Category: News This Week

  • ‘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.

  • “E-cig no more risky than smokeless”

    A study funded by The Consumer Advocates for Smokefree Alternatives suggests that e-cigarettes are no more risky than other smoke-free tobacco and nicotine products.

    After reviewing more than 9,000 “observations” about the chemistry of e-cigarette vapor and e-liquids, Igor Burstyn of the Drexel University School of Public Health found “no evidence that vaping produces inhalable exposures to contaminants of the aerosol that would warrant health concerns by the standards that are used to ensure safety of workplaces.” Exposure for bystanders, he said, is likely to be orders of magnitude less, and thus poses no apparent concern.

    The study cautioned that e-cigarette users are inhaling substantial quantities of propylene glycol and glycerin, the main chemicals in e-cigarette liquid. The chemicals are not considered dangerous, and the levels are below occupational exposure limits, but Burstyn suggested ongoing monitoring to confirm that there is no risk.

    CASAA Scientific Director Carl Phillips said the study “assures us that e-cigarettes are as low risk as other smoke-free tobacco and nicotine products, like smokeless tobacco and NRT.”

    The study is here.

  • Wales might go for independent position on standardized tobacco packs

    Wales Health Minister Mark Drakeford is looking into whether Wales could go it alone on public health issues such as standardized tobacco packaging and minimum alcohol pricing, according to a story on WalesOnline.

    Drakeford, a professor, said he had instructed officials to look at the powers Wales had in relation to these two measures after the U.K. government recently backed away from them.

    Meanwhile, Dr. Richard Lewis, Welsh secretary of the British Medical Association, was quoted as saying that the Scottish government had signaled its intention to legislate for standardized packaging. “Perhaps the Welsh government could follow their lead,” he said.

    But both Drakeford and Lewis would like the U.K. government reconsider its position.

    “I was very disappointed that, on a U.K. level, plans which we thought were coming along have not been included in the U.K. government’s program,” Drakeford said.

    “I still think that moving together is the best way to deal with some of these big public health issues. But I have asked my officials and the chief medical officer to give me advice on what our powers are and if it is possible for us to move ahead with that.

    “I do not align myself with the anxieties of those who accuse governments of being a nanny state. There are larger public interest issues at stake.”

  • Lawmakers given taste of own medicine

    Older members of the U.S. Congress and those who smoke could be facing much higher health insurance premiums under a new official interpretation of President Barack Obama’s health-care law, according to a story by Robert Pear for The New York Times.

    The administration said yesterday that the government would continue contributing to the cost of health benefits for lawmakers and thousands of congressional employees, but that they would have to buy coverage as individuals through new state-based markets known as insurance exchanges.

    Federal workers, including lawmakers, now generally get coverage through the Federal Employees Health Benefits Program, the nation’s largest employer-sponsored health insurance program. Under some of the most popular health plans, the government contributes $5,000 a year for individual coverage and $11,000 for family coverage.

    But the 2010 health-care law generally required members of Congress and employees in their “official offices” to get coverage through the exchanges. The purpose of this change was to make sure lawmakers understood the benefits and burdens of the law, as experienced by many of their constituents.

    In the federal employee program, people in the same health plan generally pay the same premiums, regardless of their age or place of residence.

    However, for health plans sold on the exchanges, premiums can vary, based on a person’s age, tobacco use and place of residence.

  • BAT has drop on nicotine product rivals

    Having recently launched its Vype electronic cigarette in the U.K., BAT Industries is poised to seize the lead in next-generation nicotine products, according to a Proactiveinvestors story quoting U.S. broker Citigroup.

    Citigroup expects Vype to do well in the existing, unregulated electronic cigarette market, but it is with the next range of products that it sees BAT putting some distance between itself and its rivals.

    The broker expects BAT to launch two new products with medical licenses during the next two years, and it thinks these licenses will be key since unlicensed products are likely to be banned from 2016.