The Mendiola & Compañía, a subsidiary and 100% owned by Philip Morris International (PMI), absorbed the Tabacalera Costarricense S.A. and in addition, it will stop producing cigarettes in the country.

As a result of the merger, the company will lay off 45 employees, reducing its operation in Costa Rica to 200 workers, confirmed Susana Salas, corporate affairs manager at Mendiola & Compañía.

The company’s main brands in Costa Rica are Derby, Marlboro, and L&M.

“As part of the consolidation of production, our products will be manufactured in our global plants, thus optimizing processes and reallocating resources to ensure an optimal long-term operation,” Salas explained.

The executive did not detail PMI’s investment in becoming the sole shareholder of Mendiola & Compañía. “Before, the two companies, both Tabacalera and Mendiola, were affiliated with Philip Morris International, and now the one that prevails is Mendiola & Compañía,” explained Salas.

Tabacalera Costarricense, Mendiola & Compañía was formed in 1960 to be in charge of distributing cigarettes in the country. In 1975, PMI acquired Tabacalera shares, as detailed on the company’s website.

The company’s main brands in Costa Rica are Derby, Marlboro, and L&M.

Salas said the increase in the tax burden on cigarettes packs of 20 that went into effect in 2012, and the increase in illegal cigarette smuggling led to the closure of production in the country.” The studies carried out by the consultant MSIntelligence in Costa Rica in 2009 showed an incidence of smuggled cigarettes of only 0.2%, while the same study carried out in 2017 showed an incidence of 30.1%,” stressed the executive.

In Costa Rica, contraband cigarettes result in a US$26 million loss per year, according to data from the Costa Rican-American Chamber of Commerce (Amcham), released in 2016.

Support for former employees

Salas explained that the dismissed employees will be offered severance packages exceeding those established by law. In addition, they will be provided with a psychological, financial and legal counseling service.

“The program of support after the separation of the employee, so that the person can reincorporate quickly to their working life, includes from consultancy to initiate a process of interviews in different companies, development of documents like curriculum to advising to start a business of his own”, explained the executive.

The support will be for a period of 12 months.

Source (in Spanish): La Nacion