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Most people complying with Beijing smoking ban

| August 7, 2015

Since the June 1 start of a public-places tobacco smoking ban in Beijing, China, enforcement officials have conducted more than 20,000 inspections at 13,000 venues and ticketed 73 businesses and 179 individuals, according to a story by Chu Yiming for China Radio International, relayed by the TMA.

Put another way, for each inspection they made, enforcement officials ticketed 0.00365 of a venue and 0.00895 of a person, which seems to suggest an enormous level of compliance among businesses and smokers.

In fact, such compliance mirrors what has been the experience in many other cities and countries where smokers tend to be much more law-abiding than do, say, motorists.

The number of tickets issued was low despite the fact that Beijing’s tobacco-smoking ban covers all enclosed public places and some outdoor public places.

And it was low despite the fact that non-smokers were given plenty of opportunity to turn in those who violated the ban.

According to a piece on the Shanghaiist blog in the middle of June, Beijing’s municipal government had set up a public account on WeChat called ‘No Smoking Beijing’, where users could upload pictures of smokers and tag their location. The account was said to feature anti-smoking videos, the full text of the banning regulations and information on smoking-related health impacts.

And for those who didn’t use WeChat, Beijing set up a hotline, 12320, through which smokers could be reported.

Although the number of violations recorded seemed to be low, Zhang Jianshu, chairman of the Beijing Tobacco Control Association, urged authorities in the police, city management and health departments to co-ordinate with each other to ensure better implementation of the smoking ban.

Meanwhile, China National Tobacco Corporation officials apologized for preventing inspectors from entering its training center.

They must have got in eventually, however, because Wang Benjin, a Beijing Health Inspection law enforcement officer, said his team had identified many violations at the training center, including a lack of a tobacco control system, cigarette butt litter and cigarette advertisements on office paraphernalia.

Universal reports start of end of oversupply

| August 7, 2015

There are signs that the global leaf market is moving towards a more balanced position following more than a year of oversupply.

In announcing Universal Corporation’s financial results for its first quarter that ended on June 30, chairman, president, and CEO George C. Freeman III said that as the leaf industry entered the second year of global leaf oversupply, it was seeing progress in moving towards more balanced markets.

‘Production has come down in most origins,’ he said. ‘Burley tobacco supply is now balanced, while supply continues to exceed demand for certain qualities and stalk positions of flue-cured tobacco.

‘Although global oversupply conditions have improved, based on customer shipment indications we believe that volumes will be heavily weighted towards the second half of the fiscal year, similar to last year’s trend. Given this, the first fiscal quarter’s seasonally weak results were expected.

‘However, total volumes shipped, as well as segment operating income, were higher this quarter than the comparable quarter last year.’

Freeman said that crop purchases in Brazil had been progressing at a normal pace, while purchases in some African origins had started more slowly, due in part to crops being delayed by weather conditions.

‘In addition, customer orders have been coming in at a slow pace as customers evaluate the global markets,’ he said.

‘Green leaf tobacco prices have continued to decline this year, particularly in Brazil, Africa, and Europe where currency movements have reduced US dollar-based prices. ‘The lower prices in Brazil have increased demand for that above average quality flue-cured crop and conversely, may reduce demand for tobacco from other origins.’ Looking forward, Freeman said that Universal was continuing to monitor carefully crop purchases this season, and that its uncommitted inventories remained well within the company’s normal range.

‘It is still early in the season, but customer orders and indications remain in line with our expectations, and we currently anticipate that lamina volumes for fiscal year 2016 will exceed those of the prior year, barring any unexpected logistical challenges.

‘We also recently announced that commencing with the 2016 crop season, we are scaling down our operations in Zambia, where we have historically contracted with growers to purchase flue-cured crops but do not own processing facilities. This change is a result of continual assessment of our operations to achieve efficiencies and structures that deliver value for all stakeholders and is consistent with industry movements to reduce sourcing complexity.’

Universal reported a net loss of $5.9 million, or $0.43 per diluted share, for the first quarter of fiscal year 2016, against a net income of $0.7 million, or a loss of $0.13 per diluted share for the first quarter of fiscal year 2015.

Revenues for the first fiscal quarter of 2016 of $275.4 million increased by $3.9 million as higher total volumes were partly offset by lower overall green prices, a less favorable product mix, and lower processing revenues.

E-cigarettes reduce need for quit-smoking program

| August 7, 2015

A sharp decline in Scotland in the number of people using a National Health Service (NHS) support program to help them quit smoking has been linked to the rise in popularity of electronic cigarettes, according to a BBC Online story.

The Smoking Matters service in Dumfries and Galloway, for instance, helped 102 people in deprived areas quit smoking during the past year, but this was 251 below target.

And public health consultant Dr. Andrew Carnon said this trend was being mirrored across Scotland. Many people, he said, saw e-cigarettes as a stepping stone to stopping smoking.

Nationwide figures have shown a similar trend to those in the south west of Scotland.

Carnon said that though there was a lack of evidence about the effectiveness of electronic cigarettes, the NHS might have to review and adapt its smoking cessation service in the future.

However, he said he believed that there would always be a need for support services.

Where 19.7 percent illicit cigarettes is record low

| August 7, 2015

An empty pack survey in Lithuania conducted by the National Association of Tobacco Producers has found that 19.7 percent of the packs collected were smuggled into the country from other markets, according to a Baltic News Service story relayed by the TMA.

Although 19.7 percent might seem high, it is the lowest rate since the survey was launched in 2010, when 42 percent of the packs collected were illicit.

The percentage of illicit packs was 32.8 percent in 2011, 32.5 percent in 2012 and 28.9 percent in 2013.

Ramunas Macius, executive secretary of the National Association of Tobacco Producers, attributed the latest decline primarily to improving economic conditions in the country, efforts of law-enforcement agencies to curb smuggling and the Finance Ministry’s decision to raise cigarette excise tax gradually.

But Macius warned that the survey findings suggested that the number of illicit products on the market was still high and that the authorities could not afford to relax.

Grower prices down but AOI’s profits fall

| August 6, 2015

Market prices paid in US dollars for suppliers’ green tobacco have again been generally lower this year, according to Alliance One International’s president and CEO, Pieter Sikkel.

Announcing the company’s results for its first quarter to the end of June, Sikkel said that global leaf tobacco markets were still in oversupply, though the supply/demand situation was beginning to tighten in some regions.

And he predicted that oversupply would ‘further correct through the current crop cycle’.

‘Despite global oversupply and reduced average sales prices, our sales for the first quarter improved 5.9 percent versus last year to $263.8 million primarily due to increased volumes shipped from South America and enhanced customer demand for Asian products,’ Sikkel said.

‘South American and African markets have been delayed by four to six weeks this year mainly related to weather. As a result, we have experienced a slow start that is expected to improve through the year with sales building each subsequent quarter and resulting in improved full-year revenue and adjusted EBITDA when compared to last fiscal year.’

AOI reported that its gross profit had decreased by 2.6 percent to $34.2 million and that its gross profit as a percentage of sales had decreased to 13.0 percent this year from 14.1 percent last year, driven by Brazilian Real hedging expenses, a change in product mix, customer processing requirements and the weather-related delay in crop timing. ‘Mainly as a result of changes in Brazilian Real/US Dollar exchange rates versus our hedging plans, gross profit this year included $1.4 million of foreign currency hedging expense, compared to $2.1 million of foreign currency hedging gains last year, or a $3.5 million change,’ Sikkel said. ‘Benefits from Brazilian Real depreciation versus the US dollar that resulted in hedging expense in the first quarter are expected to be recognized as current Brazilian crop purchases and inventory are sold through later this fiscal year.’

Later in his report, Sikkel said that AOI continued to make progress toward its global plans and strategies. ‘Those plans include investing in sustainable tobacco production where appropriate returns are achievable, eliminating costs from the supply chain and optimizing our global footprint to match future customer requirements,’ he said. ‘We have made solid progress in all these initiatives during the quarter and expect execution of these plans to improve our results and shareholder value.’

Egypt looks to reduce its smoking incidence

| August 6, 2015

Twenty four percent of Egyptians are smokers and 12 percent of the country’s smokers are under 15 years of age, according to a story in the Cairo Post quoting the Health Ministry Undersecretary Amr Kandil.

The ministry was reported to have signed a protocol with the Consumer Protection Agency to support quit-smoking activities and thereby reduce the rate of smoking.

President Abel Fatah al-Sisi raised taxes on local and imported cigarettes and alcoholic beverages by up to 200 percent in July last year.

And a presidential decree of February 22 this year raised sales taxes on both local and imported cigarettes by 50 percent.

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