Category: News This Week

Imperial Tobacco’s business in the Netherlands has been recognized by trade partners for its field sales excellence, according to a note posted on the company’s website.

Imperial said that it had won the Distrifood Field Sales Team of the Year award in the non-food category for the fourth time, ahead of firms such as Mars and Nestlé, and ahead of other tobacco companies.

“These awards are based on the results of a nationwide survey of more than 2,000 Dutch retailers, who praised our field force for their professionalism, retail engagement and category knowledge,” the note said.

“This is not just recognition for our field sales team; all of our people have played an important role in this achievement,” said Ronald van Bilsen, head of sales.

“As we like to say in the Netherlands, together we can achieve more.”

A member of the European Parliament has questioned the ethics of tobacco manufacturers moving into the e-cigarette business.

Marc Tarabella, a Belgian MEP, noted in a preamble to questions he asked of the European Commission that all of the main cigarette companies had already bought “one or several electronic cigarette brands.”

The objective of these companies was clear, Tarabella said: to be completely in control by offering “both the evil and the remedy.”

“This is a serious problem,” he said.

“With such practices, ethics risk going up in smoke.”

Tarabella asked:

1. What is the Commission’s reaction?

2. Is there not a conflict of interest, or an ethical problem? What does the Commission plan to do?

The Commission will reply in writing at a later date.

Cyprus has become the 36^th country to have ratified an international protocol aimed at eliminating the illicit trade in tobacco products, according to a story in the Famagusta Gazette.

The protocol was adopted with much fanfare in November at the fifth Conference of the Parties to the World Health Organization’s Framework Convention on Tobacco Control, which was held at Seoul, South Korea.

The WHO opened the protocol for signature in January when the organization’s director-general, Margaret Chan, apparently told delegates attending the ceremony that one of the most joyous moments of her life had been the unanimous adoption of the protocol, despite efforts by the tobacco industry to prevent it from passing.

In fact, the protocol is almost certainly broadly welcomed by the tobacco industry, for which the illicit trade is a fierce competitor. The industry would like to see the speedy implementation of one of its commitments—the establishment an efficient international track and trace system for tobacco products.

And it would almost certainly like to see the protocol broadened to encompass certain manufacturing materials.

The protocol is due to enter into force 90 days after the 40th FCTC participating country has ratified it.

Japan Tobacco Inc. today announced the nationwide, early-December launch of two new Seven Stars products offering the “ultimate in taste.”

Seven Stars Real Rich is said to offer the ultimate in rich flavor and aroma, while Seven Stars Real Smoke is said to provide the ultimate in deep flavor and aroma.

In a note posted on its website, JT said that since its launch in 1969, Seven Stars had consistently offered “unique value in terms of flavor, aroma and design,” and as a result had become extremely popular among consumers.

In fact, a Seven Stars product occupies the No. 1 slot on Japan’s domestic volume sales table. And now, with 10 products in its lineup, the brand is one of the most popular in Japan.

Seven Stars Real Rich is said to use only selected leaf tobacco to produce a rich and mellow flavor and aroma with no roughness.

Its pack uses the basic Seven Stars design, but gives it a “deep red base tone rendered in sophisticated hues, representing the rich aroma and depth of the product.”

Seven Stars Real Smoke uses tobacco blended so as to produce a “full smoke sensation that is sharp yet has depth.”

It also uses the basic Seven Stars design, but in this case adapted with “bold black hues as the base tone, symbolizing a product with a rich and full smoke sensation together with a roasted flavor.”

Smokers of long or ultra-long cigarettes are at greater risk of lung and oral cancer than are the smokers of regular and king-sized cigarettes, according to Researchers at the Harvard School of Public Health (HSPH), Center for Global Tobacco Control.

“We found that smokers of long or ultra-long cigarettes have higher concentrations of tobacco specific carcinogens in their urine than [do] smokers of regular or king-size cigarettes,” said Constantine Vardavas, M.D., senior research scientist at the HSPH.

According to a MarketWired report sourced from the American College of Chest Physicians (ACCP), Vardavas and colleagues compared urine tests among 3,699 smokers of regular, king-sized and long or ultra-long cigarettes using data from the National Health and Nutrition Examination Surveys (NHANES) from 2007–2010.

Smokers of king-sized cigarettes accounted for 53 percent of the smoker population, smokers of long or ultra-long cigarettes constituted 31.5 percent, and smokers of regular-sized cigarettes made up the remaining 15.4 percent.

The researchers found that smokers of long or ultra-long cigarettes had significantly higher levels of NNAL—an indicator of a tobacco-specific carcinogen—in their urine.

In addition, researchers found that older smokers, non-Hispanic blacks and females had a greater tendency to smoke long or ultra-long cigarettes.

“While the significant risks of smoking are well known and accepted, very little information exists on the health risks of different sizes of cigarettes,” said Darcy Marciniuk, M.D., Fellow of the College of Chest Physicians and President of the ACCP.

Philip Morris USA’s domestic cigarette shipment volume during the third quarter to the end of September, at 34.1 billion, was 1.2 percent higher than it was during the third quarter of 2012.

Marlboro volume was increased by 1.5 percent to 29.4 billion, while the volume of the company’s other premium brands was down by 7.4 percent to 2.0 billion and its discount brand volume was up by 5.1 percent to 2.7 billion.

In presenting third-quarter and nine-month figures yesterday, Altria said that PM USA’s third-quarter reported domestic cigarettes shipment volume had increased by 1.2 percent primarily due to “one extra shipping day, changes in trade inventories and retail share gains, partially offset by the industry’s rate of decline.”

“After adjusting for calendar differences and changes in trade inventories, PM USA estimates that its third-quarter 2013 domestic cigarettes shipment volume was down approximately 3 percent and that total cigarette category volume declined approximately 3.5 percent in the same period,” Altria said.

PM USA’s domestic-market retail share during the three months to the end of September, at 50.7 percent, was increased by 0.2 of a percentage point on that of the third quarter of 2012.

Marlboro’s market share was unchanged at 43.7 percent, while the share of the company’s other premium brands was down by 0.1 of a percentage point to 3.1 percent, and the share of its discount brands was up by 0.3 of a percentage point to 3.9 percent.

USSTC and PM USA’s combined domestic smokeless products shipment volume during the third quarter, at 212.8 million cans and packs, was up by 9.5 percent on that of the three months to the end of September 2012.

Shipments of Copenhagen and Skoal taken together were up by 10.5 percent to 192.0 million packs and cans, while shipments of other brands were increased by 1.5 percent to 20.8 million packs and cans.

Altria commented that for the third quarter of 2013, USSTC and PM USA’s combined reported domestic smokeless products shipment volume had increased by 9.5 percent primarily due to one extra shipping day and volume growth for Copenhagen and Skoal.

“After adjusting for an extra shipping day, trade inventory changes and other factors, USSTC and PM USA estimate that their combined domestic smokeless products shipment volume grew approximately 4 percent for the third quarter of 2013,” Altria said.

USSTC and PM USA’s retail share of the domestic smokeless products market during the three months to the end of September, at 55.1 percent, was down by 0.3 of a percentage point.

Copenhagen’s share increased by 1.3 percentage points to 29.6 percent, while Skoal’s share fell by 1.2 percentage points to 21.2 percent, and the share of the companies’ other brands fell by 0.4 of a percentage point to 4.3 percent.

Middleton’s cigar shipment volume during the first three months, at 320 million, was increased by 6.0 percent on that of the three months to the end of September 2012, as Black & Mild volume increased by 4.4 percent to 311 million and other-cigar volume rose by more than 100 percent from 4 million to 9 million.

Middleton’s retail share during the third quarter, at 29.7 percent, was down by 1.1 percentage points on that of the three months to the end of September 2012, with Black & Mild’s share down by 1.1 percentage points to 29.5 percent and the share of other brands unchanged at 0.2 percent.

Altria’s 2013 third-quarter reported diluted earnings per share (EPS), at $0.70, were increased by more than 100 percent on those of the third quarter of 2012, while its adjusted diluted EPS, which excludes the impact of special items, increased by 12.1 percent to $0.65.

Altria’s third-quarter net revenues increased by 5 percent to $6.6 billion primarily due to higher net revenues from the smokeable and smokeless products segments, and higher gains on asset sales in the financial services business. Altria’s revenues net of excise taxes increased 6.6 percent to $4.8 billion.

“During both the quarter and the first nine months, our strategies and diverse business model continued to produce strong results,” said Marty Barrington, chairman and CEO of Altria.

“Our businesses are on track against their full-year plans, and Altria remains focused on creating long-term value for shareholders.

“In addition to producing strong results in our core businesses, we’re developing innovative tobacco products for adult tobacco consumers. We’re pleased with Nu Mark’s lead market launch in Indiana of its MarkTen e-vapor products. Further, Nu Mark plans to expand distribution of MarkTen to Arizona in December.”

Molins PLC said yesterday that its order intake and sales had been broadly as expected and, in the year to date, remained ahead of those of last year.

Performance in the period also had been broadly in line with expectations, the company said in issuing an interim management statement for the period from July 1 to Oct. 23.

“Each of the three divisions [Tobacco Machinery, Scientific Services and Packaging Machinery] has an order book that supports the anticipated level of sales in the fourth quarter, and the board’s expectation of group performance for the year as a whole remains unchanged,” the statement said.

“There has been no significant change in the financial position of the group since 30 June 2013.”

The company’s half-year results to June 30 were announced on Aug. 29 and reported here on Aug. 30 (see “First half sales up sharply at Molins”).

Researchers in New Zealand say that nicotine is not the only ingredient in tobacco products that makes quitting difficult, according to a story by Peter Sergo for the Medical Daily.

At the Smokefree Oceania conference in Auckland, Penelope Truman, of the Institute of Environmental Science and Research, presented a study that was said to show how rats exhibited a greater desire to obtain a dose of smoke from non-nicotinic hand-rolling tobacco than from either doses of nicotine or from smoke from factory-made cigarettes that contained nicotine.

Truman, along with researchers from Victoria University, gauged how keen rats were to press a lever to obtain a dose of saline that was infused with either just nicotine or a type of tobacco smoke. “Because rats showed a significantly higher willingness to go the distance to get a taste of rolling tobacco smoke, the authors concluded that a substance other than nicotine must be getting them hooked,” Sergo wrote.

The study authors concluded that non-nicotinic components had a role in tobacco dependence and that some tobacco products had higher abuse liability, irrespective of nicotine levels.

“This extra chemical is an additional thing that makes smoking harder to give up,” Truman reportedly told The New Zealand Herald. “This is a formal proof that some tobacco substances are more addictive than nicotine is.”

What the specific tobacco component is has yet to be identified.

Lorillard’s domestic wholesale cigarette shipment volume during the third quarter of this year, at 10,271 million, was up by 3.8 percent on that of the third quarter of 2012.

Full-price cigarette volume, at 8,779 million, was up by 5.1 percent, because of a Newport volume rise of 5.3 percent to 8,697 million.

Also in the full price sector, True volume fell by 8.1 percent to 43 million and Kent volume fell by 9.7 percent to 39 million.

Price/value volume, at 1,492 million, was down by 3.3 percent, with Maverick sales down by 2.5 percent to 1,377 million and Old Gold volume down by 12.4 percent to 115 million.

Non-domestic (Puerto Rico and U.S. possessions) volume was down by 11.2 percent to 155 million; so Lorillard’s overall volume was up by 3.5 percent to 10,426 million.

Lorillard’s domestic market share during the third quarter, at 14.9 percent, was up by 0.5 of a percentage point from that of the third quarter of 2012, and its share of the menthol segment of the market, at 40.4 percent, was up by 0.8 of a percentage point. The industrywide menthol share of the overall domestic market was up by 0.4 of a percentage point to 31.4 percent.

Newport’s share of the domestic market, at 12.6 percent, was up by 0.5 of a percentage point, and its share of the menthol segment was up by 0.8 of a percentage point to 37.2 percent.

In reporting its third quarter and nine months results, Lorillard said that its Blu eCigs had “further established itself as the e-cigarette category leader, achieving approximately a 49 percent share.”

The company was able to report, too, that it had acquired Skycig, a British-based e-cigarette business, on Oct. 1.

Lorillard’s net sales during the third quarter, at $1.827 billion, were increased by 10 percent on those of the third quarter of 2012.

Its reported operating income was down by 4.6 percent to $458 million, while its adjusted operating income increased by 12.5 percent to $541 million.

Its reported net income was down by 8.8 percent to $258 million, and its adjusted net income was up by 9.5 percent to $310 million.

And its reported diluted earnings per share decreased by 4.2 percent to $0.69, while its adjusted diluted earnings per share increased by 15.3 percent to $0.83.

“Lorillard had a strong third quarter of 2013 marked by market share, volume and margin gains for our cigarette business, market share and sequential volume gains for our market leading e-cigarette business and the acquisition of a small U.K. e-cigarette business,” said Murray S. Kessler, chairman, president and CEO.

“We are very pleased that the company’s continued industry leading fundamentals have resulted in robust financial results for the quarter and year to date, with adjusted EPS growth of more than 15 percent in the third quarter and more than 13 percent for the first nine months of 2013.

“We remain steadfast in delivering on our promise to consistently deliver a double-digit total shareholder return as measured by EPS growth and the dividend yield over the long term.”

Philip Morris International has said that the next arbitration hearing in a dispute between Philip Morris Asia (PMA) and Australia over standardized packaging is scheduled to take place on Feb. 20.

The arbitration is proceeding in accordance with the provisions of the Bilateral Investment Treaty (BIT) and the Arbitration Rules of the United Nations Commission on International Trade Law 2010.

PMA is a Hong Kong corporation that owns and controls Philip Morris Ltd in Australia.

Hong Kong and Australia have a BIT agreement.

PMI’s statement is at http://www.pmi.com/eng/media_center/company_statements/Pages/bilateral_investment_treaty.aspx.