Category: News This Week

  • TTM wary of decreasing market share

    The Thailand Tobacco Monopoly (TTM) has gradually lost market share to imported cigarettes since the country lifted the tax barrier two decades ago, says director-general Torsak Chotimongkol.

    Local cigarettes still claim 76 percent of the market, but foreign cigarettes are likely to gain one percentage point to 25 percent by the end of this year, according to a story in the Bangkok Post.

    Torsak said TTM is trying to regain market share in the middle- to upper-income markets dominated by imported cigarettes, while also keeping its low-income base. “We need to protect our share from imports, as our margin is quite thin,” he said.

    TTM cigarettes make up 33 percent of the market, legally imported cigarettes make up 12 percent, smuggled smokes contribute 10 percent and roll-your-own tobacco comprises 45 percent, said Torsak.

    Roll-your-own tobacco has gained rapidly as a result of the tax waiver for local breeds of tobacco, while the tobacco produced by TTM is taxed at THB1,000 a kilogram.

    Last year TTM had total sales of 36 billion units for THB70 billion, and this year will likely be similar.

    “If TTM can expand overseas, our sales may reach THB100 billion, as we are now attempting to enter into Japan, the U.S. and Europe to build up our brand,” said Tanusak Lekuthai, deputy finance minister.

  • Vietnam’s anti-smoking law to take effect May 1

    Vietnam’s law on the prevention and control of smoking takes effect on May 1, 2013, according to the Health Ministry, according to a story in VietnamPlus.

    The law, with five chapters and 35 clauses, regulates measures aimed to reduce the demand for tobacco, control supply and prevent tobacco harm, said the ministry at a conference in Hanoi on April 23.

    According to Deputy Minister of Health Nguyen Thi Xuyen, in the coming time, the implementation of the law will focus on enforcing the smoking ban in agencies, government offices, schools, hospitals and a number of public places.

    Regulating cigarette advertisement, promotion and funding will be another focus, she added.

    According to the World Health Organisation (WHO), Vietnam is one of 15 countries with the most smokers in the world. About half of all male adults (15 years old and above) in the country are smokers.

    Earlier, on January 25, 2013, the Prime Minister approved the national strategy to combat tobacco’s negative impacts by 2020.

  • China: HongyunHonghe launches cigarette-processing unit in Africa

    HongyunHonghe Tobacco Group, in southwest China’s Yunnan Province, recently launched its cigarette-processing unit for Africa at the Walvis Bay port in Namibia.

    The project is intended to produce HongyunHonghe’s Yunyan, Honghe, Honghe and Honghe brands for sale in Africa.

    The annual production capacity of the unit could reach 1 billion cigarettes.

  • TIMB report: nearly $300 million in sales of golden leaf

    The Tobacco Industry and Marketing Board (TIMB) has recorded close to $300 million from the sales of the golden leaf as more farmers deliver their crop to the country’s three auction floors, according to a story by Zimbabwe’s NewsDay.

    TIMB shows that as of Wednesday (Day 44), revenue had reached $289 million from 77,787 million kg of tobacco sold. The sales comprised 46,619 million kg contract and 31,168 million kg auction sales.

    On Friday, April 19, Tobacco Sales Floor handled 11.8m kg, followed by Boka Tobacco Auction Floors at 11.3m kg and Premier Tobacco Floor with 7.9 million kg.

    On the day’s trade TSF bought tobacco at an average price of $3. 70 per kg, BTF at $3. 61 per kg and PTF at $3. 56 per kg.

    At least 1,099,020 bales were accepted, while 48,954 bales had been rejected for various reasons. According to the TIMB weekly tobacco report, the current 2013 seasonal sales were 16 percent firmer than the prior year at the same time.

    TIMB said to date, about 51,083 growers have delivered tobacco against 86,941 growers who have registered for 2013 season. During the same period last year about 64,293 had registered.

    TIMB projects 170 million kg of the golden leaf to be brought to the auction floors this season.

  • Lorillard’s 1Q profit up 47 pct on higher pricing, e-cig sales, lower costs

    Lorillard’s first-quarter profit jumped 47 percent as higher prices, e-cigarette sales and lower legal expenses from a longstanding legal settlement offset a decline in traditional cigarette sales.

    The nation’s third-biggest tobacco company on Wednesday reported earnings of $328 million, or 86 cents per share, for the period ended March 31, up from $223 million, or 57 cents per share, a year ago, according to the Associated Press.

    Excluding one-time items, earnings were 66 cents per share, beating Wall Street expectations by 2 cents. That excludes a benefit of 23 cents per share in credits for disputed payments under the 1998 Master Settlement Agreement, in which some cigarette makers are paying states for smoking-related health care costs.

    Revenue excluding excises taxes rose 6 percent to $1.12 billion, matching analyst expectations, according to FactSet.

    Its shares rose $1.29, or about 3 percent, to $43.07 in morning trading.

  • Police: Kessler interrogation illegal in ‘Dalligate’

    OLAF director-general Giovanni Kessler had no authority to carry out an interrogation on Maltese territory, a senior police officer privy to the John Dalli investigation, according to a story in MaltaToday.

    In comments that followed yesterday’s presentation of the OLAF supervisory committee’s annual report, which highlighted questionable legal practices employed by Kessler in his investigation of a bribery allegation, doubts have now been raised over the EU anti-fraud agency’s investigation it carried out Malta during the summer of 2012.

    Giovanni Kessler had come to Malta to interview businessman Silvio Zammit, who is today accused of having solicited a €60 million ($77.9 million) bribe from Swedish Match in return to influence tobacco laws that banned the sale of smokeless tobacco snus.

    Kessler had been aided by Rita Schembri – then a member of OLAF’s supervisory committee – who served as the head of the Prime Minister’s internal audit and investigations department (IAID) and of the anti-fraud coordinating service (Afcos) which liaised with OLAF, in organising the interview.

    The interview was carried out at the IAID offices in Valletta after Silvio Zammit was approached by Kessler and Schembri at his Sliema kiosk.

    “I’m baffled at the amateurish interrogation methods employed by Kessler and the fact that he ignored his legal obligations,” the senior police source told MaltaToday.

  • Reynolds American profits jump 88 pct in Q1, volume down

    Consumers squeezed by higher gas prices and an increase to the payroll tax led Reynolds American Inc. to report a sharp drop in cigarette volumes in the first quarter.

    “Overall, the external environment remained challenging,” President and CEO Daniel Delen said. “Industry cigarette volumes were negatively impacted by higher energy prices, the expiration of the payroll-tax holiday and fewer shipping days,” according to a story posted on 4-traders.com.

    Profit, meanwhile, jumped 88 percent in the quarter due to lower costs and a $202 million credit tied to a landmark tobacco settlement. Adjusted profit was higher than Wall Street expected, aided by higher cigarette prices and strong demand for smokeless products, though the decline to net sales was worse than anticipated.

    Reynolds American and rival tobacco companies face a difficult operating environment as cigarette volumes have been declining for years. A weak economy and high unemployment have continued to pressure consumers’ disposable income. But an estimated 6.2 percent drop to cigarette volumes in the first quarter was more bruising than historical trends, with declines generally averaging 3 percent to 4 percent in recent years. Domestic cigarette shipment volume at the R.J. Reynolds unit fell 8.7 percent in the first quarter, though when adjusting for the two fewer shipping days, the company estimates its cigarette volume dropped about 5.6 percent.

    The company’s total cigarette retail market share dropped to 26.1 percent from 26.7 percent, the eighth consecutive year-over-year decline.

    Camel and Pall Mall, the company’s core brands, performed better than the overall cigarette unit. Volumes slid 5.5 percent for Camel and 2 percent for Pall Mall, and both posted higher market share. Together, they represent more than two-thirds of the company’s total market share.

  • Australian fund gets tough on TOMRA’s tobacco ties

    An Australian superannuation and investment fund is leading an international effort to pressure a Norwegian machinery maker to leave the tobacco  industry.

    In what amounts to a new front in the war against tobacco, Australian Ethical will put forward a resolution on Monday at the annual general meeting of Norwegian company TOMRA, demanding it stop selling tobacco sorting machines.

    Australian Ethical, which manages more than $600 million on behalf of about 18,000 investors, has long invested in TOMRA, which makes machinery used in recycling.

    Last year, when TOMRA bought Best Sorting, a Belgian company that makes tobacco sorting machines, Australian Ethical wrote to TOMRA, asking it to get out of the area. When it refused, Australian Ethical approached other investors in the company for support.

    The resolution calls on the company to stop selling tobacco sorting machines to the tobacco industry within six months. If the resolution received majority support, it would be binding on the company. If it fails, Australian Ethical will sell its stake in TOMRA.

    In February the Future Fund announced it would sell its tobacco investments – valued then at about $222 million – citing the damaging health effects and addictive properties of tobacco.

  • NYC attempts to raise smoking age to 21, Chicago may follow

    New York City put forward a proposal Monday that, if adopted, would make it the first major U.S. city to raise the legal age for buying cigarettes from 18 to 21 — the same age for buying alcohol, according to a story in USA Today.

    The proposal is part of a decade-long, anti-tobacco campaign by outgoing Mayor Michael Bloomberg, who has imposed some of the highest cigarettes taxes in the country, banned smoking in parks and run graphic ads on the hazards of smoking. Last month, his administration proposed a requirement that stores keep cigarettes out of sight unless an adult customer asks for them.

    Hours after New York City Council Speaker and mayoral candidate Christine Quinn proposed raising her city’s legal smoking age from 18 to 21, Health Committee Chairman George Cardenas (12th) talked about Chicago following the Big Apple’s lead, according to a story in the Chicago Sun-Times.

    “That’s something worth exploring because more kids are smoking now,” said Cardenas, who didn’t immediately provide data to back that up.

  • BAT benefits from reduced illicit trade, says CEO

    British American Tobacco (BAT) is benefitting from the gradual deflation in the illicit trade of cigarettes locally due to the improved regulatory environment in Malaysia, according to a story posted on The Star Online.

    Managing director Datuk William Toh said the illegal buying and selling of cigarettes had declined last year by 1.6 percent compared to 2011.

    “We saw a slight reduction in illicit trade to 34.5 percent of (overall) volume last year.

    “Due to this, we are seeing a 0.24 percent growth in legal volume, which is the first time in many years where we have enjoyed volume growth,” Toh said at a briefing after the company’s AGM.

    “This is good news and we hope the Government will continue to put in more effort into this area. Illicit trade at 34.5 percent is high by any standards.

    “It is a difficult challenge as we have long coastlines with neighbouring countries where smugglers can easily enter,” he added.

    BAT attributed the reduction in illicit trade to the sustained excise duties for two consecutive years and the increased role by the various enforcement agencies such as the Customs and border patrol in nabbing smugglers.