Author: Staff Writer

  • Imperial employees getting stuck in outside the factory gates

    Imperial Tobacco is supporting a scheme to improve adult literacy in the Dominican Republic and to promote greater social inclusion in the Caribbean nation.

    The Altadis Foundation and Imperial’s local subsidiary, Tabacalera de García, are jointly backing the Ministry of Education’s “Quisqueya Aprende Contigo” (“Dominican Republic learn with you”) initiative.

    The foundation will pay for specialist teachers and fund a community campaign in La Romana, where Imperial’s cigar factory is based.

    Under the initiative, employees who have difficulty reading and writing will be provided with access to education resources along with the support of volunteers from the factory acting as coordinators.

    “We’re helping our people and the wider community tackle an important issue in the Dominican Republic,” said Altadis Foundation General Manager Ines Cassin.

    “The aim is to provide a basic education to those who didn’t have the same start in life as others, and our people will also be engaged in ensuring the success of this project.”

    In the Philippines, Imperial employees are helping to maintain a river basin which drains into Manila Bay near the company’s Rosario factory.

    Imperial’s subsidiary, the Philippine Bobbin Corporation, has joined with other businesses in adopting the Maalimango River as part of a local environmental protection scheme.

    Thirty-eight employees from the factory volunteered to take part in a clean-up operation to remove rubbish from the waterway, and they joined volunteers from other local companies in planting trees along the riverbank to help prevent rubbish from ending up in the river.

    “The Maalimango is important during the rainy season to help drain away floodwaters from the surrounding area,” said factory manager Carlos Saez-Diez Reberdito.

    “However if it is clogged up by garbage it cannot do its job effectively, which can impact on the Rosario region.”

    And in the Canary Islands, a group of Imperial volunteers has been working to help preserve one of its biggest natural pine forests.

    The Tamadaba Park forest on Gran Canaria covers more than 7,500 ha and is extremely important for capturing rainwater.

    It also provides a secure nesting area for birds and a wildlife haven for other protected species.

    But in the summer months, the forest becomes very dry and the risk of forest fires is extremely high; so a group of 40 employees worked in 39-degrees-Celsius heat to pick up around one 1 tonne of pine needles from the forest floor and thereby alleviate the risk of fire.

     

  • Fuller builds technical center in Germany

    Adhesives provider H.B. Fuller has broken ground for a new technical center at its existing site in Lüneburg, Germany. The ceremony, on Aug. 12, was attended by Mayor Ulrich Mädge, along with representatives from the company’s leadership team and local employees.

    Covering an area of 2,300 square meters, the center will have three sections—one with offices and development laboratories; one containing a staff canteen, meeting rooms and building services; and one that will serve as a customer center, where H.B. Fuller will carry out tests, demonstrations and training.

    The expansion is part of a wider business transformation project, designed to streamline and modernize operations and facilitate profitable growth. Construction is scheduled to be completed in the summer of 2014.

     

  • “U.S. retreats from tobacco regulations in trade deal”

    FairWarning reports that the Obama administration appears to have retreated from efforts to include, in the Trans-Pacific Partnership agreement, language enabling countries to uniquely attack the tobacco industry and adopt tough anti-tobacco regulations.

    The online publication, which provides public-interest journalism on issues of health, safety and corporate conduct, says the Office of the U.S. Trade Representative put the protective language on hold last year following protests from the U.S. Chamber of Commerce and other business groups. Eight negotiating rounds passed since then without U.S. officials enabling the targeting of the industry through such language.

    Cigarette makers in recent years have invoked trade agreements to challenge anti-smoking rules like large graphic warning and plain packaging requirements. The National Association of Manufacturers, the American Farm Bureau Federation and a group of former U.S. trade representatives, including three employed by law firms with tobacco industry clients, also spoke up against language protecting countries’ authority to adopt anti-smoking regulations.

    Health advocates have said trade rules should not “inhibit any nation from exercising its sovereign authority to protect the health of its citizens,” and tobacco products “should not be treated as other consumer goods” in international trade.

     

  • Morgan Stanley shares thoughts on e-cigs

    In a report summarizing “key thoughts” on e-cigarettes, financial services provider Morgan Stanley acknowledges it has been surprised by the success of e-cigarettes, given the commercial failures of other innovative products such as Accord and Eclipse and the slower-than-envisioned development of tobacco segments such as snus and dissolvables.

    E-cigarettes have already achieved volume equivalent to about 1 percent of the U.S. market. Morgan Stanley attributes the sector’s success to effective nicotine delivery, broader consumer acceptance of technology, widespread consumer perception of less health risk versus conventional combustible products, growing societal pressure against cigarette smoking and the current regulatory vacuum, which allows for aggressive marketing.

    At the same time, the bank notes that e-cigarettes won’t necessarily benefit established tobacco companies. The potential business risks to the traditional industry include cannibalization of tobacco cigarette sales volumes, FDA regulations preventing the marketing of e-cigarettes under tobacco cigarette name brands and uncertainty about the capacity of e-cigarettes to develop the brand equity and consumer loyalty that is typical for traditional cigarettes.

    According to Morgan Stanley, Lorillard is best positioned to take advantage of the new segment because it owns the current e-cig market leader Blu Ecigs, while Reynolds American “probably has the most to gain from cigarette industry discontinuity.” Altria, as the dominant cigarette incumbent, has the most to lose.

    Future success for e-cigarettes, according to the investment bank, depends on the scale and pacing of technological and product performance improvements, along with ultimate FDA regulation and federal/state excise tax structure, the analyst said.

     

     

  • ‘Exclude tobacco from trade pact’

    The Malaysian Medical Association (MMA) has urged for tobacco to be excluded from the Trans-Pacific Partnership Agreement (TPPA), according to a report in The Star.

    According to MMA President Datuk N.K.S. Tharmaseelan, the overall objective of the TPPA was to increase and facilitate free trade of goods and services, but it should not apply to tobacco.

    “Tobacco is the only product that kills half its users prematurely, causes numerous diseases and reduces productivity.

    “There is simply no justification for tobacco to enjoy the privileges of free trade,” he said in a statement.

    The TPPA is a U.S.-sponsored trade agreement that is being negotiated by 12 countries—Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Japan, Singapore, Vietnam and the United States.

  • Retailers warned over misbranding RYO

    The U.S. Food and Drug Administration has warned retailers against misbranding RYO and MYO tobaccos as pipe tobacco. Pipe tobaccos are taxed at significantly lower rates than are cigarette and rolling tobaccos.

    In recent warning letters to retailers, the FDA stated that while the products are promoted or labeled as pipe tobacco, “the overall presentation of these products strongly suggests that they are intended for use in a cigarette.”  If these violations are not corrected, the retailers face sanctions that include monetary penalties, seizure of the product, no-tobacco-sale orders and criminal prosecution.

    In 2009, Congress substantially increased the federal excise tax on cigarettes and RYO tobacco and equalized the tax rates on these products.  However, pipe tobacco was taxed at a much lower rate.  In response, some tobacco manufacturers changed the label but not the content of tobacco previously labeled RYO.  From 2008 to 2011, sales of RYO tobacco fell by more than 76 percent, while sales of “pipe tobacco” increased by 573 percent, according to the Centers for Disease Control and Prevention.  There is no evidence of any increase in actual pipe smoking.

    The CDC last year found that the mislabeling of RYO tobacco as pipe tobacco cost federal and state governments $1.3 billion in revenue from April 2009 to August 2011.

     

  • Quarterly loss for AOI

    Alliance One International reported a net loss of $36.9 million for the first quarter that ended June 30. In the comparable 2012 quarter, the company posted a net loss of $30.7 million.

    Revenues for the quarter improved $26.1 million to $383.9 million versus last year. Total kilos sold, at 76.3 million, was similar to last year’s quarter, generating $370.7 million in tobacco revenues and $13.2 million in processing and other income.

    Alliance One President and CEO Pieter Sikkel expects volume and revenue for the full year to be better than that recorded last year, due to anticipated customer shipping schedules.

    “Our first fiscal quarter is usually a lower-revenue quarter in comparison to other quarters during the year, based on the timing of crops from the growing regions where we source tobacco,” he said. “This year’s first quarter is consistent with past experience.”

    Sikkel said the company’s quarterly performance had been affected by several factors, including restructuring expenses, disappointing recoveries of advances to tobacco suppliers in Zambia and the appreciation of the Malawi kwacha and other currency versus the U.S. dollar.

     

     

     

     

  • Dissolvables struggle

    R.J. Reynolds Tobacco Co.’s Camel Orbs, Sticks and Strips dissolvable products have struggled to gain consumer traction even after spending four years in five test markets, according to a story in The Winston-Salem Journal.

    Company spokesman Richard Smith said that the Camel dissolvables remain in limited distribution in the current test markets of Charlotte, North Carolina, and Denver, Colorado, but that “there are no plans for any marketing beyond these channels.” Camel Snus, by contrast, stayed in test markets for only two years, from April 2006 to October 2008, before its nationwide distribution began.

    Smith said the company found from its conversations with adult consumers that “while there’s strong interest in the [dissolvables] category, a different product form may present a better option over the long term.”

    John Spangler, a professor of family and community medicine at Wake Forest School of Medicine, said he is not surprised that the dissolvables have not spurred demand because he believes that “the market for spit-less, noncombustible tobacco is probably already taken up by snus.”

    Bill Godshall of Smoke Free Pennsylvania said the “test markets weren’t good” and RJR’s use of child-resistant packaging may have been detrimental for sales as the products are “impossible to open without scissors.”

  • Wisconsin university to study menthol

    The University of Wisconsin-Madison Center for Tobacco Research and Intervention received a $368,000 grant from the National Heart, Lung and Blood Institutes and the Food and Drug Administration to “study the use of menthol cigarettes” and contribute to the FDA’s research to determine whether or how to regulate the flavoring, reports the Wisconsin State Journal.

    The grant begins this month and runs through June 2014. The principal research investigators will be Michael Fiore and Timothy Baker of the UW Center for Tobacco Research and James Stein of UW Preventive Cardiology Program.

    According to the UW-CTRI website, the research will use data from the Wisconsin Smokers’ Health Study 2, a longitudinal study involving 2,500 participants and assessing dependence, participant characteristics and quitting attempts and successes, to determine associations of menthol cigarette smoking with dependence, cessation attempts and cessation success.

  • Goldman Sachs “bullish” on e-cigs

    Goldman Sachs analysts said Aug. 7 that they remain bullish on category growth prospects for e-cigarettes, which “have the potential to transform the tobacco industry.” However, they noted that not all tobacco companies would benefit equally, as e-cigarette growth could simultaneously accelerate the decline in conventional cigarettes.

    E-cigarettes currently account for less than 1 percent of total U.S. industry sales. Goldman Sachs believes they could reach 19 percent of sales and 10 percent of total industry volume by 2020 at the expense of conventional cigarettes, whose share of total tobacco industry profit pool is estimated to shrink to 63 percent by 2020 from 82 percent today.

    E-cigarette sales have doubled in each of the past two years, with continued building of awareness, trial and repeat usage, the analysts said, adding that they appear “positioned to extend the duration of the tobacco industry’s profit generation and even accelerate industrywide profit growth.”

    E-cigarettes also have the potential to generate higher profit per cigarette-equivalent pack as they are not subject to Master Settlement Agreement payments and will likely have lower taxes, the analysts noted.

    The analysts said they see Lorillard as best-positioned in e-cigarettes because of its “first-mover advantage” and limited cannibalization on its cigarettes, while Altria has the most at risk given its 55 percent share of cigarette industry profit.