Turmoil Forces RJR to Stop Making Cigarettes in Russia

From Reuters

Economic and political chaos gripping Russia has left RJR Nabisco Holdings Corp.'s R.J. Reynolds International tobacco unit no choice but to halt cigarette production there temporarily, a company spokesman said Thursday.

Adam Bryan-Brown told Reuters that RJR, which has invested hundreds of millions of dollars over the last six years opening production facilities in Russia, has faced great difficulties in the Russian market. The trouble started when the ruble began its downward spiral, and President Boris N. Yeltsin wrestled with efforts to name a new government that was acceptable to the Communist-dominated Duma, the lower house of parliament.

"I can tell you today there's no production going on," Bryan-Brown said from his office in Geneva, Switzerland. "We and a lot of other companies have had no choice but to curtail or temporarily cease production in Russia. I can tell you we're not alone. There's very little trade going on. We're still selling cigarettes, but it is a struggle."

Bryn-Bryan could not say when production would restart.

RJR, maker of Camel and Winston cigarettes as well as a Russian brand called Peter I, is the world's third-largest tobacco firm.

Just last month, RJR had said it would increase its investment in Russian production by $120 million over the next two years. It said it had already invested more than $400 million since 1992 and had claimed to hold as much as 20% of the Russian cigarette market.

Spokesmen for Philip Morris and BAT were not immediately available to comment on their Russian operations.

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