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Imperial preparing for factory closures

| April 16, 2014

The Imperial Tobacco Group is proposing to close its cigarette factories at Nottingham, U.K., and Nantes, France.

The proposed closures are part of a number of “European restructuring projects” that could see 900 jobs axed.

In a note posted on its website, Imperial said the projects, which are planned to be “implemented progressively” during the next two years, were aimed at strengthening its competitive position.

The proposed closures reflected declining industry volumes in Europe, impacted by tough economic conditions, increasing regulation and excise and the growth in illicit trade, the note said.

Production had been affected at the Nottingham and Nantes sites, which now utilized less than half their manufacturing capacity.

The projects could reduce the group’s workforce by 900. Employees, works councils and trade unions had been informed and consultation processes were now underway, the note said. A comprehensive range of measures to support employees would be discussed as part of the consultations.

“These projects are an essential part of securing the sustainable future of the business,” said Alison Cooper, chief executive. “The prospect of job losses is always regrettable, and we will be doing all we can to support employees and ensure that they are treated in a fair and responsible manner.”

The proposed projects were said to support the group’s cost optimization program, which is expected to deliver savings of £300 million a year from September 2018.

PM USA pays $3.3 billion to U.S. states

| April 16, 2014

Philip Morris USA yesterday made its annual Master Settlement Agreement (MSA) payment, which, this year, amounts to about $3.3 billion, net of various items related to the non-participating manufacturer adjustment disputes.

In a statement posted on its website, the company said that, since signing the tobacco settlement agreements, PM USA had paid U.S. states more than $66 billion.

“MSA payments provide states valuable resources to fund tobacco cessation and underage tobacco use prevention programs,” the statement said. “For years, PM USA has encouraged the states to use MSA payments to fund these programs at levels recommended by the Centers for Disease Control. PM USA continues to support using these funds for these purposes.”

A portion of PM USA’s MSA payment is being deposited into the Disputed Payments Account, in accordance with the terms of the MSA and calculations made by the independent auditor.

Industry acts in face of forest crisis

| April 16, 2014

Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) and tobacco merchants have established the Sustainable Afforestation Association (SAA) to spearhead reforestation across the country, according to a story by Elias Mambo for the Zimbabwe Standard.

The reforestation program is aimed at countering the deforestation that is taking place as a result of the increased number of small-scale tobacco growers now operating in the country.

According to Forestry Commission data released recently, Zimbabwe is estimated to have lost 15 percent of its tree cover during the past 15 years.

And Mambo quoted “experts” as saying that, at the current rate of loss, the country risked turning into a desert in 35 years.

In order to fund the program, the merchants were expected to contribute an amount equivalent to 1.5 percent of total tobacco sales for the whole season.

The SAA’s CEO, Maggie Okore, said her organization had already embarked on a massive reforestation program that would see 4,000 ha of new woodlots being planted by the end of the year.

E-cigarette use link to smoking cessation

| April 16, 2014

New survey data from England show rising e-cigarette use has been accompanied by a notable increase in smoking cessation, according to a story by Jacob Sullum for Reason Magazine.

Sullum quotes Boston University public health professor Michael Siegel as having highlighted the Smoking Toolkit Study, which had shown that e-cigarette use in England had been increasing since 2011, when the survey began.

The study had shown also that the percentage of smokers who had reported quitting in the previous year had risen from 4.6 percent in 2011 to 6.2 percent in 2012.

The cessation rate was 6.1 percent last year and 8.7 percent in the first quarter of this year.

During the same period the success rate of smokers who tried to quit rose from 13.7 percent to 21.4 percent.

These trends, Siegel was quoted as saying, suggested that “electronic cigarettes are helping to accelerate smoking cessation, rather than hinder it.”

The researchers concluded that the “evidence does not support the view that electronic cigarettes are undermining motivation to quit or reduction in smoking prevalence.”

They noted also that “use of e-cigarettes by never smokers remains extremely rare,” which deflated the fear that e-cigarettes were a gateway to smoking.

Siegel is a professor in the Department of Community Health Sciences, Boston University School of Public Health.

His blog is at http://tobaccoanalysis.blogspot.co.uk/.

PM straining at the bit over brand protection dispute with Australia

| April 15, 2014

Philip Morris Asia (PMA) is keen to get to the core of its dispute with the Australian government over the issue of standardized tobacco packaging.

In a note posted on its website, the company reported that the tribunal assigned to hear PMA’s challenge to Australia’s plain packaging law yesterday decided to divide the proceedings in the case into two phases—one to decide certain questions related to jurisdiction and a second to hear the arguments at the core of the case.

“Australia’s plain packaging law entails the destruction of brands,” said Philip Morris International’s vice president, communications, Julie Soderlund, in commenting on the tribunal’s decision.

“It is evident that brands are core to consumers’ understanding of the intrinsic characteristics of a product and of their ability to differentiate. Brands drive the creativity and innovation that propel economies. Building a brand is a long-term, significant investment that international law protects from arbitrary government action of exactly the sort at the heart of our claim.

“Today, the tribunal decided it would be efficient to hear some of Australia’s objections to the tribunal’s jurisdiction before moving to the core issues in the case. We respect the tribunal’s view on which is the most efficient way to proceed.

“We are eager to move past preliminary questions to a hearing during which we will show that Australia breached its promises to protect investments—promises that it has made in over 20 treaties and through its long history of enforcing strong trademark laws and fair regulatory processes.”

FCTC threatens more harm than good

| April 15, 2014

Indonesian Trade Minister Muhammad Lutfi has said his government will not ratify the World Health Organization’s Framework Convention on Tobacco Control (FCTC) soon, according to a Tempo story.

According to the views of the trade ministry and of the industry ministry, Lutfi said, the ratification did not have to take place immediately.

“Mr. Hidayat [the industry minister] and I thought the time had yet to come for Indonesia to ratify the FCTC,” Lutfi said after inaugurating a new Kawasaki factory in Cikarang.

Lutfi said the ministries’ position was based on the needs of the various stakeholders involved in the cigarette industry.

Tobacco farmers, he added, comprised only one of a number of factors both ministries had to take into account before deciding to “refuse the ratification of the FCTC.”

“We think that the ratification will cause more harm than good,” he said.

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