Tag: International

HNB scientific workshop
A one-day workshop on heated-tobacco products is due to be hosted by CORESTA (Co-operation Centre for Scientific Research Relative to Tobacco) in Paris, France, on March 26.
The workshop will discuss a range of issues related to these products and set up a road map for further CORESTA activities in this area.
A press note announcing the workshop said the interest in new nicotine delivery products had increased significantly during the past decade.
‘Recently, among these products, those using heated-tobacco technologies have come to the forefront of discussions within the scientific, health and regulatory communities,’ the note said. ‘Studies have been published, but there are still different scientific opinions, based on different approaches. Therefore, further work remains to be conducted to provide better understanding of all issues, and robust data produced to assist to make science-based decisions in terms of devices, components and product use patterns.
‘Regarding heated-tobacco products (HTP), also known as tobacco-heated, heat-not-burn or non-combusted tobacco products, an interest from many CORESTA members and non-members is growing to embrace these new alternatives to conventional cigarettes. This is why CORESTA, six years after a similar situation with electronic cigarettes, which eventually led to the first vaping industry international standard, considered that it should capitalize on its global scientific expertise in helping with the understanding and characterization of these products, in co-operation with all interested and relevant stakeholders.
‘After an open-discussion held on the topic during the CORESTA Congress in Kunming, China, October 2018, a one-day workshop will be convened on March 26, 2019, in Paris, France, to discuss a range of issues related to these products and to set up a road map for further CORESTA activities in this regard.’
Registration is open to all interested parties.
More information is available on the CORESTA website.
February 12, 2019
PMI’s volumes robust
Philip Morris International’s cigarette shipment volume during the 12 months to the end of December, at 740,315 million, was down by 2.8 percent on that of the 12 months to the end of December 2017, 761,926 million.
Cigarette volume was up by 4.0 percent from 171,600 million to 178,469 million in the company’s South and Southeast Asia region, but down in its other regions: by 4.1 percent from 187,293 million to 179,622 million in its EU region; by 8.9 percent from 119,398 million to 108,718 million in its Eastern Europe region; by 0.1 percent from 136,759 million to 136,605 million in its Middle East and Africa region; by 10.4 percent from 62,653 million to 56,163 million in its East Asia and Australia region; and by 4.1 percent from 84,223 million to 80,738 million in its Latin America and Canada region.
The company said that the fall in its cigarette shipment volume had partly reflected the impact of out-switching to heated tobacco units, largely from premium and mid-price cigarette brands. Marlboro shipments were down by 2.2 percent from 270,336 million to 264,423 million.
Heated tobacco unit shipment volume during the 12 months to the end of December, at 41,372 million was increased by 14.2 percent on that of the previous 12 months, 36,226 million. Heated tobacco unit volume was down by 17.9 percent from 32,729 million to 26,866 million in the company’s East Asia and Australia region, but increased by more than 100 percent in each of its other regions where these products are available: from 1,889 million to 5,977 million in the EU region; from 674 million to 4,979 million in its Eastern Europe region; from 907 million to 3,403 million in its Middle East and Africa region; and from 27 million to 147 million in its Latin America and Canada region.
Cigarette and heated tobacco unit shipment volume during the 12 months to the end of December, at 781,687 million, was down by 2.1 percent on that of the previous 12 months, 798,152 million. Combined shipments were increased by 4.0 percent from 171,600 million to 178,469 million in the company’s South and Southeast Asia region and by 1.7 percent from 137,666 million to 140,008 million in its Middle East and Africa region. But they were down by 1.9 percent from 189,182 million to 185,599 million in its EU region; by 5.3 percent from 120,072 million to 113,697 million in its Eastern Europe region; by 13.0 percent from 95,382 million to 83,029 million in its East Asia and Australia region; and by 4.0 percent from 84,250 million to 80,885 million in its Latin America and Canada region.
PMI said that, ‘excluding the net impact of estimated distributor inventory movements of approximately 16.6 billion units, due primarily to heated tobacco unit inventories in Japan, reflecting unfavorable cigarette and heated tobacco unit inventory movements of approximately 0.4 billion and 16.2 billion units, respectively, PMI’s total shipment volume was flat.
In announcing the results, CEO André Calantzopoulos said PMI had closed out a challenging year with a robust financial and strategic performance across the business. “Excluding inventory movements largely associated with heated tobacco unit volume in Japan, our total volume variance was flat – our best annual performance since 2012 – underpinned by a near doubling of global in-market sales of heated tobacco units,” he said.
“We grew our international market share by 0.5 points to reach 28.4 percent, and maintained a stable share of the cigarette category, highlighting our ability to successfully manage our transition to reduced-risk products.
“Our total net revenues were driven by an exceptional cigarette pricing variance of 7.6 percent and a strong contribution of more than $4 billion from our smoke-free products, despite the impact of the inventory adjustments. Our operating income was essentially flat, excluding currency, primarily reflecting increased investment behind our reduced-risk product portfolio. Our robust, currency-neutral double-digit adjusted EPS performance was assisted by a lower effective tax rate and interest expense.
“Thanks to the tremendous efforts of our employees around the world, and significant investments in portfolio development and organizational capabilities, including a state-of-the-art digital infrastructure to fuel our expansion, we believe we have laid the foundation for an even better performance in 2019. The underlying strength of our combustible tobacco business remains intact and our reduced-risk products are the catalysts to accelerate our business growth and secure the long-term future of our company and the sustainability of our earnings and dividend growth.”
February 8, 2019
Universal focused on leaf
In announcing Universal Corporation’s nine-months’ results to the end of December, chairman, president, and CEO George C. Freeman, III, said the company remained committed to strengthening its market share and investing for growth in its core tobacco business.
“As we recently announced, we are expanding our leaf purchasing, processing, and grower support services in the Philippines, as part of a new leaf supply arrangement with one of our major customers [Philip Morris International Management SA], who had previously purchased and processed their own tobacco,” Freeman was quoted as saying. “This arrangement will increase the efficiency of the supply chain in that origin by providing procurement synergies and economies of scale.
“Another aspect of improving efficiencies and reducing costs in the supply chain is ensuring that our operations and footprint support and reflect global market demand for leaf. Customer demand over recent years for tobacco sourced from Tanzania has declined. As a result, we have undertaken a review of the Tanzanian leaf tobacco market and our operations there. The review is ongoing, and we have decided to substantially reduce our permanent workforce and have incurred an impairment charge on certain assets there.
“This move and the expansion of services in the Philippines are consistent with our continued focus on effective rationalization of global leaf procurement supply chains, appropriate with changes in our customers’ leaf tobacco requirements to maintain strong and stable markets into the future.
“Looking forward, we expect that our fourth quarter shipments will be strong. We are, however, continuing to monitor container and vessel availability, particularly in Brazil, which may shift some shipments into the first quarter of fiscal year 2020.”
Freeman reported net income for the nine months ended December 31 at $72.8 million, or $2.87 per diluted share, compared with $75.1 million, or $2.94 per diluted share, for the same period of the prior fiscal year.
Operating income of $100.4 million for the nine months ended December 31, which included restructuring and impairment charges of $19.4 million in Tanzania, decreased by $10.3 million compared to operating income of $110.7 million for the nine months ended December 31, 2017.
February 8, 2019
Acquisitions boost volumes
Japan Tobacco Inc. reported today that its domestic cigarette sales volume during the year to the end of December, at 82.0 billion, was down by 11.7 percent on that of the year to the end of December 2017, 92.9 billion.
This compared with a JT-reported industry-wide decline of 12.4 percent from 151.4 billion to 132.7 billion that was said to have been caused mainly by the expansion of the reduced-risk product (RRP) category and an underlying ‘natural decline trend’.
As a result, JT’s cigarette market share increased by 0.5 of a percentage point to 61.8 percent.
JT reported that its RRP sales volume had reached 2.8 billion cigarette-equivalent units in 2018, and it estimated that overall RRP sales in Japan represented about 21 percent of total tobacco-industry volume.
JT’s domestic tobacco business core revenue was said to have fallen by 1.4 percent due to an unfavorable cigarette volume contribution of ¥64.9 billion, partially offset by a positive cigarette price/mix variance of ¥5.3 billion and a ¥51.3 billion increase in RRP and other factors, resulting in RRP revenue reaching ¥64.6 billion.
Domestic tobacco business adjusted operating profit declined 10.0 percent due to a negative cigarette volume contribution of ¥54.4 billion and an increase in sales-promotion expenses, partially offset by an increase in RRP-related profit, and a favorable cigarette price/mix variance of ¥5.3 billion.
Meanwhile, Japan Tobacco International’s total tobacco shipment volume during the year to the end of December, at 427.6 billion, was up by 7.3 percent on that of the year to the end of December 2017, 398.5 billion.
JTI’s global flagship brand shipment volume was increased by 2.3 percent from 260.4 billion to 266.4 billion.
JT reported that JTI’s 7.3 percent shipment growth was driven by acquisitions in Bangladesh, Ethiopia, Greece, Indonesia, the Philippines and Russia. Excluding acquisitions, total shipment volume declined by 1.1 percent. Volume increases and market share gains in the Czech Republic, Germany, Hungary, Iran, Italy, Luxembourg, the Netherlands, Poland, Spain, Sweden, Switzerland, the USA and several emerging markets did not offset the impact of industry volume contraction, notably in France, Russia and Taiwan.
JTI’s core revenue during the year to the end of December, at ¥1,250.7 billion, was increased by 6.3 percent on that of the year to the end of December 2017, ¥1,177.0 billion. Adjusted operating profit was up by 9.5 percent to ¥384.5 billion.
JT’s consolidated revenue for the year to the end of December, at ¥2,2216.0 billion, was up by 3.6 percent on that of the year to the end of December 2017, ¥2,139.7 billion.
Operating profit was up by 0.7 percent to ¥565.0 billion, while adjusted operating profit was up by 1.73 percent to ¥595.5 billion.
Masamichi Terabatake, president and CEO of the JT group said that in 2018 the Group had increased adjusted operating profit at constant FX by 8.9 percent in a challenging business environment. “We were also able to strengthen our business foundation for sustainable profit growth from 2019 onwards,” he was quoted as saying.
“In the international tobacco business, market share gains and strong pricing in key markets yielded outstanding performance which was supported by the positive impact of acquisitions.
“In the Japanese domestic tobacco business, we completed the nationwide expansion of Ploom TECH and solidified our leading position in cigarettes by increasing our market share.
“Our 2019 Business Plan reaffirms our strategic direction. Our goal is to deliver mid- to high-single-digit annual average profit growth in the mid- to long-term. To achieve this, we will deliver sustainable earnings growth in the total tobacco business, by offering a wide portfolio of conventional products and RRPs to meet diverse consumer needs.”
February 7, 2019
Addressing tobacco poverty
The mission of the Foundation for a Smoke-Free World’s Agricultural Transformation Initiative (ATI) is to prepare smallholder tobacco farmers for an era of significantly reduced demand for tobacco, focusing first on populations with the greatest need, according to a piece posted on the Foundation’s website.
The initial focus will be on Malawi.
The piece starts by admitting that growing tobacco has never lifted smallholder farmers out of poverty.
But it then goes on to say that high-quality data and rigorous analysis can shape and inform effective, evidence-based policy creation and resource deployment to diversify economies and lessen country dependence on tobacco – better preparing farmers for the future while strengthening their countries’ economies.
‘The mission of the Foundation’s … ATI … is to prepare smallholder tobacco farmers for an era of significantly reduced demand for tobacco, focusing first on populations with the greatest need,’ the Foundation says. ‘The ATI will use this opportunity to facilitate the establishment of more secure income strategies for farmers and will seek to partner with a diverse set of stakeholders to ensure the success and sustainability of our strategy. ATI activities will target the following outcomes:
1. ‘Higher and more secure income streams, improved food security status, and better overall health for smallholder farmers, their families, and their communities more broadly
2. ‘Increased knowledge and application of cutting-edge agricultural science and technology
3. ‘Reduced economic dependence on tobacco and increased resilience for tobacco-growing nations
4. ‘Reduced environmental degradation due to tobacco cultivation
5. ‘Improved nutritional quality and food security status
‘To achieve this, the ATI will employ a systems approach to understanding local contexts and potential points of intervention, coupled with an investment-oriented model of action. A systems-thinking approach is well suited for tackling complex development problems because it incorporates multifactor analysis and feedback loops to foster better decision-making. Focusing on investment, meanwhile, will ensure that each dollar spent is contributing to building capacity and strengthening local and national economies in a sustainable way – contributing, that is, to a better future for smallholder farmers, their families, and their communities…’
Meanwhile, the piece singles out Malawi as being the country with a uniquely great need where the ATI will focus initially.
According to the Foundation, a 2016 study found that only 25 percent of Malawian tobacco farmers were content with the prices they received in 2014, and about 41 percent of all tobacco farmers have considered switching to alternative crops or livelihoods. About 45percent of all tobacco farmers in Malawi are contract farmers, but no statistically significant differences between independent and contract farmers were found in price satisfaction and desire to switch.
Farm-gate prices of tobacco in Malawi fell by 54 percent between 2012 and 2016.
January 29, 2019
TMA buys Tobacco Reporter
The US-based TMA announced on Friday that it had reached agreement to acquire assets of the international multi-platform trade publisher and conference producer SpecComm International, based in Raleigh, North Carolina.
‘Assets acquired by TMA include the premier nicotine and tobacco conference, GTNF; the oldest tobacco and nicotine business trade magazine, Tobacco Reporter; vaping community stalwart Vapor Voice; tobacco farming staple Tobacco Farm Quarterly; and the leading international trade exposition and congress, TABEXPO,’ the TMA said in a press note issued through PRNewswire.
‘The upcoming TABEXPO Amsterdam 2019 will follow the success of TABEXPO London 2015 and is a marquee all-industry international showcase, networking platform and congress for the entire nicotine and tobacco community. The TMA’s involvement will further enhance TABEXPO’s profile.
‘Launched in 1994, TABEXPO grew to strategic importance under the dynamic management of British entrepreneur David Pike and the SpecComm events team led by publisher and global event director Elise Rasmussen. With David Pike’s retirement last year, the TABEXPO license was acquired by British businessman Steve Fowler. Mr. Fowler built his pet-care business into a 50-store chain before selling it in 2016, and also served as a leading figure in his industry’s trade association. He is keen to bring his trading expertise to this new venture and work with TMA.’
“Having served as a director and chairman of a trade association for more than 18 years, I’m delighted that TABEXPO 2019 will benefit from the support of TMA and its membership, and look forward to working with them,” said Fowler.
‘TMA was founded in 1915 to provide unbiased information to stakeholders at a time of policy and industry uncertainty, and act as a convener of forums to address pressing issues. Today, TMA remains true to the ethos of these founding principles as its members and the wider tobacco and nicotine stakeholder community grapple with pressing issues. Chris Greer, president and CEO of TMA said, “Our members will now be able to draw on the huge breadth and depth of knowledge that the combined team will offer, both in traditional and next generation products”.
‘Elise Rasmussen, the new TMA vice president of sales and marketing said she was confident that TABEXPO 2019 would be the best TABEXPO event to date, citing the continuity of experience and know-how that the original sales team brings, now backed by TMA and the expertise of Steve Fowler and TEM. “My sales team will provide its in-depth knowledge of our customers, their business needs and objectives, which will continue to benefit from the history and experience of our TMA colleagues,” she said.’
January 28, 2019
A for climate change
Philip Morris International says it has been highlighted as a global leader on corporate climate action by the environmental-impact non-profit organization CDP [formerly the Carbon Disclosure Project], achieving a place on the CDP Climate Change A List for the fifth consecutive year.
In a note posted on its website yesterday, the company said it was the only tobacco company to have scored an A and that it had been recognized for cutting emissions, mitigating climate risks and developing the low-carbon economy, based on its 2018 disclosure to CDP.
“Climate change is one of [the] major concerns for humanity, and companies can make a difference,” said PMI CEO André Calantzopoulos. “Just like we are leading our industry’s transformation toward a smoke-free future, we are focused on bettering every part of our business and supply chain to become a leader in sustainable business practices.”
The company said its efforts to reduce the environmental footprint of its operations were focused on sustainable design in new facilities, energy efficiency in manufacturing processes, greener purchasing of electricity and fuels ‘as well as greening of our fleet’. ‘Additionally, the environmental efforts go beyond the factory gates: Most GHG [greenhouse gas] emissions related to the tobacco supply chain come from the curing process for Virginia flue-cured tobacco, one of the main tobacco types the company purchases,’ it said. ‘PMI aims to lower GHG emissions in the curing process by 70 percent by 2020 (vs. 2010). To achieve this, PMI works with contracted farmers and leaf tobacco suppliers to improve curing-barn efficiency (combustion efficiency, ventilation and controls), as well as eliminate the use of coal and non-sustainable wood. The CDP A-list recognition underscores that the company is on track to achieve its target.’
Meanwhile, Paul Simpson, the CEO of CDP offered congratulations to all the companies that made it onto the A List this year. “As the severity of environmental risks to business becomes ever more apparent, these are the companies that are positioning themselves to provide solutions, seize new market opportunities and thrive in the transition to a sustainable economy,” he was quoted as saying.
“We need to urgently scale up environmental action at all levels in order to meet the goals of the Paris Agreement and the Sustainable Development Goals. It’s clear that the business world is an essential player in this transition, and the A List companies are set to make a substantial contribution to those goals.”
More information about PMI’s sustainable practices are available here.
January 24, 2019
Tobacco business attacked
An oncologist of Melbourne, Australia, is on a mission to break the links between the tobacco and global-finance industries, according to an interview conducted by Madeleine Morris at abc.net.au.
Morris, in introducing the oncologist, Dr. Bronwyn King, who is also the CEO of Tobacco Free Portfolios, said that the global finance industry still worked hand-in-glove with the tobacco industry. Big insurers insured it, big banks lent to it, and many superannuation funds invested their members’ money in it.
In fact, King was prompted to act when, 10 years ago, her financial adviser told her that her superannuation fund – along with most others – invested in cigarette companies.
“If we invented the finance system today, banks wouldn’t automatically lend money to tobacco companies, and super funds or global pension funds wouldn’t invest in tobacco companies and insurers wouldn’t insure them,” King was quoted as saying. “We simply have to undo what has been established as a status quo…
“Seven million people across the world have died as a result of tobacco in the past year alone. Just imagine if a brand-new industry was launched today and, by the end of next June, that industry’s products had killed seven million people.” [The interview appeared to be dated January 22; so it wasn’t clear why it was implied that ‘next June’ was a year away.]
Morris said that, during the past year King had been around the world six times; and to New York and Paris five times each. “She’s on a mission to convince major financial institutions to drop their investments in cigarette companies,” said Morris.
The extracts from the interview are not included in chronological order above. The interview, as presented, is here.
January 23, 2019
Travel retail in China
The China Duty Free Group (CDFG), Central Japan International Airport (Nagoya), Alibaba, Ctrip.com and Lagardère Travel Retail are among the companies that are due to take to the stage at the 2019 Tax Free World Association (TFWA) China’s Century Conference.
According to a TFWA press note, the conference is scheduled to be held in partnership with the Asia Pacific Travel Retail Association (APRTA) at the Grand Hyatt hotel in Haitang Bay, Sanya, Hainan province, on March 5-7.
‘TFWA will welcome the Department of Commerce and Department of Finance of Hainan province as co-hosts and Sanya Phoenix International Airport as official airport of this year’s event,’ the note said. ‘CDFG has also confirmed its support as Diamond Sponsor, while Cartier and Interparfums join as Platinum Sponsors.
‘On the first day, following a welcome by the Hainan Department of Commerce, CDFG president Charles Chen will share his vision of the future of travel retail in China. Kevin Guo, general manager of strategic co-operation and marketing innovation for Ctrip.com, will examine the latest travel and shopping trends among Chinese tourists, while the changing tastes of Chinese travellers will be examined by Masanao Tomozoe, president and CEO of Central Japan International Airport Co. (Nagoya) and Eudes Fabre, CEO of Lagardère Travel Retail China.’
Delegates are due to be given highlights from an exclusive study commissioned by TFWA and APTRA and conducted by Counter Intelligence Retail, which looks at new trends and perceptions among young Chinese consumers. Additional insights will be presented by speakers including Mirko Wang, CEO of popular shopping comparison app Jessica’s Secret. And a panel of senior executives from WeChat and Alibaba will offer their perspectives on the rise of e-commerce and resulting changes to consumer behaviour.
‘Day two of the conference will explore further core themes affecting the Chinese market, ranging from the ever-growing influence of Key Opinion Leaders (KOLs) to new opportunities arising from the growth in the cruise market in China,’ the note said. ‘Economist and author Ann Lee will explore how the world is conducting business with China, while Dr. Eve Ren, president of the Institute for Tourism Studies, and Andrea Belardini, CEO Asia, ME and Australia at Dufry, will analyse the future of Chinese domestic tourism and resulting opportunities in travel retail.’
“As we mark the 40th anniversary of the Chinese duty free and travel retail industry, TFWA China’s Century Conference looks set to be as compelling as ever,” said
Alain Maingreaud, TFWA president. “I’d like to thank all our sponsors and speakers for supporting the event, which will provide delegates with exclusive insight into this fascinating and fast-evolving market.”
Registration and further information are available here.
January 15, 2019
Health coup unfolding
A major report on the state of tobacco harm reduction around the world was launched in the UK yesterday.
No fire, no smoke: The global state of tobacco harm reduction 2018 is said, for the first time, to map the global regional and national availability and use of safer nicotine products (products, the use of which poses a significantly reduced health risk than is posed by smoking cigarettes), the regulatory responses to these products, and the public health potential of tobacco harm reduction.
The report, which runs to more than 100 pages, has an introductory chapter on tobacco harm reduction and others on: The continuing global epidemic of cigarette smoking; Safer nicotine products: a global picture; Consumers of safer nicotine products; Safer nicotine products and consumer health; Regulation and control; and Human rights, public health and tobacco harm reduction advocacy.
In addition, tucked away in the back is a useful Vaping timeline, though it is important to stress that the report, while focused on vaping, also looks at other lower-risk products such as snus.
In conclusion, the author, Harry Shapiro, describes the report as an attempt to enumerate and explain the advantages of embracing harm reduction as a legitimate approach to help tackle the global smoking epidemic.
‘Apart from being founded on the well-established principles of the right to health for the world’s citizens, as enshrined in many international documents, it is also grounded in evidence-based pragmatism,’ the conclusion says in part.
The conclusion goes on to say that those seeking harm reduction should not be distracted by concerns about ‘gateway’ effects or ‘re-normalizing’ smoking for which there was no robust evidence. And it says that people should not be overly swayed by talk of nicotine ‘addiction’, which had become a freighted word.
And it adds that it is important that over-proscriptive regulation and control is not allowed to deny access to products that have the potential to be one of the most dramatic public health coups of modern times – a coup that costs governments, international agencies and NGOs nothing.
The report was undertaken by Knowledge-Action-Change and supported solely by a grant from the Foundation for a Smoke-Free World. It was launched in the UK at an event hosted by Viscount Ridley at the Palace of Westminster.
Early next year, the report is due to be presented in a number of countries during a series of day-long harm-reduction roadshows.
December 19, 2018