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Archive for November, 2012

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Earnings up at Donskoi Tabak

| November 29, 2012

Russian cigarette maker Donskoi Tabak on Nov. 20 reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of RUR1.86 billion ($ 59.3 million) in January-September 2012, up 26 percent from a year ago, reports Prima-Tass.

Net revenue jumped 71 percent year-year to RUR19.7 billion, volumes rose 2 percent to 23.5 billion cigarettes, and the company’s average cigarette price increased 16 percent to RUR25.60 rubles per pack following an excise tax hike.

In January-September 2012, Donskoi Tabak’s cigarette output, at 23.5 billion pieces, was flat compared with the same period in 2011. The company exported 4.4 billion cigarettes worth $34.8 million in the nine-month period, up 8 percent from like 2011.

Proposal to raise smoking age

| November 29, 2012

Junior Health Minister Martin van Rijn plans to introduce legislation to raise the Dutch legal age to buy tobacco products from 16 to 18, reports DutchNews.nl.

Earlier this month, the Dutch cigarette industry association SSI, the smoking tobacco association VNK, and Philip Morris Benelux, called for raising the legal tobacco buying age.

Anti-tobacco group Stivoro has blamed government policies, including Health Minister Edith Schippers’ 2010 decision to relax the country’s smoke-free law to exempt bars smaller than 70 square meters, for an anticipated increase in the adult smoking rate to 26.2 percent by the end of 2012.

Belarus braces for tax hike

| November 29, 2012

The Belarusian government will increase tobacco excise tax rates by between 50 percent and 100 percent, starting Jan.1, reports Oreanda-News.

The excise tax rate on filtered cigarettes will increase by 55.6 percent to 110 percent, depending on the price group. The excise tax rates on smoking and pipe tobacco, and cigars will increase by 66.7 percent, while the rate on cigarillos will rise by 73.8 percent.

Report dismisses industry claims about plain packaging

| November 29, 2012

A report commissioned by Cancer Research UK dismisses the tobacco industry’s claims that the U.K. government’s plans to introduce plain packaging for cigarettes will boost the trade in illegal cigarettes, reports HealthCanal.

According to the report, which was prepared by Luk Joossens, advisor to the World Bank, the European Commission and World Health Organization on illicit tobacco trade, producers of counterfeit cigarettes find all existing cigarette packaging easy to forge, and that introduction of plain packaging is unlikely to cause more counterfeiters to make more fake packs.

Noting that producers of counterfeit cigarettes are able to provide “top quality packaging at low prices in a short time,” Joossens said “plain packaging will not make any difference to the counterfeit business.”

Cancer Research UK’s director of tobacco control Jean King said the tobacco industry “has a track record of facilitating smuggling and often says policies that cut smoking will increase smuggling, even though smuggling has been falling for a decade.”

Australia’s plain packaging an “anomaly”

| November 29, 2012

Morgan Stanley analysts believe the spread of plain packaging beyond Australia may be “very slow.”

Capital markets have been concerned that Australia’s plain tobacco packaging law–the world’s first–could spread to other nations, ultimately commoditizing the tobacco category by hurting brand equity and reducing manufacturers’ pricing power.

The analysts base their optimism on the facts that there is no evidence that the measure will reduce tobacco use or youth initiation and that such legislation appears both “extreme and disproportionate.”

They also point out that plain packaging will “almost certainly” fuel the black market, thus reducing tax revenues, and that the legislation arguably violates various international trade rules.

The analysts suggested that the nation’s geographic positioning may have led policy makers to believe that the country would be largely immune to contraband.

Although the Commonwealth still faces strong legal challenges under a Bilateral Investment Treaty with Hong Kong and the World Trade Organization, the failure of the industry’s constitutional challenge in the country’s High Court “reflects the unique nature of Australia’s ‘protection’ of trademarks and intellectual property,” the analysts said.

E-cigarettes may surpass NRT sales

| November 29, 2012

Euromonitor International believes the value of the global trade in electronic cigarettes may soon exceed that of non-prescription nicotine-replacement products. In a recent report, the market intelligence provider estimated the worldwide e-cigarette market at $2 billion, compared with $2.4 billion for the NRT market, excluding prescription sales.

The report also highlights the increasing involvement of traditional tobacco companies in e-cigarettes. As examples, it highlights the ventures of Lorillard, which acquired Blu eCigs for $135 million in April 2012, and Swisher International, which launched its own brands of e-cigarettes and e-cigars this year.

Euromonitor predicts that by 2050, e-cigarettes and other non-combustible smoking alternatives will be worth 4 percent of the overall tobacco category.

E-cigarettes are currently largely unregulated across the world, according to the report, although some countries, such as Argentina, have banned them, while others, such as the United States, have classified them as tobacco products.

There is speculation that the EU is planning to ban e-cigarettes that are not registered pharmaceutical products, the article said.

“Should any future legislation clamp down on e-cigarettes that are not registered pharma products, tobacco companies such as BAT with their pharma-approved devices and those companies with the financial clout to afford the approval process will be poised to pick up the slack,” the article said.