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Zimbabwe district council gets tough on tobacco growers and contractors

| March 5, 2014

All tobacco companies operating in Zimbabwe’s Hurungwe district will be required from the next tobacco growing season to sign with Hurungwe Rural District Council (HRDC) a memorandum of understanding (MOU) regulating their operations, according to a story in The Herald.

This follows concerns that tobacco contractors and farmers have not been complying with council bylaws and the tenets of corporate social responsibility.

The HRDC chief executive officer, Joram Moyo, said that tobacco farming was having a negative impact on the district’s environment and, in particular, on its forests as wood was cut for curing leaf.

In part, the MOU will require farmers to use coal for curing their tobacco or to establish a woodlot as a curing resource.

Meanwhile, Hurungwe District Administrator Tsana Chirau said that though contractors were raking in huge profits, they were not forthcoming in fulfilling their corporate social obligations.

She said that despite the fact that farmers were exposed to dangerous chemicals, contractors had not come up with programs to assist the area’s clinics, some of which were facing drugs and equipment shortages.

According to the Herald, the Tobacco Industry Marketing Board puts the number of registered tobacco growers in Hurungwe at more than 22,000.

Bangladesh leaf plant said to pose threat

| March 5, 2014

A leaf tobacco processing factory has been the subject of protests in the Saptibari village of the Aditmari subdistrict of Bangladesh because of its proximity to educational institutions, according to a story in The Daily Star.

Factory and local sources were quoted as saying that though the Mian Leaf tobacco factory was built in 2012, it was not used to process tobacco last year because of protests by schoolchildren, teachers and other local people.

However, the factory’s owner is said to have decided to run the factory this year following the tobacco harvest.

The Star said the heads of three educational institutions close to the factory believed the health of their 1,500 students would be put at risk if the tobacco factory became operational, though the nature of the health risk was not specified.

Reduce smuggling, don’t increase taxes

| March 5, 2014

A top official of Vietnam’s tobacco industry has proposed boosting the country’s revenue by urgently cracking down on cigarette smuggling rather than by increasing tobacco-products consumption tax, according to a VietnamPlus story.

Vu Van Cuong, the chairman of both the Vietnam Tobacco Association and the state-owned Vietnam National Tobacco Corp, made the suggestion after the Ministry of Finance unveiled a plan to raise the consumption tax on cigarettes to 75 percent by July 2015 and to 85 percent by 2018, as part of draft amendments to the Law on Special Consumption Tax.

He said a consumption tax hike would pave the way for more smuggling, the reduction of the domestic tobacco industry’s market share and the lowering of state revenues.

VietnamPlus reported that a 2012 survey by the International Tax and Investment Centre, which is part funded by multinational tobacco companies, showed that Vietnam was the second largest consumer of smuggled cigarettes among 11 surveyed Asian nations.

U.S. e-cigarette sales up 31.3 percent

| March 5, 2014

Logic Technology said yesterday that it had strengthened its No. 2 position in respect of e-cigarette volume sales, according to a Wells Fargo Securities report on Nielsen’s C-Track [U.S. convenience store] Database.

Logic said also that it had maintained its No. 2 position in respect of e-cigarette dollar sales in convenience stores.

“Logic now commands 20.2 percent of dollar share in the category, demonstrating the continued success of Logic’s premium product line,” the company said.

“Further, Logic has maintained the No. 2 unit share position, increasing to 21.8 percent of the category.”

The Nielsen report showed also that Logic had three of the top five SKUs nationwide.

Lorillard’s Blu remains the e-cigarette category leader.

Overall, Wells Fargo reported that the growth in the value of e-cigarette sales had decelerated slightly to plus 31.3 percent.

Reynolds American rumoured to be considering Lorillard acquisition

| March 4, 2014

Reynolds American Inc. is rumoured to be considering making a bid for Lorillard, according to research notes issued by Wells Fargo Securities and based on a story yesterday in The Financial Times.

Neither Reynolds nor Lorillard have commented on the story.

Bonnie Herzog, managing director, beverage, tobacco and convenience store research at Wells Fargo, said that such an acquisition could produce considerable synergies and cost savings in respect of manufacturing, employment and e-vapor product development, given that certain conditions pertained.

Herzog said that a combined RAI and Lorillard would be an attractive strategic partner for British American Tobacco, which owns 42 percent of the equity in RAI.

And she said she expected that such an acquisition would be accepted by competition authorities, though perhaps on condition that some brands were divested.

Nevertheless, Herzog did express surprise at the timing of the move given the current lack of clarity over the U.S. Food and Drug Administration’s potential menthol regulation.

All U.S. retailers urged to quit tobacco

| March 4, 2014

Twenty-six of the U.S.’s leading public health and medical organizations have issued an open letter calling on all retailers to follow the example of CVS Caremark and end the sale of cigarettes and other tobacco products, according to a PRNewswire story.

CVS announced earlier in February that by Oct. 1 it would stop selling tobacco products at its more than 7,600 stores throughout the U.S.

“CVS Caremark is absolutely right: The sale of tobacco products—the number one cause of preventable death and disease—is fundamentally inconsistent with a commitment to improving health,” said the open letter addressed to U.S. retailers, “especially those with pharmacies.”

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