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Cigarettes still ITC’s profits milch-cow

| November 3, 2014

Despite being a conglomerate that runs luxury hotels and sells notebooks and clothing, as well as cigarettes, ITC’s bread and butter continues to be the tobacco business, according to a story by Kiran Kabtta Somvanshi for The Economic Times of India.

Its performance during the quarter to the end of September continued to display this trend as the bulk of its profits – as much as 85 percent – came from the company’s cigarette business, while its hotels and consumer goods businesses continued to bleed.

‘Though it posted a healthy 15 percent growth in revenues, its net profit rose a mere nine percent – the lowest quarterly growth in the past six years, the Times’ report said…

‘What should worry investors is the looming threat of regulatory clamps on the company’s cash cow. Since cigarettes are a major tax source for the government, it is unlikely [to] do anything that could threaten the very survival of the industry.

‘But faced with a vocal antismoking lobby, the government may increasingly make it difficult to market cigarettes – forcing ITC and others to find new ways to do business.’

Tax rise would close 1,000 tobacconists

| November 3, 2014

French MPs have approved, against the opinion of the government, two amendments that would raise the tax on cigars and cigarillos in line with that imposed on cigarettes, according to a story in Le Figaro.

The cigar suppliers’ association, Association des Fournisseurs de Cigares en France (AFCF), said that, if the amendments were confirmed, a pack of the country’s best-selling cigarillos would increase by €10.00 to €17.60.

AFCF warned that the measure would cause a drop in cigar sales next year that would translate into a fall in tax revenue of €158 million.

Meanwhile, the tobacconists’ union president, Pascal Montredon, said the price hike would lead to a decrease in revenue for tobacconists specializing in cigars and cigarillos.

If the price increase were applied, about 1,000 tobacconist shops would close down next year, in addition to the 1,000 shops already forecast to close this year.

MP Michele Delaunay, who presented the amendment, was quoted as saying that the main priority was health, ‘because tobacco is the first cause of death worldwide’.

Russia’s smoking laws under scrutiny

| November 3, 2014

Russia’s parliament, the Duma, is due to consider revising the country’s anti-smoking laws by reintroducing smoking rooms and special outdoor smoking areas at the country’s airports and train stations, according to a RIA Novosti report quoting a Rossiyskaya Gazeta story.

But the proposals for alterations to the country’s anti-smoking laws, which have come into effect during the past two years, are not only aimed at their liberalization.

Further restrictions, which have also been proposed, would make it illegal to smoke around bus stops, in pedestrian overpasses and underpasses, and in the corridors and kitchens of the communal apartments still inhabited by about 7-10 percent of the Russian population.

Proposed bill would increase minimum purchase age by one year every year

| October 31, 2014

A politician in Tasmania, Australia, plans to introduce to the state’s upper house a private member’s bill that would restrict the sale of tobacco products to people born in or after 2000, according to a story by Andrew Drummond for the Australian Associated Press.

“It will not make it illegal for them to smoke, but it will make it illegal for them to buy the product,” said the Launceston-based independent MP Ivan Dean.

“If we have a bill that’s to say they can never smoke, it would be unlikely to get support.”

Dean is working on the basis that if it’s difficult to source cigarettes, it is less likely people will smoke.

Due to be tabled in parliament on November 18, the bill is still a work in progress though, for obvious reasons, it would not come into effect until 2018.

“So far I’ve only had positive feedback about the bill and even the [state] health minister has indicated he will look at the detail,” Dean said.

And support is coming from the US, where Dick Daynard, professor of law in public health at Boston’s Northeastern University, is throwing his weight behind the proposed legislation.

The full story is at: https://au.news.yahoo.com/a/25380262/international-eyes-on-tas-smoking-bill/

Tobacco growers at a loss in Malawi

| October 31, 2014

Faced with falling prices and government apathy, Malawi’s tobacco growers feel they are between a rock and a hard place, according to an Anadolu Agency story.

“I will stop growing the crop if the status quo is maintained,” Mishek Chikulumeni was said to have told the news agency.

“Buyers are not giving us a fair deal. They are taking away the produce at the price of their own choosing.

“The future is bleak for me,” said Chikulumeni, the 46-year-old owner of Chikondi Estate, a tobacco farm located about 12 km from the central town of Kasungu.

Some growers allege that a cartel is in operation under which some buyers have agreed prices among themselves.

“This year my crop was being bought at an average of $0.80 per kilogram,” Thomas Banda, a grower from the Dowa district in central Malawi, told the agency.

“I sold about eight bales of tobacco. The money that was realized cannot even repay all the loans I got for agricultural inputs.

“We growers are caught in a fish net,” said Banda, who added that the only way out was to stop growing tobacco.

PM USA drops volume but gains share

| October 31, 2014

Philip Morris USA’s domestic cigarette shipment volume during the third quarter to the end of September, at 33.165 billion, was 2.8 percent lower than it was during the third quarter of 2013, 34.117 billion.

Marlboro volume was down by 2.8 percent to 28.581 billion, while the volume of the company’s other premium brands was down by 8.3 percent to 1.848 billion and its discount brand volume was up by 1.3 percent to 2.736 billion.

In presenting third-quarter and nine-month figures yesterday, Altria said that the fall in PM USA’s third-quarter reported domestic cigarettes shipment volume had been caused by an industry-wide decline, partially offset by retail share gains.

‘For the first nine months of 2014, PM USA’s reported domestic cigarettes shipment volume decreased 3.5 percent primarily due to the same factors, Altria reported. ‘When adjusted for trade inventory changes and other factors, PM USA estimates that its third quarter and first-nine months domestic cigarettes shipment volume decreased approximately 3.0 percent and 3.5 percent, respectively, and that total industry cigarette volumes declined approximately 3.5 percent in the third quarter and 4.0 percent for the first nine months of 2014.’

PM USA’s domestic-market retail share during the three months to the end of September, at 50.9 per cent, was increased by 0.2 of a percentage point on that of the third quarter of 2013.

Marlboro’s market share increased by 0.1 of a percentage point to 43.8 percent, while the share of the company’s other premium brands was down by 0.1 of a percentage point to 2.9 percent, and the share of its discount brands was up by 0.2 of a percentage point to 4.2 percent.

USSTC and PM USA’s combined domestic smokeless products shipment volume during the third quarter, at 203.0 million cans and packs, was down by 4.6 percent on that of the three months to the end of September 2013.

Shipments of Copenhagen and Skoal taken together were down by 4.1 percent to 184.1 million packs and cans, while shipments of other brands were down by 9.1 percent to 18.9 million packs and cans.

Altria commented that the decrease in volumes during the third quarter was caused by its having one less shipping week than did the third quarter of 2013.

‘After adjusting for calendar differences and trade inventory changes, USSTC and PM USA estimate that their combined domestic smokeless products shipment volume grew approximately 2.5 percent in the third quarter and 3.0 percent in the first nine months of 2014,’ Altria said. ‘USSTC and PM USA estimate that the smokeless products category volume grew approximately 3.0 percent over the last 12 months, reflecting slower industry volume growth in the past two quarters.’

USSTC and PM USA’s retail share of the domestic smokeless products market during the three months to the end of September, at 55.4 percent, was increased by 0.3 of a percentage point.

The share of Copenhagen and Skoal taken together increased by 0.4 of a percentage point to 51.3 percent, while the share of the companies’ other brands fell by 0.1 of a percentage point to 4.1 percent.

Middleton’s cigar shipment volume during the first three months, at 347 million, was increased by 8.4 percent on that of the three months to the end of September 2013, as Black & Mild volume increased by 9.6 percent to 341 million and other-cigar volume fell by 33.3 percent from nine million to six million.

Middleton’s retail share during the third quarter, at 29.7 per cent, was increased by 0.3 of a percentage point on that of the three months to the end of September 2013, with Black & Mild’s share unchanged at 29.2 percent and the share of other brands increased by 0.3 of a percentage point to 0.5 per cent.

Altria’s 2013 third-quarter reported diluted earnings per share (EPS) were up by 1.4 percent to $0.71 on those of the third quarter of 2013, while its adjusted diluted EPS, which excludes the impact of special items, increased by 6.2 percent to $0.69.

“Our business results are on track,” said Marty Barrington, Altria’s chairman and CEO. “We grew adjusted diluted EPS 6.2 percent in the third quarter behind strong income performance by our smokeable products segment, our companies’ leading premium brands and the strength of our diverse business model.

“Nu Mark continued its national expansion of MarkTen and continues to develop a robust product pipeline.”

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