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Zimbabwe’s growers suffering effects of low prices

| June 12, 2015

Zimbabwe’s flue-cured tobacco growers are still suffering from the effects of low prices well into the sales season, according to a story in the Daily News relayed by the TMA.

Figures issued by the Tobacco Industry and Marketing Board (TIMB) indicate that, so far, growers have sold 145.5 million kg of flue-cured leaf at an average price of US$2.94 per kg and earned nearly US$430 million. The leaf marketing season started on March 4.

Compared with figures recorded during the corresponding period of the 2014 marketing season, the sales volume is down by 7.57 percent and the value of those sales is down by 14.00 percent.

Despite the fact that cigarette prices seem always to trend upwards; the amount per kg being paid to Zimbabwe’s growers is trending down.

The TIMB said growers had sold 105.4 million kg of leaf by contract and 40 million kg over auction platforms.

Of the tobacco sold at auction, about 19 million kg was sold over the Tobacco Sales Floors, about 12 million kg was sold over the Boka Tobacco Auction Floors and about eight million kg over the Premier Tobacco Floors.

JT’s domestic cigarette volume holds firm in May

| June 12, 2015

Japan Tobacco Inc’s domestic cigarette sales volume during May, at 9.2 billion, was virtually unchanged from that of May 2014, according to preliminary figures issued by the company today (whereas the May 2014 was put also at 9.2 billion, the May 2015 figure was recorded as being down by 0.1 percent). The May 2014 figure was down by 10.3 percent on that of May 2013.

Volume during January-May, at 43.8 billion, was down by 5.3 percent on that of January-May 2014, 46.3 billion, which was down by 0.9 percent on that of January-May 2013.

JT’s market share stood at 59.5 percent during May, at 59.9 percent during January-May, and 60.4 percent during January-December 2014.

JT’s domestic cigarette revenue during May, at ¥51.9 billion, was increased by 0.5 percent from its May 2014 level, ¥51.7 billion, which was down by 7.4 percent on its revenue of May 2013.

Revenue during January-May, at ¥248.3 billion, was down by 3.1 percent on that of January-May 2014, ¥256.2 billion, which was down by 0.1 percent on its revenue of January-May 2013.

BAT and Taban Trafik to supply Hungary’s retailers

| June 12, 2015

The Hungarian government announced yesterday that British American Tobacco would join forces with a Hungarian tobacco trader to supply tobacco shops in the country, according to a Dow Jones story.

BAT and Taban Trafik would jointly pay 600 million forints ($2.2 million) for the license, Janos Lazar, head of the prime minister’s office, was reported to have said at a press conference.

Hungary monopolized the retail trade of tobacco in 2013 and, in doing so, radically reducing the number of retail tobacco outlets.

Market experts estimate Hungary’s retail tobacco market is worth about 500 billion forints ($1.81 billion) a year.

In December last year, parliament, which is dominated by the governing Fidesz party, approved legislation to introduce a single firm licensed by the state as the only tobacco wholesaler.

Filipinos to be educated about the perils of smoking

| June 12, 2015

The Philippines’ Department of Health (DOH) yesterday called on teachers nationwide to remind their students of the perils of cigarette smoking and thereby minimize the number of young smokers in the country, according to a story in The Manila Bulletin.

“Teachers should act as role models for students and they should remind the youth on the hazards of smoking and strictly implement a 100 percent smoke-free learning institution,” said health secretary Janette Loreto-Garin.

The health chief warned parents and authorities about what she said were the worsening smoking habits of Filipinos.

She cited the first quarter 2014 Social Weather Station (SWS) Report that found that nine out of 10 smokers smoked about 10 cigarettes a day.

And she cited the Philippine Global Adult Tobacco Survey conducted in 2009 that found that 28.3 percent of the population aged 15 years and over were smokers.

“With an estimated 10 Filipinos dying every hour due to smoking-related conditions, it is wise never to start the addictive habit of smoking,” she said.

Greensboro hoping Imperial can reignite KOOL & Co

| June 11, 2015

A lot is riding on whether the majority of the US Federal Trade Commission (FTC) is correct in believing that Imperial Tobacco has the ability not only to maintain but ultimately to grow the market share of the US brands that it is due to acquire tomorrow.

According to a story by Mark Sutter for the Triad Business Journal; when the FTC voted 3-2 in late May to give its blessing to the acquisition of Lorillard by Reynolds American (RAI), one of its key findings was that, by requiring the merged company to divest certain brands and facilities to Imperial, a ‘sufficient’ competitive balance would be maintained within the tobacco industry.

‘Imperial is getting an experienced team with knowledge of brands and customers,’ the approving majority of the FTC commissioners said in a written opinion. ‘The evidence shows that Imperial can grow the market share of these brands through discounting and other promotional activity. Imperial has a successful track record of repositioning cigarette brands in other jurisdictions and growing the market share of those brands.’

The Reynolds/Lorillard merger is due to go ahead tomorrow at the same time as Imperial’s ITG Brands is due to acquire from the merged company the KOOL, Salem, Winston and Maverick cigarette brands, along with the blue eCigs electronic cigarette brand and other assets.

Sutter said that, in Greensboro, North Carolina, much depended on Imperial’s making a success of these brands.

Under the deal, the UK-based company was acquiring Lorillard’s headquarters on Green Valley Road and its Market Street manufacturing plant, and it was taking on its local work force of nearly 2,000.

Lorillard had not only been one of the city’s biggest private employers, but also one of its biggest property taxpayers. Its employees were annually among the most generous contributors to the United Way and other causes.

In her written dissent, FCT commissioner Julie Brill laid out the perils and challenges that lie ahead for Imperial given that, as expected, the deals go ahead.

She pointed out that while Imperial was getting only RAI and Lorillard’s weakest brands, Reynolds was picking up Newport, the country’s top-selling menthol cigarette.

Winston, KOOL and Salem were declining and unsuccessful, with a combined market share that had gone from 14 percent in 2010 to eight percent in 2013.

Finally, Brill argued that while Imperial was one of the largest tobacco companies worldwide and had had success overseas in reviving and repositioning brands, its track record in the US so far was poor.

In 2007, she said, it had bought another tobacco company, Commonwealth, and at that time had expressed aspirations to grow its brands in the US. Instead, Commonwealth’s market share had dwindled since that acquisition.

The full story is at: http://www.bizjournals.com/triad/blog/2015/06/can-imperial-compete-with-reynolds-and-altria-for.html.

Indonesia unlikely to ratify the FCTC any time soon

| June 11, 2015

Indonesia seems unlikely any time soon to ratify the World Health Organization’s Framework Convention on Tobacco Control (FCTC).

According to a Tempo story, Widyastuti Soerojo, the chairperson of the Tobacco Control Special Agency and the Association of Indonesian Health Experts (IAKMI), has questioned President Joko ‘Jokowi’ Widodo’s commitment to tobacco control.

“I can say that the tobacco control efforts will be harder in Jokowi’s tenure,” Widyastuti said during a workshop on tobacco control in Jakarta on Tuesday. Joko Widodo has been president of Indonesia since October last year.

Widyastuti expressed the view that the government had not been supportive of the public’s health but had rather focused on cigarette-industry profits.

Meanwhile, Hakim Sorimuda Pohan, an executive of the National Commission for Tobacco Control, said that Jokowi had shown his support for the cigarette industry since the latter took office.

A week after being named by Jokowi as Industry Minister, Saleh Husin had visited Djarum, one of the largest cigarette producers in the country, to convince the company that the government would not ratify the FCTC.

The reason was that the FCTC would threaten the cigarette industry and tobacco farmers, Hakim added.

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