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Archive for April, 2014

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BAT’s 1Q volume down by 1 percent

| April 30, 2014

British American Tobacco’s cigarette volume during the three months to the end of March, at 158 billion, was down by 1 percent on that of the first quarter of 2013, 160 billion.

Volumes increased from 48 billion to 50 billion in the company’s Asia Pacific region, but fell in its other regions: from 32 billion to 31 billion in its Americas region; from 54 billion to 53 billion in its Eastern Europe, Middle East and Africa region; and from 26 billion to 24 billion in its Western Europe region.

According to an interim management statement issued today, BAT’s five global drive brands recorded a volume increase of 6.3 percent, with their combined market share growing strongly in the group’s key markets. “Dunhill volume increased by 4.1 percent, with good growth in Indonesia and Brazil, partially offset by market decline in Malaysia,” the company said.

“Kent was 1.6 percent higher, driven by Japan and the Middle East, partially offset by market decline in Russia.

“Lucky Strike volume was down by 1 percent, with increases in Russia and Spain more than offset by decreases in Chile, Germany and Poland.

“Pall Mall was up by 6.9 percent as a result of growth in Pakistan, Chile, South Africa, Argentina and Mexico, partially offset by declines in Russia and Italy.

“Rothmans grew by 27.6 percent with strong performances in Russia, Italy and Ukraine, partially offset by decline in Egypt.”

Meanwhile, the company’s total tobacco volume, including the volume of other tobacco products calculated as cigarette stick equivalents, fell by 1.1 percent from 166 billion to 164 billion.

Fine-cut volume was down by 2.9 percent because of market declines in Western Europe, mainly Italy, Spain and France, partially offset by growth in Germany and Belgium.

But Pall Mall and Lucky Strike fine-cut volumes were said to have grown.

Group revenue for the three months to the end of March, at constant rates of exchange, grew by 2 percent on that of the three months to the end of March 2013, reflecting lower volume and the timing of price increases.

At current exchange rates, revenue declined by 12 percent, as movements in the majority of the group’s key trading currencies adversely impacted reported revenue.

“This is a good underlying performance, underpinned by an improving trend in volume,” said Nicandro Durante, chief executive.

“We have grown revenue at constant rates of exchange and our pricing remains on track.

“Our market share continued to grow, driven by the strength of our global drive brands.

“Although foreign exchange remains an issue for reported results, it is a good start to the year. I remain confident of delivering consistent growth in earnings in constant currency terms, which we will recognize with an increase in the dividend.”

JTI calls for clarity on TPD provisions

| April 30, 2014

While criticizing strongly some of the provisions contained in the EU’s new Tobacco Products Directive, Japan Tobacco International has appealed for clarity so that tobacco industry businesses can comply with the complex and costly changes that have to be made in the short timeframe allowed.

“These regulations are wide-ranging and restrict the way products are made, packaged and sold,” said Ben Townsend, head of JTI’s EU Affairs Office.

“They will have a huge impact on millions of legitimate businesses across the EU, from farmers to packaging manufacturers, and tobacco producers to retailers. “Given the very short timelines and costly changes required, clarity must now be given on the multiple measures contained in the TPD and subsequent implementation and delegated acts.”

“Make no mistake: These regulations will not achieve the public health benefits that law-makers have claimed.

“Legitimate businesses will suffer as excessive packaging requirements and banning entire product categories will benefit international criminal networks who will fill this supply gap.”

Directive 2014/40/EU of April 3, 2014, on the approximation of the laws, regulations and administrative provisions of the member states concerning the manufacture, presentation and sale of tobacco and related products, was published in the Official Journal of the European Union on April 29. It repeals Directive 2001/37/EC.

The new directive is due to enter into force on May 20, and member states are required to bring into force the laws, regulations and administrative provisions necessary to comply with the directive by May 20, 2016. However, member states may allow tobacco products, which are not in compliance with the new directive but which are manufactured in accordance with the previous directive and distributed before May 20, 2016, to be placed on the market until May 20, 2017.

The directive is at http://eur-lex.europa.eu/legal-content/DE/TXT/?uri=OJ:L:2014:127:TOC.

It might seem obvious but not to the FDA

| April 30, 2014

A leading health expert has expressed dismay that the U.S. Food and Drug Administration is unsure whether smoking tobacco cigarettes is any more hazardous than is vaping e-cigarettes.

Dr. Michael Siegel, a professor in the Department of Community Health Sciences, Boston University School of Public Health, said on Monday that the most damaging revelation in the FDA’s proposed deeming regulations was the fact that the agency was not sure that smoking was any more hazardous than vaping.

“This is worth repeating: The nation’s federal regulatory agency with jurisdiction over cigarettes is not sure that smoking—which kills more than 400,000 Americans each year—is any more dangerous than vaping, which involves no tobacco and no combustion and has not been shown to cause any harm,” he wrote on his blog.

“The FDA is not convinced that inhaling nicotine plus tens of thousands of chemicals and more than 60 known human carcinogens is any worse than inhaling nicotine plus propylene glycol and low levels of a few other chemicals.”

Siegel’s full blog is at http://tobaccoanalysis.blogspot.co.uk/2014/04/federal-agency-that-regulates.html.

PM USA seeking review of reinstatement of $10.1 billion “lights” judgment

| April 30, 2014

Philip Morris USA has said that it will seek immediate review by the Illinois Supreme Court of yesterday’s appellate court decision to order reinstatement of the 2003 judgment in the Price “lights” case. While that review is pending, the appellate court decision is stayed automatically.

“Almost 10 years ago, the Illinois Supreme Court reversed the Price judgment as contrary to Illinois law,” said Murray Garnick, Altria Client Services senior vice president and associate general counsel, speaking on behalf of PM USA. “The Fifth District Court of Appeals’ decision today conflicts with that ruling and essentially overrules a decision of a higher court.

“The law does not allow the Fifth District to reopen a decision by the Illinois Supreme Court based on speculation about the possible impact of subsequent events on the higher court’s ruling.

“In addition, the Fifth District erred in ordering reinstatement despite the fact that the Illinois Supreme Court previously raised other problems with the judgment, including whether the case was properly certified as a class action.”

The Illinois Supreme Court in 2005 overturned a $10.1 billion judgment against PM USA, which was imposed by former Madison County Circuit Judge Byron, sitting without a jury. The original case, filed in 2000, alleged that Illinois smokers were deceived in purchasing Marlboro “Lights” and Cambridge “Lights” cigarettes and, therefore, were entitled to a refund.

“If the Illinois Supreme Court declines to review the case at this point, PM USA will pursue an appeal in the ordinary course, to which a $250 million bond cap would apply,” Garnick added.

Essentra Packaging offers prize to keep the ideas fresh at Interpack exhibition

| April 30, 2014
Canned idea from Essentra.

Canned idea from Essentra.

Visitors to Interpack are being asked for ideas about how AquaSense™, the latest label innovation from Essentra Packaging, can revolutionize packs.

Every idea submitted by visitors to Essentra’s stand, C20, in hall 7 at Messe Düsseldorf May 8–14 will be in with a chance of winning an iPad Mini at the end of the show, the company said in a press note issued yesterday.

AquaSense™ has been designed to help maintain and control the moisture content within packs, ensuring the goods do not dry out and are kept fresh.

Moreover, in a press note issued towards the end of March, Essentra said that AquaSense™ had been designed to help maintain and control the moisture content of make-your-own tobacco packs.

According to the March press note, an absorbent AquaSense™ pad included in the packaging and available on opening was placed by the consumer under a running tap or in a glass of water. The pad soaked up only a specific amount of water that it then released over time to keep the contents of the packaging fresh, control humidity and reduce product waste due to drying out.

The pad could be supplied in a variety of formats and sizes and had been designed to meet the specific protection needs of make-your-own tobacco packs and tubs.

And it could be used to deliver high-impact promotional graphics and messages that appeared on the addition of the water.

Plain packaging dispute moves up a gear

| April 29, 2014

Australia could learn by the end of this year whether its standardized tobacco packaging regulations have fallen afoul of World Trade Organization requirements, according to an Agence France Presse story.

Since Dec. 1, 2012, 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.

Australia and the five countries that have raised objections to the regulations, Cuba, the Dominican Republic, Honduras, Indonesia and Ukraine, agreed at a WTO dispute settlement body meeting on Friday to combine the five separate challenges into a single case.

WTO chief Roberto Azevedo is expected by May 5 to name the three-member panel of independent trade and legal experts, who, under the organization’s rules, will then have six months to issue a ruling.

However, according to a story by Tom Miles for Reuters, panels frequently ask for more time, and the WTO’s dispute system is suffering from a bottleneck.

Additionally, any party to the dispute could appeal, a process that can add months to the outcome, and some disputes drag on for years because of disagreements over whether a country ruled to be in the wrong has done enough to comply with the terms of the WTO judgment.

The Agence France Presse story, meanwhile, quoted trade analysts as saying that the dispute ruling could have far-reaching implications for how governments balanced global intellectual property rules with measures they say are in the public interest.