Archive for October, 2013

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JT to axe people, factories and operations as it opts for profit in challenging times

| October 30, 2013

Japan Tobacco Inc. is to cut its domestic workforce by about 1,600 people and close factories, sales offices and its vending machine division.

The announcement of the retrenchments comes seven months after the Japanese government reduced its share in JT from just over 50 percent to about 33 percent (with 37 percent voting rights).

One local report earlier this year had it that at least some of JT’s managers had been keen for the government to sell all of its shares because the company felt that this would remove certain management constraints.

The retrenchments, which are being made for reasons of competitiveness and profitability, come at a time when JT says the domestic business is operating in an “increasingly challenging environment.”

They will involve the replacement by April 1, 2015, of 25 area branch sales offices with 15 regional sales headquarters.

By the end of March 2015, JT will close two of its cigarette manufacturing factories: the Koriyama factory in Koriyama City, Fukushima, and the Hamamatsu factory in Hamamatsu City, Shizuoka.

It will close two other tobacco-related factories: the Hiratsuka leaf processing factory at Hiratsuka City, Kanagawa, by the end of March 2016; and the Okayama printing factory at Okayama City, Okayama, by the end of March 2015.

And the vending machine division in Akashi City, Hyogo, will be closed by the end of March 2015.

Meanwhile, though JT’s East-Japan regional leaf tobacco headquarters at Sukagawa City, Fukushima, will cease its leaf-processing operations at the end of March 2015, it will continue its leaf-buying operations.

What is described as a “voluntary retirement program” will be offered to eligible employees so as to “rightsize the workforce”—cut it down by about 1,600 people, most of whom will leave at the end of March 2015 but some of whom will leave at the end of March 2016.

“We believe that adaptability to a changing environment is critical to achieving sustainable profit growth in the mid- to long term,” said President and CEO Mitsuomi Koizumi in announcing the changes.

“The measures that we announced today aim to proactively address anticipated future challenges. By implementing these measures, the Japanese domestic tobacco business will further enhance its competitiveness and profitability, thus continuing to make significant contributions to the profit growth of the JT group.

“The Japanese domestic tobacco business remains one of the most important markets for the JT group and a highly competitive platform of the group’s profitability.”

Shorter cigarettes launched in India as higher prices force consumption down

| October 30, 2013

Cigarette manufacturers in India are launching shorter-length versions of popular brands in an attempt to revive the market following a sharp surge in prices, according to a story in the most recent issue of the BBM Bommidala Group newsletter.

Sales were said to have dropped by about 3 percent during the six months from April to September.

Manufacturers are said to be meeting with sales success with sub-65 mm and 69 mm versions of normally 74 mm and 84 mm products.

India’s cigarette market is made up of length-based categories that attract different rates of tax, and the sub-65 mm filter cigarette became a new, low-tax category last year when the Indian budget was brought down.

The setting-up of the new category was aimed mainly at providing competition for the illicit trade.

Another factor that is said to be boosting the sale of small-sized packs is the ban on the oral tobacco product gutkha, which has been imposed in 26 states and seven union territories.

Earlier this month it was announced that U.S. researchers at the Harvard School of Public Health, Center for Global Tobacco Control, had found that smokers of long or ultra-long cigarettes were at greater risk of lung and oral cancer than were the smokers of regular and king-sized cigarettes.

Hole in one for Iggesund’s Invercote

| October 30, 2013

The latest cover of Novum magazine has lifted Invercote paperboard from support act to starring role.

The starting point for the cover of the German graphic magazine’s October issue is a tribute to typography. The designer, Clormann Design, played with letters in various typefaces to create a delicate pattern that was then laser cut from the board.

“We knew this would require a paper material with unusual strength in order for it to stay together at all, so we deliberately chose to make the cover of Invercote, the paperboard from Iggesund Paperboard,” explained Christian Deppisch, a journalist at Novum.

The paperboard used was Invercote G 240 g/m2 laminated with Brushprint Silver foil. The foil side of the paperboard was used as the inside of the cover but also as a flap so that the foil would function as the background for the laser-cut pattern. A copper shade was printed onto the silver foil, and a pattern was created during the printing process by letting the silver shine through.

“The designer also wanted to play with the contrasts between shiny and matte, in this case the difference between the shiny foil and Invercote G’s uncoated reverse side,” said Deppisch.

“The delicate pattern is really a challenge, and with most other materials the pattern would risk being torn to pieces even before it reached its recipient. But for this particular job the choice of material was perfect.”

Clormann Design worked with the cutting and stamping specialists Stigler of Munich for the laser cutting. Kessler Druck+Medien did the printing and binding.

A video of how the cover was produced is at:

The holey grail of covers – achievable with Invercote. Photo by Rolf Andersson.

The holey grail of covers – achievable with Invercote.
Photo by Rolf Andersson.

Private members bill calls for imposition of standardized tobacco packs in India

| October 29, 2013

An opposition MP has introduced a private member’s bill into the Indian parliament calling for “logos and company branding to be totally removed from tobacco products,” according to an Australian Broadcasting Corp. report.

The proposal is said to be based on standardized packaging legislation imposed in Australia last year.

Since Dec. 1, Australia has required that all tobacco products be sold in packaging designed on behalf of the previous Labor government to be as ugly as possible. Packs are hugely dominated by graphic health warnings, are otherwise a standard olive color, have no logos or other design features, and have brand and variant names in a standardized font and position.

The Indian legislation is yet to be debated in parliament, and supporters of it are predicting staunch opposition from the tobacco industry and some politicians.

Criminals will take “delight” in tobacco retail fee earmarked for Ireland

| October 29, 2013

Newsagents in Ireland have labelled the 10-fold increase in the cost of a tobacco sales licence as a sneak attack on small corner shops, according to an Independent News & Media story.

Although the budget measure was not included in the finance minister’s speech, the Department of Health has confirmed on its website that a new €500 annual licensing fee for tobacco retailers—up from €50—will come into force in the coming months.

The National Federation of Retail Newsagents (NFRN) says it is unfair that the 10-fold increase is being applied equally to large supermarket chains and small corner shops.

The NFRN argues that the result will be fewer retail jobs in towns and villages across the country.

“It is a grossly unfair imposition on smaller retailers who are already hugely compliant with all tobacco regulations, as HSE monitoring confirms,” said NFRN President Joe Sweeney.

“This massive increase in registration fees will push some retailers out of the tobacco business entirely, costing jobs and leaving the market open for illicit traders to fill.

“This new charge on retailers is such a perverse and counterproductive policy decision that it will bring delight and greater profits to the criminal and paramilitary gangs now flooding the Irish market with smuggled tobacco.”

Competitive pressures knock back Swedish Match’s 3Q profit

| October 29, 2013

Swedish Match reported today that its sales during the third quarter to the end of September, at SEK3,230 million, were increased by 1 percent on those of the third quarter of 2012.

Operating profit from product areas, which excludes a share of the profit from the Scandinavian Tobacco Group, declined by 11 percent to SEK836 million.

Operating profit, which includes a share of the profit from the STG, declined by 10 percent to SEK924 million.

And basic earnings per share were down from SEK3.41 to SEK3.15.

CEO Lars Dahlgren said that key factors in the drop in operating profit had included a sharp fall in the operating profit for other tobacco products, reflecting the adverse competitive pricing developments in the U.S. cigar market, a restructuring charge relating to Scandinavian snus operations, as well as adverse “mix effects” within SM’s snus and snuff product area.