a difficult period from 1965 to 1982. The unsinkable Wong Chu King persevered, however. By 1985, the company reestablished itself as Mighty Corp., acquiring the trademarks of its rival Alhambra Industries in 1993. This enabled the company to corner the native cigarette market.
Higher labor costs in Makati forced the company to consolidate all its manufacturing at the Malolos plant. In 2001, the company entered into a cigarette manufacturing agreement with Sterling Tobacco, producing blended cigarettes using the latter’s brand names.
Between 2001 and 2007, Mighty invested in modern plants and state-of-the-art packaging facilities. This enabled Mighty to achieve a fully integrated production and packing line. This acquisition of modern manufacturing technologies prepared the company to compete head-to-head with the once dominant player in the Philippine cigarette market.
A superior marketing strategy, expanding market share in the lower-priced segments and moving up to the higher-priced segments enabled Mighty to take advantage of otherwise hostile conditions under the new “sin tax” regime. They caught the competition by surprise, to say the least.
Wong Chu King passed away in 1987, but not without establishing a corporate culture that valued long-term relationships. He left behind a legacy of corporate philanthropy that his successors sustain. Recently, Mighty put out an add celebrating the achievement of scholars supported by the company’s foundation.
The founder’s widow, Nelia D. Wongchuking now chairs Mighty’s board.