Category: News This Week

Imperial Tobacco’s cigarette volume during the year to the end of September, at 292.5 billion, was down by 3.2 per cent on the volume recorded during the year to September 30, 2011: 302.1 billion.

During the same period, fine-cut volume, calculated in cigarette stick equivalents, was increased by 0.4 per cent, from 43.9 billion to 44.1 billion.

And total cigarette and fine-cut stick equivalent volume was down by 2.7 per cent, from 346.0 billion to 336.6 billion.

Looking regionally, cigarette volume was down in the UK, by 2.6 per cent to 18.7 billion; down in Germany by 3.4 per cent to 22.6 billion; down in Spain by 10.1 per cent to 18.7 billion; down in the ‘Rest of Europe’ by 7.6 per cent to 53.4 billion; down in the Americas by 16.3 per cent to 10.3 billion; and up in the ‘Rest of the world’ by 0.1 per cent to 168.8 billion.

Fine-cut volume in stick equivalents was up in the UK, by 3.1 per cent to 6.6 billion; up in Germany by 6.8 per cent to 9.4 billion; up in Spain by 10.0 per cent to 3.3 billion; up in the rest of the world by 11.1 per cent to 3.0 billion; unchanged in the Americas at 0.5 billion; and down in the rest of Europe by 5.3 per cent to 21.3 billion.

Total volume was down in the UK by 1.2 per cent to 25.3 billion; down in Germany by 0.6 per cent to 32.0 billion; down in Spain by 7.6 per cent to 22.0 billion; down in the rest of Europe by 7.0 per cent to 74.7 billion; down in the Americas by 15.6 per cent to 10.8 billion; and up in the rest of the world by 0.3 per cent to 171.8 billion.

In the year to the end of September, Imperial’s cigarette market shares improved on those of the year to the end of September 2011 in Algeria, Austria, Greece, Portugal, Turkey and Vietnam; and its fine-cut shares improved in Australia, Belgium, Germany and Spain.

In her overview of the business, chief executive, Alison Cooper, said Imperial, over the past two years, had made great progress in shifting its strategic focus so as to put consumers at the heart of its business and drive organic sales growth.

‘It’s been a rapid transition and we’re pleased with the progress we’re making, generating quality growth from quality brands to drive sustainable returns,’ she said.

‘Our success is built around a differentiated approach that’s focused on applying our understanding of consumer motivations to realise the potential of our portfolio and offer consumers the best tobacco experiences.

‘The response from our people to these changes has been remarkable; a united focus on sales, on building total tobacco brands and on consistently applying our four sales growth drivers of portfolio management, innovation, pricing and customer engagement to deliver high quality sustainable growth.’

Cooper went on to say that Imperial’s key strategic brands, Davidoff, Gauloises Blondes, West and JPS had delivered volume growth of seven per cent and net revenue growth of 13 per cent.

‘Our fine cut tobacco volumes were stable, with net revenues up by 13 per cent,’ she said. ‘We delivered further strong results from premium cigars growing volumes by 11 per cent and revenues by 10 per cent and grew Scandinavian snus volumes by 53 per cent and net revenues by 46 per cent.’

Meanwhile, chairman, Iain Napier, said Imperial had made further good progress this year, growing sales while effectively managing its costs and cash flows.

‘We grew total adjusted operating profits by four per cent and delivered eight per cent adjusted earnings per share growth to 201.0 pence,’ he said. ‘Reported earnings per share were 68.1 pence (2011: 177.3 pence), reflecting the write down of our Spanish goodwill, as a result of the deterioration in the Spanish economy.

Net revenue was up by 4.1 per cent to £7,005 million, and adjusted operating profit was up by 3.7 per cent to £2,989 million.

A petition filed by R.J. Reynolds Tobacco could represent the boldest step to date in trying to market smokeless-tobacco products in theUSas less harmful alternatives to cigarettes, according to a story by Richard Craver for the Winston-Salem Journal.

The US Food and Drug Administration is due to hold a hearing on Monday in which it will hear petitions and comments on how it should monitor and regulate smokeless products and nicotine-replacement therapy (NRT) products.

The hearing is part of the agency’s preparation for a long-awaited report to Congress on innovative products and treatments for tobacco dependence.

Reynolds’ petition asks the FDA to adjust one of four warning labels for smokeless products from ‘WARNING: This product is not a safe alternative to cigarettes’, to ‘WARNING: No tobacco product is safe, but this product presents substantially lower risks to health than cigarettes’.

Smokeless products facing FDA scrutiny include not only moist snuff and snus products, but also dissolvable products being sold in trial markets by Reynolds and e-cigarettes.

A company that wants to market a lower-risk tobacco product in theUSmust offer scientific proof to the FDA that the marketing of the product will not only reduce harm to individual users, but also benefit the health of the population as a whole.

The full story is at: http://www.journalnow.com/business/business_news/local/article_ea77073e-44d0-11e2-81b1-001a4bcf6878.html.

Japan Tobacco Inc’s domestic cigarette sales volume during November, at 9.6 billion, was down by 0.8 per cent on its November 2011 volume, 9.7 billion, which itself was increased by 40.0 per cent on that of November 2010, according to preliminary figures issued by the company today.

Volume during the eight months, April-November, at 79.1 billion, was up by 12.8 per cent on its April-November 2011 volume, 70.1 billion, which was down by 27.8 per cent on that of April-November 2010.

JT’s market share for April-November 2012 was 59.5 per cent, against 54.9 per cent for the full year to the end of March.

JT has suffered huge volume swings in recent times because of an unprecedented, mainly tax-driven price hike on October 1, 2010, and the massive disruption caused to the company’s manufacturing and distribution operations following the earthquake and tsunami of March 11 last year.

JT’s domestic cigarette revenue during November, at ¥52.6 billion, was down by 1.2 per cent on its November 2011 revenue, ¥53.2 billion, which was up by 39.9 per cent on that of November 2010.

Revenue during April-November, at ¥435.4 billion, was up by 13.0 per cent on its revenue during April-November 2011, ¥385.4 billion, which was down by 5.9 per cent on that of April-November 2010.

Could the latest and greatest threat to the tobacco industry come from a race to the bottom by cities and countries competing to have the lowest incidence of smoking?

An opinion piece in the South China Morning Post has suggested thatHong Kongcould become the world’s first city to be declared tobacco ‘smoke-free’.

Tobacco smoking among those over 15 years of age is currently confined to just 11-12 per cent of the city’s population and ‘smoke-free’ is declared when that figure falls below five per cent.

But Hong Kong believes that Australia, with its plain packaging law that came into force at the beginning of this month, might steal its thunder.

The opinion piece, while recognizing that previous anti-tobacco policies have reduced smoking inHong Kong, suggested that more could be done to ensure compliance with existing tobacco laws.

And finally it asked: ‘Do we really need to wait and see how the Australian initiative turns out before considering further measures?’

British American Tobacco said yesterday that it would invest $200 million in the Philippines during the next five years, according to a story in The Manila Bulletin.

The company was reported as saying that, following the ratification of a new tobacco and alcohol tax regime on December 11, players in the local tobacco industry could now compete on a level playing field that opened up expanded opportunities.

‘It can – and we are confident it will – open up expanded opportunities for the industry stakeholders, not only the manufacturers but distributors, retailers, employees and the tobacco farmers,’ BAT was reported to have said in a statement.

The company said also that it believed that, contrary to the predictions of doomsayers, the new law would be beneficial to the country for the additional revenues it would generate for funding its social programs.

Certainly, not everybody saw it BAT’s way. As was reported here yesterday, Bayan Muna Representative, Neri Colmenares, said the approved bill was a regressive, anti-Filipino form of taxation that favored imports over local brands and jeopardized the job security of small farmers and workers in the tobacco and alcohol industries.

BAT went on to say that it saluted ‘the wisdom and courage of the Executive Department and Congress in taking the bold step of reforming the Sin Tax Law after 16 years. We are looking forward to competing in the market and contributing to the growth of the Philippine economy,’ it added.

Tobacco companies’ aggressive coupon marketing tactics could reduce the likelihood that current smokers will quit, according to a PRNewswire press note quoting new research published in an article in Tobacco Control.

The report is said to be the first of its kind to illustrate that cigarette coupons have a negative association with smoking cessation.

“We know that raising the price of cigarettes encourages smokers to quit,” said Dr. Kelvin Choi, Research Associate at the University of Minnesota School of Public Health and lead author of the article. “Coupons are a way to bring the price down, and keep people smoking. Smokers who receive these coupons think the tobacco industry cares about their health and well-being, even though industry documents prove that they know their products are addictive and deadly.”

Choi analyzed data collected through the Minnesota Adult Tobacco Survey (MATS) Cohort Study, funded by ClearWay MinnesotaSM, which recruited 2,436 participants who were smokers and recent quitters in 2007, and surveyed them between 2008 and 2010.

The findings were said to include:

* Nearly half of smokers reported receiving cigarette coupons;

* Eighty per cent of those who received coupons redeemed them;

* Women, younger smokers and heavier smokers are disproportionately targeted by coupons;

* Smokers who use coupons are more likely to believe that tobacco companies care about their health, do their best to make cigarettes safe and tell the truth;

* Smokers who redeem coupons are 84 per cent less likely to quit smoking.

Philip Morris USA said yesterday that the Madison County Circuit Court had denied the plaintiffs’ request to reopen the Price ‘Lights’ case.

“The trial court correctly recognized that the plaintiffs could not meet their burden of proof to reopen the judgment,” said Murray Garnick, Altria Client Services senior vice president and associate general counsel, speaking on behalf of PM USA. “Specifically, the plaintiffs did not show that they would have been successful before the Illinois Supreme Court.”

The US Food and Drug Administration (FDA) now prohibits the use of ‘Lights’ and other descriptors unless a manufacturer receives authorization to use the terms.

The Altria Group’s board of directors declared yesterday a regular quarterly dividend of $0.44 per common share, payable on January 10 to shareholders of record as of December 26.

The ex-dividend date is December 21.

The board of directors of Philip Morris International yesterday declared a regular quarterly dividend of $0.85 per common share, payable on January 11, to stockholders of record as of December 27.

The ex-dividend date is December 24.

Voting 10-9 with no abstentions, senators in the Philippines yesterday ratified a measure restructuring the taxes on tobacco and alcohol products, according to a story in The Philippine Star.

The House later followed with its own ratification and the measure now awaits President Aquino’s signature.

The Manila Times, meanwhile, said the Department of Finance had welcomed the fact that the government’s 16-year struggle for a better excise tax regime in respect of tobacco and alcohol had ended successfully.

Finance Secretary, Cesar V. Purisima, said in a statement that the government had succeeded in working with industry “vested interests” for the benefit of the country.

“The passage of the excise tax reform on tobacco and alcohol marks a historic victory for health and revenue reform in thePhilippines, Purisima said. “We congratulate our partners at the Bicameral Conference Committee for passing the excise tax reform bill.”

Others were less than sanguine, however. According to The Philippine Star story, Zambales Representative, Mitos Magsaysay, said the proposed law on higher sin taxes would hurt tobacco farmers.

“The tax increase for tobacco products will be at least 1,000 per cent by 2017,” she said. “This is ridiculous. I have never seen this kind of tax increase in my entire career as a lawmaker…

“There are 2.9 million Filipinos dependent on the tobacco industry. If we increase the taxes excessively, they will lose their livelihood. Without any income, our tobacco farmers and their families will starve to death. Are we really willing to do this?” Magsaysay asked.

And Bayan Muna Representative, Neri Colmenares, said the approved bill was a regressive, anti-Filipino form of taxation that favored imports over local brands and jeopardized the job security of small farmers and workers in the tobacco and alcohol industries.