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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.”

Taxing issues in Luxembourg

| October 31, 2014

Luxembourg’s Cancer Foundation has condemned a government decision to compensate for a two percent VAT increase on tobacco products by reducing excise duty from January 1, according to a story in the Luxembourg Wort.

Speaking on behalf of the awareness-raising not-for-profit organization, Dr. Lucienne Thommes said in a press release that he was ‘shocked’ by the decision.

He said he had hoped that Luxembourg would ‘finally advance its anti-smoking policy’ after smoking in public places was banned from 2014.

“We deeply regret that with this measure, the government should put economic interests before a major public health issue,” said Thommes.

The Luxembourg government is currently implementing a National Cancer Plan, which emphasises that tobacco is the leading preventable risk factor for cancer.

Volume sales down at JT and JTI

| October 30, 2014

Japan Tobacco Inc.’s domestic cigarette sales volume during the six months from April to September, at 53.5 billion, was down by 10.2 percent on that of April-September 2013, 59.6 billion.

In announcing this morning its consolidated results, JT said that volume sales had suffered a temporary slowdown following a tax hike in April.

Core revenue had declined by 7.0 percent (from ¥335.8 billion to ¥312.4 billion) and adjusted operating profit had declined by 7.4 percent (from ¥131.2 billion to ¥121.5 billion) due to the lower sales volume, partly offset by cost reductions.

JT said that it had taken steps to strengthen brand equity, including the launch in July of four new Seven Stars variants and, in September, of two Peace variants.

Mervius had shown steady market share growth driven by the Premium Menthol Option line and, overall, market share had recovered from 59.1 percent in April to 59.9 percent in April-September.

Meanwhile, Japan Tobacco International’s total cigarette and cigarette-equivalent shipment volume during the six months from January to June, at 190.6 billion, was down by 5.6 percent on that of January-June 2013, 202.0 billion.

Within that total, GFBs (global flagship brand) shipment volume was down by 4.0 percent to 123.0 billion.

The total and GFB volume declines were blamed on industry contraction in France, Russia and Spain, on first-quarter trade-industry adjustments in some markets, and on intense price competition in the ‘value’ segment of Turkey’s market.

The company reported that its year-on-year market share had increased in the key markets of France, Spain, Turkey and the UK, while, in Russia, GFBs’ share had continued to increase and their value share had been stable.

JTI’s core revenue and adjusted operating profit in US dollars at constant foreign exchange grew by 4.2 percent and 11.7 percent respectively, with robust price/mix compensating for the overall volume decline.

Core revenue and adjusted operating profit on a reported basis increased by 0.6 percent and 3.3 percent respectively. And as a result of the currency depreciation against the US dollar, core revenue and adjusted operating profit in Japanese Yen grew by 7.6 percent (from ¥559.7 billion to ¥602.0 billion) and 10.4 percent (from ¥199.2 billion to ¥219.9 billion) respectively.

Including the results of its other businesses, JT’s April-September revenue increased by 1.3 percent to ¥1,174.4 billion and its adjusted operating profit increased by 3.0 percent to ¥328.3 billion.

Operating profit was down by 11.6 percent to ¥307.1 billion and the profit attributable to the owners of the parent decreased by 7.5 percent to ¥219.3 billion.

JT’s president and CEO, Mitsuomi Koizumi, said that against the backdrop of significant industry contraction, JTI’s business fundamentals remained strong, driving market share gains in most key markets. “Pricing continues to be the main driver of earnings growth and the decline in total shipment volume has slowed down,” he said. “Our international business is on track for a double-digit profit increase.

“In Japan market share has steadily recovered from the tax increase impact. While the operating environment is increasingly competitive, we strive to achieve further market share gains through brand equity strengthening initiatives.”

JTI reported separately that its total cigarette shipment during January to September, at 296.6 billion, was down by 4.9 percent on that of January-September 2013, with GFB volume down by 2.2 percent to 194.3 billion.

Trade treaty under further attack

| October 30, 2014

Medical specialists in New Zealand are warning that health outcomes for Māori will suffer a setback if the government signs up to the Trans Pacific Partnership (TPP), according to a story by Laura Bootham for Radio New Zealand.

They are demanding that the government release details of the TPP negotiations so that it can be independently reviewed by the sector.

Ten health organisations and prominent specialists argue that the government is being negligent if it does not take into account its potential impact on Māori.

Oncologist George Laking, of Whakatōhea, said that under the agreement companies, such as tobacco companies, could sue the government if they believed their intellectual property rights were at risk. But that would put Māori at risk, he added.

Laking said health reforms such as those promoted by former Maori Party co-leader Tariana Turia, who advocated the introduction of standardized tobacco packaging, could be threatened.

He said international trade treaties had frequently been used by commercial interests that worked against public health interests. “… we’ve particularly seen this with the tobacco industry taking legal action, for example, against the government of Australia over previously signed trade treaties when the country wanted to introduce plain packaging,” he said.

“Any lawsuit that had a chilling effect on tobacco control measures could jeopardise the Smokefree 2025 target which is very important in terms of reducing smoking amongst Māori.”

Laking complained that the process was not transparent to civil society organisations. Only participating governments and industry interests had been party to the draft documents; so it hadn’t been possible to scrutinize those documents independently, from the point of view of indigenous health and indigenous sovereignty.

The full story is at:

Poland recognizes Imperial’s contribution

| October 30, 2014

Imperial Tobacco’s subsidiary in Poland has been presented with an award recognizing the significant contribution it makes to the nation’s economy. In a note posted on its website, the company said that Imperial Tobacco Polska Manufacturing (ITPM) was named an ‘Ambassador of the Polish Economy’.

Organised by the country’s Business Centre Club in conjunction with the Polish government, the awards celebrate the contribution made by international businesses.

The award in the Exporter category was accepted by corporate and legal affairs manager Poland, Grażyna Sokołowska, at a ceremony held at the Ministry of Foreign Affairs in Warsaw.

“I’m delighted to accept this award on behalf of ITPM because it recognises the value which we bring to the country’s economy,” said Sokołowska.

“It also recognises us as a responsible business making a valuable contribution to the social fabric of the nation through our various community projects.”

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