Category: News This Week

A computer glitch involving the U.S.’ new health-care law might mean that some smokers next year won’t bear the full cost of tobacco-user penalties that would have made their premiums much higher than those of nonsmokers, according to a blog by Anne Carrns in The New York Times, quoting an Associated Press report.

The Obama administration has notified insurers that a computer system problem will limit penalties that the law says the companies may charge smokers.

Fixing the problem is expected to take at least a year.

“This is a temporary circumstance that in no way impacts our ability to open the marketplaces on Oct. 1, when millions of Americans will be able to purchase quality, affordable insurance for the first time,” said Joanne Peters, a spokeswoman for the Department of Health and Human Services, in an emailed statement.

Starting in 2014, the law requires insurance companies to accept all applicants regardless of pre-existing medical problems.

But it also allows them to charge smokers up to 50 percent higher premiums to ward off bad risks.

For an older smoker, the cost of the full penalty could be prohibitive.

Reynolds American Inc. is due to host a webcast and conference call following the release of its second-quarter 2013 financial results before the market opens on July 24.

The webcast, at www.reynoldsamerican.com, and the conference call, on (877) 390-5533 (toll-free) and (678) 894-3969 (international), which will be in listen-only mode, are due to begin at 9 a.m. Eastern Time.

The speakers will be President and CEO Daniel M. Delen, CFO Thomas R. Adams and Vice President of Investor Relations Morris L. Moore.

Webcast registration is now available at www.reynoldsamerican.com.

It will not come as much of a surprise to many tobacco people, but the evidence supporting the need to ban smoking on beaches or in parks is virtually nonexistent, according to Ronald Bayer, a professor at Columbia University’s Mailman School of Public Health.

Speaking on PBS (Public Broadcasting Service television) about an article in Health Affairs (abstract at: http://content.healthaffairs.org/content/32/7/1291.abstract), of which he was the lead author, Bayer said that he had discovered the evidence was really weak. The evidence of harm to nonsmokers on the beach or in a park from someone smoking was virtually nonexistent.

The evidence that fish and birds were dying because of cigarette butts was virtually nonexistent.

And even the evidence that seeing someone smoking in a park or on a beach would encourage kids to smoke was extremely weak.

At the end of the abstract, the authors ask the question: What, then, accounts for the efforts to impose such bans?

“We conclude that the impetus is the imperative to denormalize smoking as part of a broader public health campaign to reduce tobacco-related illness and death,” the abstract says.

“Although invoking limited evidence may prove effective in the short run, it is hazardous for public health policymakers, for whom public trust is essential.”

A transcript of the PBS broadcast is at http://www.pbs.org/newshour/rundown/2013/07/the-real-reasons-behind-public-smoking-bans.html.

Analysts at Canaccord Genuity have downgraded their recommendations on British American Tobacco and Imperial Tobacco because of the growth in sales of electronic cigarettes, according to a piece by Nick Fletcher in The Guardian, quoting Canaccord’s Eddy Hargreaves and Alicia Forry.

The analysts were quoted as saying that they believed electronic cigarettes would prove to be the most significant development in the history of the organized tobacco industry, stretching back some 200 years. Consumers worldwide would migrate from tobacco smoking to electronic cigarettes at an accelerating rate through 2020.

Hargreaves and Forry estimated that the electronic cigarette market would grow from $2 billion in 2012 to $3 billion in 2013 (tobacco is approximately $700 billion).

In the longer term, the total combined market would shrink at a more rapid rate than most investors envisaged as electronic cigarettes weaned smokers off tobacco but did not attract new users into the overall category.

The critical question seems to be whether, in the short- to medium-term, at least, the tobacco cigarette sector continues to attract the insouciant young as new users, and that they migrate to electronic cigarettes as they become more mature.

Fletcher’s piece is at http://www.guardian.co.uk/business/marketforceslive/2013/jul/09/electronic-cigarettes-british-american-imperial.

India’s Union Territory of Puducherry, formerly Pondicherry, has banned the sale, storage, distribution and manufacture of the chewing tobacco products gutkha and pan masala for one year, according to a story in the latest issue of the BBM Bommidala Newsletter.

The banning order, made under the provisions of the Food Safety and Standards Act 2006, prohibits any foodstuff from containing tobacco.

Iggesund Paperboard is launching an e-commerce system in the U.S. for the direct sale of Invercote board with payment by credit card and distribution via courier.

The system caters for companies across the U.S. involved in developing test packaging and mock-ups using digital printing.

“The digital market involves only a small number of standard sheet sizes, and we can undoubtedly provide good service to this market throughout the country,” said the president of Iggesund Paperboard in the U.S., Rickard Österlindh, who is responsible also for global strategy in the digital printing segment.

“Most American paper merchants are less focused on digital print markets than they are on traditional offset print markets, and their distribution models are not set up to service what can often times be very small volumes. The e-commerce solution is intended to enable Iggesund to capture these smaller volume opportunities, of which there are many. In this respect, we believe our new service will be a success.”

In a press note, Iggesund said that digital printing was advancing in leaps and bounds, and that marketers were beginning to grasp the power of its applications.

“The quality of print reproduction associated with digital printing has improved substantially, and with that, end users are increasingly turning to variable data, which allows each printed piece to be individually customized, to increase the ROI for their marketing and advertising spend,” the note said.

“In addition, technological progress is enabling the presses to handle formats and thicknesses that make the presses better and better suited to packaging production.”

Altria Group is due to host a live audio webcast at altria.com from 9 a.m. Eastern Time on July 23 to discuss its 2013 second-quarter business results, which will have been issued about 7 a.m. on the same day.

During the webcast, which will be in listen-only mode, chairman and CEO Marty Barrington and executive vice president and CFO Howard Willard will discuss the results and answer questions from the investment community and news media.

Pre-event registration is necessary at altria.com, where an archived copy of the webcast will be made available.

A group of vapers has written an open letter to the chairman of the European Parliament’s Environment, Public Health and Food Safety Committee, Matthias Groote, calling for a rethink on the European Commission’s proposal for regulating electronic cigarettes.

The committee is due to vote tomorrow on the totality of the commission’s proposals for revising the EU’s Tobacco Products Directive (TPD), which include the electronic cigarette proposal.

The group says that for 5 million to 7 million people within the EU, electronic cigarettes have and continue to provide a viable alternative to smoking tobacco cigarettes.

And it asked Groote and his committee to imagine how many lives could be saved if electronic cigarettes were allowed to continue to flourish.

However, the group expressed concern that what it called this positive story was about to come to an abrupt halt because of the commission’s proposals to amend the TPD. Under these proposals, electronic cigarettes could be placed on the market only if they were authorized pursuant to the Medicinal Products Directive. “By regulating e-cigarettes as a medicinal product, and by banning flavours, the Commission and its supporters in Parliament and Council are effectively banning e-cigarettes, as the Parliament’s own Legal Affairs Committee has made clear,” it said.

The group made the point that whereas electronic cigarettes were safe, tobacco cigarettes killed 700,000 people in the EU each year and neither the commission nor Parliament were proposing to ban them.

“The key health benefit of e-cigarettes is determined by how many smokers switch to them or use them as a staging post to quitting completely,” the group said in its letter. “It is therefore vital that e-cigarettes continue to be regulated as a consumer product. Many of us have tried numerous times to quit smoking using conventional nicotine replacement therapies and have failed; however, with e-cigarettes we have all cut down our smoking or stopped completely. Without anyone in the professional public health field doing anything and without spending any public money, smokers like us have been quitting, switching and cutting down through the use of e-cigarettes. This is something that should be celebrated, not a cause for concern.”

The group posed the following question to the committee: “Why would the EU want to intervene to prevent or obstruct a smoker having access to products that could potentially save his or her life?”

And it followed up that question with another: “Do MEPs really want to protect an industry that kills 700,000 people at the expense of a market-based, consumer-led public health revolution that has the potential to save millions of lives?”

The group urged the committee to reject the electronic cigarettes proposal.

“We believe it is poorly thought through, contains an arbitrary and pointless threshold, takes an easy shortcut by applying medicines regulation rather than designing appropriate regulation, and has been prepared without proper consultation of the industry and users like us,” the group said. “Members of your committee should insist that the Commission starts again and does a thorough job, looking properly at all the regulatory options and only once it has done the necessary work, bring forward proposals.

“In the meantime, Member States should enforce the existing legislation properly and report on what they are doing.

“For the sake of 7 million e-cigarette users and the millions of potential e-cigarette users, we urge you to do the right thing.”

The letter can be read in full at: http://www.scribd.com/doc/152389430/Open-Letter-From-Electronic-Cigarette-Users-From-Across-the-European-Union.

British American Tobacco is planning to spend about $50 million over five years building a tobacco manufacturing plant in Myanmar, where it was forced to leave 10 years ago.

The company said yesterday it had completed a joint venture agreement in Myanmar with I.M.U. Enterprise Ltd. (IMU) to manufacture, distribute and market BAT’s brands for the domestic market.

IMU is said to be part of the leading local conglomerate, Sein Wut Hmon Group, which has an extensive fast-moving consumer goods distribution network throughout the country.

The Myanmar Investment Commission approved the joint venture foreign investment in January.

“Under the terms of the agreement, British American Tobacco will have majority share in the joint venture company, British American Tobacco Myanmar Ltd.,” BAT said in a note posted on its website. “The company plans to invest approximately US$50 million over five years to establish a world-class manufacturing facility that will produce London, an iconic brand of international prestige and quality.”

“Historically, British American Tobacco had a market-leading position in Myanmar, which we are aiming to rebuild with our partner,” Rehan Baig, the managing director of British American Tobacco Myanmar Ltd., was quoted as saying. “The country has strong opportunities for growth, and, with the re-entry, we are very keen to offer consumers an attractive range of international-quality products and brands through responsible marketing. The joint venture gives us a very sustainable and long-term position in this growing economy.

“This signifies much more than a shared responsibility for the production of our international brands. It is a long-term commitment to develop local talent in technical know-how and management capabilities whilst also creating more employment opportunities. We will employ approximately 400 people to begin with, and we also intend [to] collaborate with local farmers to improve their yield and quality of local tobacco.”

Meanwhile, BAT’s CEO, Nicandro Durante, said his company was truly excited with the post-sanctions development in Myanmar and was keen to play a part in the country’s economic and social advancement. “Our ability to build strong positions in emerging markets such as Myanmar is one of our key strengths as … one of the largest international tobacco companies in the world,” he added.

The average price paid for the first 129.28 million kg of flue-cured tobacco auctioned in the Indian state of Andhra Pradesh this year, RS122.51 per kg, was more than 24 percent up on that of the average price earned at the same stage of the previous sales season, RS98.67 per kg, according to a story in the latest issue of the BBM Bommidala Group newsletter quoting figures from the Tobacco Board of India.

Andhra is believed to have produced about 167 million kg this year.

With 129.28 million kg sold, the top price for Andhra leaf stood at RS197.20, which was paid for northern light-soil tobacco.

Five auction platforms in the northern light-soil tobacco had accounted also for the highest average price, RS150.41 per kg.