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PM to close Australian factory this year

| April 2, 2014

Philip Morris Limited (PML) said today that it was to stop cigarette manufacturing in Australia by the end of this year.

The manufacture of cigarettes for the Australian market will be moved to PML’s affiliate in South Korea.

Currently, about 180 people are employed at PML’s factory at Moorabbin, a suburb of Melbourne, Victoria.

“This is an extremely difficult decision, and devastating news for all of our employees,” said John Gledhill, managing director, Australia, New Zealand and Pacific Islands.

“Philip Morris Limited has a proud history of nearly 60 years of manufacturing in Moorabbin, being the first Philip Morris affiliate established outside of the United States, and many of our employees have been with the company for a significant part of that journey,” said Gledhill.

“With the Australian market in gradual decline over the last decade, in 2006–2009 PML substantially invested in the Moorabbin factory to capitalize on export opportunities across the region,” said a note posted on Philip Morris International’s website. “However, these forecast export opportunities have not been realized due to Australian government reduced-fire risk requirements introduced in 2010 on all locally manufactured cigarettes that do not match consumers’ preferences in other markets in our region.”

“Despite the introduction of plain packaging and the continued growth in illicit trade, PML’s volumes were stable in 2013,” said Gledhill. “However, with any significant export opportunity restricted by Australian government regulations, our Moorabbin factory is significantly under-utilized, operating at less than half of its currently installed capacity.

“Our operations team [has] led the PMI business in terms of quality, and set numerous records for productivity and performance. However, regrettably factors beyond our control prevent us from fully utilizing the facility, and accordingly it’s been identified for closure.”

Gledhill said about 180 employees directly involved in manufacturing would be impacted by the planned closure, and that extensive support would be provided to all employees, including redeployment where feasible, counseling and coaching, career transition and outplacement support, and financial and retirement advice.

Ireland ranks highly on illicit trade table

| April 2, 2014

Ireland was the third highest on a list of EU countries for non-duty-paid tobacco (NDP) in 2013, according to a Sunday World story, which did not include the source of its figures.

It came behind Latvia and Lithuania.

But both of the Baltic states have decreased the level of their NDP tobacco sales significantly since 2012, while Ireland’s remains the same, at 28.3 percent.

Ireland has the EU’s second-highest average price for a pack of 20 cigarettes, €9.40, with the U.K. slightly ahead on €9.94.

The U.K. had nevertheless managed to decrease its NDP level from 21.5 percent in 2012 to just 15.6 percent last year.

Warnings too scary for their own good

| April 2, 2014

Taiwan is to introduce less scary graphic images on cigarette pack warnings in the hope of getting smokers at least to look at them, according to a report on Focus Taiwan News Channel.

The country’s Health Promotion Administration (HPA), part of the Ministry of Health and Welfare, is hoping the new warnings, which are due to be introduced on June 1, will be more effective than the current pictures of diseased human organs.

The director of the HPA, Feng Tzung-yi, said the change was being made in the light of evidence that smokers tended not to look at the current warnings because they were too scary.

Currently, cigarette packets in Taiwan carry one of six images of diseased organs, including cancerous lungs and mouths.

The eight new warning images were less direct and included three that were used in the EU, one of them showing a shriveled apple that symbolized the adverse effects of smoking on human skin, said Feng.

Altria finalizes Green Smoke acquisition

| April 2, 2014

The Altria Group said yesterday that its subsidiary Nu Mark had completed the acquisition of the e-vapor business of Green Smoke and its affiliates.

The transaction is valued at about $110 million in cash and up to $20 million in incentive payments.

Additional information is available at www.altria.com.

WHO says China’s proposed tobacco advertising restrictions not enough

| April 1, 2014

The World Health Organization said on Friday that China needed a comprehensive ban on tobacco advertising in order to reduce smoking prevalence in the country, according to a Xinhua News Agency story.

What was being planned was not enough.

WHO’s representative in China, Bernhard Schwartlander, made these comments in a statement following a submission by the WHO to the Legislative Affairs Office of the State Council, China’s Cabinet.

The office had invited comments from the public on proposed changes to China’s advertising law.

Schwartlander welcomed China’s move to tighten restrictions on tobacco advertising. “Banning all forms of tobacco advertising, promotion and sponsorship is one of the most cost-effective tobacco control measures any government can take,” he said. “Cutting demand for tobacco products has a direct and measurable impact on public health.”

Currently, there are restrictions on tobacco advertising in China, but, while the proposed changes to the advertising law would strengthen those restrictions, advertising would still be allowed in some circumstances.

“This means the proposed amendments do not meet the requirements of the WHO FCTC [Framework Convention on Tobacco Control],” Schwartlander commented.

Brazil joint venture delivering leaf tobacco to China

| April 1, 2014

Alliance One International said yesterday that its Brazilian subsidiary, Alliance One Brasil Exportadora de Tabacos (AOB), and China Tabaco Internacional do Brasil (CTIB), the Brazilian subsidiary of China Tobacco, had formed the joint-venture company China Brasil Tobacos Exportadora (CBT) in Brazil.

Fifty-one percent of the joint venture is owned by CTIB and 49 percent by AOB.

The joint venture’s administrative, buying and processing functions operate out of Alliance One’s facilities in Venancio Aires.

CBT, which has operated as an independent subsidiary of AOB for the past two crops, currently contracts with 9,500 integrated growers.

“We are honored that China Tobacco selected Alliance One for its first international joint venture in the tobacco leaf supply segment,” said Pieter Sikkel, Alliance One’s CEO and president.

“China Tobacco is a highly valued partner, and we are pleased with our combined efforts to grow CBT over the last two crops and see a very bright future.

“China’s cigarette market is the largest in the world, and our joint venture has been established to provide high-quality, sustainably grown Brazilian tobacco to its cigarette manufacturing groups.

“Our partnership aligns Alliance One’s strategy of profitable growth with meeting customers’ unique individual requirements through our sustainable model.”

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