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JT expected to sell beverage business to Suntory

| May 26, 2015

Suntory Beverage & Food has said it will buy Japan Tobacco Inc’s beverage vending machine business for about ¥150 billion ($1.2 billion), according to a Reuters report citing figures from the industry publication Inryosouken.

JT’s withdrawal from the business, which includes the sale of its Roots canned coffee and Momono Tennen-sui flavoured water brands, comes in the face of fierce competition in the nation’s beverages industry.

The company announced in February that it would pull out of the beverage business and stop production and sales of beverages by the end of September.

JT competes against larger rivals, including Suntory and Coca-Cola Co, which last year held more than 20 percent market share each. JT controlled 1.6 percent.

Vapor less toxic according to Cultex study

| May 22, 2015

Cultex Laboratories—a leader in the research and development of cell-based exposure systems and cultivation technologies based in Hannover, Germany—has examined the cytotoxic effects of the vapor emitted by e-cigarettes. Using specially designed exposure models that made it possible to keep cells at an atmosphere that mimicked the real characteristics of a human lung, researchers conducting the in-vitro study exposed healthy human bronchial epithelial cells to e-cigarette vapor.

The study compared e-cigarette vapor containing 0.0 percent and 2.4 percent nicotine with the smoke emitted by combustible cigarettes, and results indicated that the toxicological effects of e-cigarette vapor were 4.5 to 8 times lower than those of tobacco smoke. No differences regarding the cytotoxicology were found between nicotine-free vapor versus the vapor that contained nicotine. Cultex Laboratories will continue its e-cigarette research and plans to analyze the possible long-term effects of e-cigarette use. The full study can be found at www.mdpi.com/1660-4601/12/4/3915.

PMI files plain packaging suit against UK government

| May 22, 2015

Philip Morris International today filed suit in the English High Court to contest the UK government’s recently introduced standardized packaging regulations for tobacco products.

In a note posted on its website, PMI said it was seeking a decision that the regulations – which imposed a wholesale ban on logos and visual trademark elements and required all cigarette packaging to look the same – violated English and European Union law.

“We respect the government’s authority to regulate in the public interest, but wiping out trademarks simply goes too far,” said Marc Firestone, PMI senior vice president and general counsel. “Countries around the world have shown that effective tobacco control can co-exist with respect for consumer freedoms and private property.”

PMI pointed out that in April 2015, all tobacco products in the UK were banned from display at retail, and as early as 2016, EU law would require that health warnings for cigarettes cover up to 65 percent of the pack.

PMI’s filing asserts that:

* ‘The regulations unlawfully deprive PMI of its trademarks. A core doctrine of English and EU law is that there must be fair compensation for deprivations of property, a remedy that the regulations do not provide.

* ‘The regulations violate the EU law that says Community trademarks can be used by identical means throughout the EU, which would be impossible if the UK government bans their use in the UK.

* ‘The regulations obstruct the free movement of goods through means that are neither necessary nor proportionate to achieving the UK government’s public health objectives.

* ‘A case from the English High Court is already before the European Union’s Court of Justice to decide whether standardized packaging is permissible under the EU’s recently enacted tobacco product directive. If not, then the UK regulations would be invalid. It would have been far sounder to hear from the Court of Justice before issuing the regulations.’

PMI said that trademarks conveyed a product’s quality and other attributes and helped consumers select from competing brands in a crowded marketplace. In this and other ways, trademarks were the key to a market economy.

In 2014, it added, Marlboro ranked as the ninth most valuable global brand with an estimated value of $67 billion.

“The UK government rushed out the regulations, with many serious questions left unanswered,” Firestone said. “The law protects trademarks because of their essential functions for consumers and in driving competition. By contrast, a wholesale ban on branding distorts the market and treats consumers as if they’re not capable of making their own decisions.”

Low leaf tobacco prices cause concern in Zimbabwe

| May 22, 2015

Zimbabwe’s Parliamentary Portfolio Committee on Lands and Agriculture has expressed concern over the low prices being offered at tobacco auction floors this season, according to a story in The Herald.

It has urged stakeholders to educate growers on what they have to do to be rewarded with good returns for their tobacco.

The committee members toured Northern Tobacco, Tianze Tobacco Company and Boka Tobacco Auction Floors, where they were said by the Herald to have expressed dismay at a price cap of $4.99 per kg at a time when prices on contract floors were as high as $6.30 per kg.

Some committee members felt that buyers were exploiting farmers by offering low prices, while others accused the Tobacco Industry and Marketing Board of not doing enough to assist farmers, especially on the issue of low prices. Others attributed the low prices to the low quality of the crop being delivered to the auction floors.

The Zengeza West Member of Parliament, Simon Chidhakwa, complained of middlemen buying the tobacco at very low prices outside the auction floors for resale at the floors.

Meanwhile, a story in the Zimbabwean relayed by the TMA said that quality tobacco that in previous seasons had sold for US$4.00 per kg was this season attracting offers of US$1.60 per kg.

Reynolds on the brink of acquiring Lorillard

| May 22, 2015

Reynolds American is poised to win US antitrust approval for its $25 billion purchase of Lorillard as early as next week, according to a story by David McLaughlin for Bloomberg News, quoting ‘a person familiar with the matter’.

If the merger is cleared, Reynolds will account for about a third of domestic tobacco sales and, together, Reynolds and Altria will account for about eight out of every 10 cigarettes sold in the country.

Reynolds first announced plans to buy Lorillard in July last year.

The full story is at: http://www.bloomberg.com/news/articles/2015-05-21/reynolds-said-set-to-win-antitrust-clearance-for-lorillard-deal.

More Brits vaping but more taken in by health scares

| May 22, 2015

The number of vapers in Britain has risen by 500,000 recently, according to a Press Association story citing figures from Action on Smoking and Health (ASH).

ASH was quoted as saying that there were now 2.6 million vapers in Britain, up from 2.1 million in 2014, with nearly all of this increase attributable to a rise in the number of ex-smokers using electronic cigarettes.

The campaign group said the figures showed the ‘value’ of electronic cigarettes in helping smokers give up tobacco.

But it warned of a ‘worrying’ increase in people falsely believing that electronic cigarettes were as harmful as or even more dangerous than traditional tobacco cigarettes.

Twenty two percent of people were said to believe that electronic cigarettes were as harmful as or even more dangerous than traditional tobacco cigarettes, up from 15 percent last year.

ASH said analysis by researchers at King’s College London had shown that electronic cigarette use had increased among ex-smokers from 4.5 percent in 2014 to 6.7 percent in 2015, but remained the same among current smokers at 17.6 percent.

Vaping remains rare amongst people who have never smoked, with just 0.2 percent of users falling into this category during the past three years.