Archive for October, 2012

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CoP5 recommendations lambasted by Indian growers and Tobacco Board

| October 31, 2012

Indian tobacco grower representatives and the Tobacco Board of India have expressed strong opposition to certain of the draft recommendations made by the working group of the fifth Conference of the Parties (CoP5) of the World Health Organization’s Framework Convention on Tobacco Control (FCTC), according to a story in the latest issue of the BBM Bommidala Group newsletter.

CoP5 is due to be held in Seoul on November 12-17.

The Board, which represents a 36 million tobacco farming community, said that the proposals would directly impact six million growers and about 20 million farm laborers.

The FCTC had originally suggested that governments that had signed and ratified the convention should promote viable alternatives to tobacco and ensure the sector delivered safe working conditions and a sustainable environment.

However, the working group now seems to be promoting a policy to cut back on tobacco cultivation by reducing the area allocated to the crop and stopping all government and private support to leaf producers.

These policies would be devastating for tobacco growers, especially given that no viable alternative crops have been identified.

Growers are of the view that there might be no viable alternatives to tobacco.

Meanwhile, the Board is urging the Indian government to ask the working group to take on board the views of tobacco farmers’ organizations and agricultural policy specialists in the decision making process on alternative crops.

According to the original goals of the FCTC, tobacco growers and workers should have been involved in the deliberations, but until now such people have been totally excluded from the debate.

“The FCTC consultation process has allowed a few health ministry bureaucrats to seal the fate of crores [tens of millions] of small tobacco peasants and agricultural laborers without considering the realities of tobacco farming,” a member of the Board was quoted as saying.

Tobacco growers in the states of Andhra Pradesh and Karnataka observed October 29 as World Tobacco Growers’ Day in protest at the FCTC recommendations.

Swedish Match’s snus and snuff volumes down, but cigar volumes up

| October 31, 2012

During the third quarter to the end of September, Swedish Match’s Scandinavian snus and snuff shipment volumes measured in number of cans were down by 0.7 per cent on those of the third quarter of 2011.

Competition from low priced products intensified inSwedenduring the third quarter, leading to an acceleration of SM’s market share erosion and contributing to a volume decline for full price products.

In theUS, moist snuff volumes were down by five per cent.

US mass market cigar volumes grew by 11 per cent, while US chewing tobacco volumes grew by two per cent, with higher contract manufacturing volumes following inventory reductions in the prior year more than offsetting a decline of nine per cent in SM’s own brands.

Overall, SM’s sales for the third quarter, at SEK3,208 million, were up by seven per cent.

Operating profit from product areas (excludes SM’s share of net profit from the Scandinavian Tobacco Group) increased by four per cent to SEK942 million, while operating profit (includes SM’s share of net profit from the Scandinavian Tobacco Group) increased by four per cent to SEK1,022 million.

Basic earnings per share increased by four per cent to SEK3.41.

CEO, Lars Dahlgren, said that SM had delivered sales and operating profit growth during the third quarter, led by solid growth in the company’sUSmass market cigar business and the continued strength of snus inNorway.

“In local currencies, operating profit increased by three per cent, with improvements for Scandinavian snus, US mass market cigars and lighters, partially offset by lower profits for chewing tobacco, matches and US moist snuff/snus,” he said.

“In the US, General snus is now available in more than 9,000 retail outlets and I am pleased with the trends and the progress. We will continue to invest behind the brand and expand distribution, and expect to be in more than 10,000 stores by the end of the year.

“Test market activities for snus through SMPM International continue inCanada, andSt. Petersburg,Russia, and we have now added Tel Aviv,Israel, as another test market.

“In Scandinavia, the snus business delivered a six per cent increase in sales, with volume growth inNorwayand travel retail largely offsetting volume declines inSweden.

“Recent market share and volume declines inSwedenare the result of aggressive pricing at the low end of the market taking share from premium brands. Despite this, profitability in the third quarter improved versus prior year.

“In theUSmoist snuff business, sales in local currency were down on lower volumes, and operating profit declined.

“Our USmass market cigar business continued its strong performance, helped by the launch of White Owl Black and Game by Garcia y Vega Black cigars. Shipment volumes increased by 11 per cent and sales grew by 14 per cent in local currency.

“Our lights businesses demonstrated mixed performance. While lighters continued to deliver solid results, match profits declined.

“We have revised our outlook in this report. Due to difficult comparisons in the fourth quarter of 2011, and a deterioration of the product mix in the Swedish snus market, it is likely that the operating profit from product areas for the fourth quarter of 2012 will be lower than in the fourth quarter of 2011.

“The profitability of the Swedish snus business in the beginning of 2013 will also be negatively impacted by the product mix and the absorption of the proposed excise tax increase for premium and mid priced brands.”

The performance of Filtrona’s latest filter is largely down to its architecture

| October 31, 2012

Filtrona Filters has launched the Corinthian filter, an addition to its Icon range of innovative, premium filters.

The new filter was named after a type of column used in Greek architecture, which the filter resembles.

According to a Filtrona press note, the Corinthian filter uses acetate shaping technology to offer high visual impact for brand differentiation, and robust flutes that resist crushing during production and use.

It offers also a unique and pleasant smoking experience by delivering a mix of air and smoke.

The Corinthian filter is said to have been developed to meet the growing demand for high quality filters that offer ‘visual differentiation possibilities which can also be used as indicators of performance and flavour’.

The press note said that the increasing purchasing power of consumers in status-conscious markets, such as those in Russia, China and countries of the Southern Asia Pacific, along with the need for cigarette manufacturers to maintain revenue growth in established markets, such as those in the US and countries of Western Europe, had led to an increase in a practice referred to by Euromonitor as ‘premiumisation’.

“In this context, premiumisation describes the leveraging of brands to increase the value, and therefore price, of a cigarette,” said innovations director, Patrick Meredith. “One way of achieving this is through the use of visual products, such as Icon range style filters, as brand differentiators. To meet the subsequent growing demand for these filter types, Filtrona Filters has expanded its manufacturing capacity and also developed the innovative Corinthian filter.”

The Corinthian filter is a multi-segment cellulose acetate filter which uses acetate shaping technology to create between one and six flutes along the length of the mouth end filter segment, which is then surrounded with plug wrap.

As a multi-segment filter, the Corinthian filter, as with all Icon range filters, can incorporate activated carbon to deliver additional performance.

And it can be combined also with flavoured and coloured acetate segments, or presented as a recessed filter.

It is currently available in standard circumference.

Management board changes at BAT

| October 31, 2012

At British American Tobacco, Jack Bowles, currently regional director –Americas, is due to be appointed regional director – Asia Pacific on January 1. Bowles, who joined the company’s management board in 2008 after running its French and Malaysian businesses, has over 20 years of tobacco industry experience.

At the same time, Naresh Sethi, currently business development director, will be appointed regional director –Western Europe. Sethi, who joined the management board in January 2012, has 23 years experience in the tobacco industry, having held various marketing roles in India with ITC, and then with the BAT group in Indonesia, West Africa, Australasia and, most recently, in Japan.

Also on January 1, Ricardo Oberlander, currently global consumer director, will be appointed regional director –Americas. Oberlander joined Souza Cruz in May 1989 and has held various roles including marketing director of BAT’s business, regional marketing manager for theAmericasand general manager inFrance.

The role of business development director will not be replaced on the management board.

These appointments were made necessary by the impending departures of David Fell, currently regional director – Asia Pacific, who will step down from the management board at the end of this year and who will leave the group at the end of March 2013, and Mark Cobben, currently regional director – Western Europe, who will step down from the management board and leave the group at the end of this year.

Commenting on these departures, CEO, Nicandro Durante, said, “Both David and Mark have dedicated a very large part of their professional careers to British American Tobacco, and have made significant contributions to the performance of the group. I thank them both as colleagues and friends and wish them well for the future.”

RAI to webcast management presentations

| October 31, 2012

The management team of Reynolds Tobacco Inc is due to discuss the company’s performance and plans during presentations to the investment community on November 12.

The presentations will be webcast on a listen-only basis at beginning about 09.00 hours Eastern Time.

Registration is available at the same website, where a replay will be made available.

JT increases half year domestic and international cigarette shipments

| October 30, 2012

Japan Tobacco Inc.’s domestic cigarette sales volume during the six months from April to September, at 59.6 billion, was up by 17 per cent on that of April-September 2011, which was negatively affected following the earthquake of March 2011.

The company’s core revenue from domestic cigarette sales grew by 16.8 per cent to ¥335.0 billion and its adjusted EBITDA increased by 24.4 per cent to ¥154.2 billion.

Meanwhile, Japan Tobacco International’s total cigarette shipment volume during the six months from January to June, at 212.4 billion, was up by 3.7 per cent on that of January-June 2011, partly due to the acquisition of the Haggar Cigarette & Tobacco Factory Ltd.

Within that total, GFB (global flagship brand) shipment volume was increased by 7.2 per cent to 130.8 billion.

JTI’s core revenue was up by 3.7 per cent to ¥457.0 billion, and its adjusted EBITDA was increased by 6.6 per cent to ¥172.9 billion.

Including the results of its other businesses, JT’s revenue increased by 6.0 per cent to ¥1,057.4 billion and its adjusted EBITDA increased by 15.1 per cent to ¥329.1, according to consolidated financial results released today.

Operating profit was up by 25.5 per cent to ¥265.6 billion and the profit attributable to the owners of the parent increased by 17.5 per cent to ¥168.8 billion.

“Our tobacco businesses once again achieved strong results,” said JT’s president and CEO, Mitsuomi Koizumi.

“Internationally, we have achieved both GFB and total volume growth, in spite of the challenging environment, notably inWestern Europe, affecting industry volume.

“InJapan, we have been steadily recovering our market share over a short period post-earthquake through marketing efforts to strengthen brand equity.

“We will continue to prioritize business investments for sustainable future growth, as shown by our initiative to evolve Mild Seven to Mevius to strengthen brand equity and our global presence.”

JTI reported separately that its total cigarette shipment during January to September, at 327.9 billion, was up by 2.6 per on that of January-September 2011, with GFB volume up by 5.1 per cent to 202.5 billion.