Category: News This Week

The international (excluding China) tobacco industry cigarette volume forecast through 2015 ranges from stable to a continued modest annual decline of up to 1.3 per cent, according to Philip Morris International’s chairman and CEO, Louis Camilleri.

Addressing investors yesterday at the Morgan Stanley Global Consumer & Retail Conference inNew   York, Camilleri said that PMI expected further growth in non-OECD markets, driven mainly by favorable demographics, to be offset by a continued long-term decline in OECD markets.

IncludingChina, PMI expects the international cigarette market to be stable to increasing by up to 1.1 per cent a year.

PMI expects to meet its mid- to long-term annual organic volume growth target of one per cent for the full-year 2012

Meanwhile, Camilleri said that PMI had completed an exploratory clinical study for the first of its three ‘Next Generation Product (NGPs) platforms’ and planned to initiate a further eight next year.

Ground-breaking for PMI’s first NGP manufacturing facility inEuropewas planned to take place in the middle of next year, he added.

PMI plans to invest heavily during the next three years to establish an initial annual NGP capacity of about 30 billion units.

Commercialization of the NGPs is planned for 2016-2017.

EU health commissioner-designate Dr. Tonio Borg, has said that his top priority as health commissioner would be to forward a revised version of the EU’s tobacco products directive for inter-service consultation in January 2013, according to a story in the Malta Star, relayed by the TMA.

Borg was speaking yesterday before the European Parliament at a hearing for his candidature

The much-delayed commission proposals for the revision of the tobacco directive have been delayed once more due to the resignation of former EU health commissioner, John Dalli.

Borg reportedly said that tobacco products “should look like tobacco products,” and that a “high-level of consumer protection” was expected of the EU with regards to policing such items.

Borg’s candidature is scheduled for a vote by the full EU parliament at its November 19-22 plenary meeting.

Bulgaria’s National Association of Tobacco Growers has threatened to declare a ‘zero year’ if buying companies don’t increase tobacco prices, according to a Novinite story relayed by the TMA.

A zero year is presumably a year when no tobacco is produced.

Growers in Andhra  Pradesh, India, employed such a tactic about 10 years ago when they declared a ‘crop holiday’. The move, also prompted by disappointing prices, met with some success even though the Andhra growers produce flue-cured, a type that is normally widely available in big quantities.

The disappearance ofBulgaria’s oriental tobacco would be a different matter given that some observers believe oriental is heading towards being in short supply.

Tobacco producers are suspicious about the reasons for the delay in the country’s leaf purchasing season and the fact that there has been little variation in purchase prices, which are well below their expectations.

The season typically starts at the end of the summer and concludes at the end of October, but this year the sales are just beginning.

The Dominican Republic has requested the establishment of a panel under the dispute settlement procedures of the World Trade Organization to consider a challenge toAustralia’s plain packaging measures for tobacco products, according to a Marketwire report.

The country’s representatives have asked that this request be included on the agenda of the WTO Dispute Settlement Body meeting on December 17.

From December 1,Australiawill require that all tobacco products be sold in ‘plain packaging’ – packaging designed on behalf of the government to be as ugly as is possible. Packs will be a standardized olive color, without logos or other design features, and with brand and variant names in a standardized font and position.

The requirement will prevent tobacco products from using their trademarks and geographical indicators.

‘These unprecedented measures will undermine theDominican Republic’s tobacco industry, in particular its premium cigar sector,’ the report said. ‘By prescribing standardized plain packaging, the tobacco market will be driven towards commoditization, with declining prices, and increasing – rather than falling – consumption and illicit trade.

‘TheDominican RepublicsupportsAustralia’s health objectives. However, plain packaging will undermine those health objectives, failing to curb consumption, while destroying the market for Dominican producers.Australia’s plain packaging measures do not, therefore, withstand scrutiny under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Agreement on Technical Barriers to Trade (TBT).

“Tobacco has been an intrinsic part of the Dominican culture and heritage for centuries, and the tobacco sector is vital for our development,” said Luis Manuel Piantini, theDominican Republic’s ambassador to the WTO.

“Our producers have made enormous investments – including in intellectual property – to turn theDominican Republicfrom a simple tobacco leaf exporter into one of the world’s leading producers of premium cigars and the world’s largest exporter of cigars. This is a significant achievement for a small developing economy.

“Plain packaging will wipe away these achievements – our premium cigars will be dressed as discount products, which people will continue to smoke; prices will ultimately fall, affecting the livelihood of more than a hundred thousand Dominican workers and their families.

“The TRIPS and TBT agreements protect our commercial and development achievements.”

Duty-free tobacco sales were given a reprieve yesterday with the adoption of an international illicit trade protocol that did not include a ban on such sales, according to a story by Nicole Mezzasalma for DFNI.

The protocol, which does call for further scrutiny of these sales in the future, was adopted at the fifth Conference of the Parties of the World Health Organization’s Framework Convention on Tobacco Control, which is currently meeting inSeoul.

Once the protocol has been ratified by at least 40 countries, it will come into effect and become binding on countries that have ratified the convention.

Lorillard said yesterday that its board of directors had declared a three-for-one split of Lorillard common stock. The stock split, it added, would be effected through a 200 per cent stock dividend.

“Since becoming an independent publicly traded company in 2008, Lorillard has consistently grown its business and financial results, and those results have largely been reflected by a higher stock price,” said Murray S. Kessler, chairman, president and CEO.

“Today’s announcement demonstrates the board of directors’ continued confidence in the company’s brands and strategic direction, along with our ongoing commitment of creating value for Lorillard shareholders.”

Lorillard shareholders of record at the close of business on December 14 will receive two additional shares of Lorillard stock for each share then owned.

The additional shares will be distributed from January 15.

Delegates to the World Health Organization’s tobacco meeting inSeoulthis month have been warned that they risk causing harm by not taking account of the benefits offered by some cigarette alternatives.

According to a TMA report, South Korea’s JoongAng Daily has carried a column by Jeff Stier, senior fellow at the National Center for Public Policy Research in Washington, DC, who warns that delegates at the 5th Conference of the Parties (CoP5) to the WHO Framework Convention on Tobacco Control (FCTC) risk harming smokers by considering bans on less harmful alternatives to cigarettes such as e-cigarettes and smokeless tobacco. These alternative products have been shown to help smokers quit cigarette smoking.

Stier made the point that papers prepared by ‘unnamed WHO bureaucrats’ used ‘specious arguments and agenda-driven science’ that departed from the WHO’s original mission to fight tobacco-related harm across the globe and that tried to prohibit some of the least harmful forms of nicotine while letting cigarettes remain legal.

If WHO’s own analysis has determined that cigarette smoking is the most dangerous but ‘dominant form of tobacco use’, cigarette smoking should be the top target when reducing the harm from tobacco use, Stier was quoted as saying.

However, the FCTC delegates are now considering bans on lower-risk products, he said.

Stier urged FCTC parties to consider draft guidance just published by the National Institute for Health and Clinical Excellence (NICE) in theUK, which says ‘most health problems are almost entirely caused by other components in cigarettes, not by the nicotine’.

Since nicotine was addictive but was not the harmful component in tobacco, nicotine addiction should not be conflated with tobacco use, Stier said. Recognizing that difference was critical to understanding tobacco harm reduction, he added.

Meanwhile, according to another TMA report, Clive Bates, the former executive director of Action on Smoking and Health UK and founding member of the Framework Convention Alliance, has warned that the papers prepared by the FCTC Secretariat do not properly consider the role of smokeless tobacco products and electronic nicotine delivery systems as ‘credible alternatives to smoking’ with ‘potential positive health value’ in reducing the burden of smoking-related disease.

Bates, in an open letter (clivebates.com) to delegates attending the CoP5 meeting on November 12-17, said that strategies to address nicotine addiction had to take real-world behavior into account and ‘use any possible strategy to reduce the harm caused by tobacco’, because a ‘crude “quit or die”’ philosophy’ had no place in a WHO health treaty.

He wrote also that banning or over-regulating nicotine-containing products that had low risks relative to cigarettes would only result in the FCTC protecting the cigarette market and “unwittingly doing the dirty work of the cigarette industry.”

Bates says that with a ‘complete abstinence’ approach, many older, often poorer smokers will continue to smoke, and a health treaty should not be denying people addicted to nicotine access to products that reduce health risks.

A German member of the European Parliament has said that Tonio Borg,Malta’s foreign minister, should not be allowed to join the college of European commissioners, according to a story by Toby Vogel for the European Voice.

Borg, who has been put forward by Malta as a replacement for John Dalli, who resigned last month from his position as European Commissioner responsible for health and consumer affairs, is due to appear before two Parliamentary committees today.

Holger Krahmer, a German Liberal MEP, said the commission president José Manuel Barroso should not have accepted Tonio Borg as a candidate for the job of health commissioner.

If Malta did not withdraw Borg as candidate, Barroso should reject him even before Borg’s hearing in the European Parliament he added.

Borg has come under criticism for his views, on women’s rights, homosexuality and abortion. He now also faces questions over a Kazakh citizen who was granted residency inMaltaat a time whenKazakhstanwas seeking his extradition. Borg denies any wrong doing.

“A court should decide over the allegations against Borg,” said Krahmer, the spokesman on the environment for the German Liberal MEPs. “I do, however, think it is remarkable that the president of the commission should make such a proposal to the European Parliament.”

The European Parliament is consulted on commissioners’ nominations but does not have the power to reject candidates.

Krahmer, according to a story in the Malta Independent, has been among those expressing their doubts on introducing tougher restrictions and bans as part of the revision of the commission’s tobacco products directive, now under review.

Asked for his views on the matter the Krahmer was quoted as saying that “the revision of the tobacco products directive was now likely to be off the table for this legislative period”.

“It is good that we now have more time to reflect on the meaning of further sales restrictions on tobacco products,” he said.

Meanwhile, Matthias Groote, chairman of the European Parliament’s environment committee, fears a revision of the tobacco products directive will not be proposed before the end of the year as planned, according to a story by Dave Keating for the European Voice.

But he then went on to say that this “important legislation has been postponed time and time again”. “The European Parliament and European public will not tolerate further delays,” he added.

An unnamed commission spokesperson was quoted as saying that though the directive would still be proposed as planned, it would not be put forward until a new health commissioner was in place.

Philip Morris International has welcomed the passing by the World Health Organization of the first international protocol aimed at fighting the illicit trade in tobacco.

“With sales estimated at more than 600 billion cigarettes a year – more than one in every 10 consumed – all black market tobacco products combined make up the third largest tobacco supplier in the world, said vice president of communications, Peter Nixon, in a statement.

“While the passage of this protocol is not the silver bullet to resolving this serious issue, it is a step toward addressing a problem that not only harms governments but fuels organized crime and terrorism.

“The long term solution to this challenge lies in governments implementing effective policies and providing sufficient enforcement resources to disrupt the global illegal supply chain through which these unlawful products are manufactured, transported and sold. In addition, preventative measures not covered under today’s agreement, such as regulating the essential materials used to produce tobacco products, should be considered by governments in the national implementation of this protocol.”

More information about PMI’s views on the illicit tobacco trade is at: http://www.pmi.com/eng/tobacco_regulation/illicit_trade/pages/illicit_trade.aspx.

Imperial TobaccoCanadahas congratulated the government of Manitoba for its leadership in addressing the supply of untaxed and unregulated tobacco sold by the First Nations-owned Chundee Smoke Shop.

“Manitobais leading the way on this important and complex societal issue,” said Caroline Ferland, Imperial’s vice-president corporate affairs.

“The province has taken decisive action to confront a problem that other provinces, most notablyOntarioandQuebec, have shied away from for fear of political fall-out.

“It is reassuring to see that at least one province believes that there should not be two sets of tobacco laws in this country.

“It is time for other provinces to follow suit.”

In a note posted on its website, Imperial said it recognized that the sale of tobacco by First Nation communities was a complex issue to resolve but that ignoring the problem only made it worse. It was now time, it added, for governments to show real leadership and find concrete solutions that would resolve this problem once and for all.

“First Nations have a significant role to play in addressing this issue and the federal and provincial governments must work with them to find solutions that will ensureCanada’s tobacco laws are respected,” said Ferland.

“Whatever your position on tobacco products, it is incontestable that legal tobacco – taxed, regulated, and subject to hundreds of restrictions under the law – pours millions of dollars into provincial coffers each year.

“Today, tobacco products sold by First Nations do not respect the tobacco laws and pay nothing back.”

Imperial said that a court order sought by the Manitoba Attorney General and issued on November 5 would allow theManitobagovernment to take ownership of the ‘controversial First Nations-owned Chundee Smoke Shop’.

The provincial government was quoted as saying that the court ruling “further validates our position that the possession and sale of non-Manitoba ‘marked’ tobacco products are illegal, as specified under the provisions of the Tobacco Tax Act. The Act applies to all tobacco sales on- and off-reserve, by both Aboriginal owned and non-Aboriginal owned businesses.”

With more than 350 smoke shacks inOntarioandQuebec, it is estimated thatOntarioloses approximately $500 million in tax revenue every year because of untaxed and unregulated tobacco whileQuebec’s estimates are at $225 million.