Fake Marlboro Vendors Sued by Philip Morris International

From: Zacks Research

Philip Morris International Inc. (PM) has filed a case in U.S. District Court against local retailers in Miami for selling fake Marlboro cigarettes. The New York-based cigarette company has tracked down 17 retailers who have been selling these cigarettes.

Philip Morris has been fighting against retailers and importers who sell fake versions of its top branded cigarettes. In 2008 the tobacco giant had terminatedits relationship with the Poospatucks based on findings brought out by The Center for Public Integrity that indicted one of its distributors, Mauro Pennisi Inc. ofdistributing fake cigarettes to the citizens.

In February, 2011 the company filed a lawsuit in California against seven Chinese online retailers, alleging that they sold counterfeit versions of Marlboro to U.S. customers.

Philip Morris says Miami is one of the top three areas and a hotbed of counterfeit cigarettes. The fake business extends from Little Havana to Hialeah to Miami Beach. The company believes more than one million fake cigarette packs are sold in Miami-Dade County every year.

The illegal cigarettes are actually made in China and shipped directly to United States. The extensive collection includes not only counterfeit smokes, but cigarettes with counterfeit tax stamps for almost all countries.

Apart from being fake these cigarettes are far more injurious to health than their real counterparts. As per the lab findings of “The Organized Crime and Corruption Reporting Project” fakecigarettes from China are reported to contain 80% more nicotine and 130% more carbon monoxide, and impurities harmful for health.

Other tobacco giants are also joining the fight against rampant black marketing of bootleg cigarettes on city streets. Way back in 2003, Lorillard Inc. (LO) had come forward to demolish the fake cigarette market and sued about 75 retailers in five states, 26 of whom were from Los Angeles alone.

On June, 2011 British American Tobacco Plc. (BTI) Australia initiated legal action against six tobacco sellers alleging them of selling Winfield Blue and Winfield Gold look-alike packets at two-third of the real price.

Currently, we maintain a Neutral rating on the stock.  Further, Philip Morris carries a Zacks #3 Rank, which translates into a short-term Hold rating.

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