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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.”

Graphic warnings bill reaches Senate

| March 4, 2014

The Philippines Senate yesterday started deliberations on a bill that, if passed, would require graphic health warnings to be included on tobacco packs, according to a story on GMA News Online.

In his sponsorship speech, Senate President Franklin Drilon said the graphic health warning bill was of “vital importance” because of the rising number of Filipino cigarette smokers.

“The bill is necessary in order to strengthen the government’s efforts to discourage smoking among our citizenry,” he said. “Smokers have to be informed and made fully aware of what will happen to their health every time they pick up a cigarette pack.”

The Philippines is a signatory to the World Health Organization’s Framework Convention on Tobacco Control, which obliges countries that have ratified the treaty to pass laws requiring graphic health warnings on cigarette packs.

But so far, the Philippines has not passed any laws on graphic warnings, and the House version of the bill now before the Senate is still only at the committee level.

The GMA story said that the Department of Health had issued in 2010 an order requiring graphic health warnings on cigarette packs, but that tobacco companies had challenged the move in court and obtained a temporary restraining order.

Nigerian court upholds cigarette seizures

| March 4, 2014

A federal high court in Abuja has upheld the right of Nigeria’s Consumer Protection Council (CPC) to impound cigarettes that do not conform to packaging regulations, according to a story in ThisDay.

Creation Commercial Ventures Ltd. (CCV), said to be the sole distributor of Superkings cigarettes in Nigeria for Imperial Tobacco, had challenged the CPC’s powers to confiscate cigarettes imported into the country.

In its application, the company had sought a court order for the immediate release of the 3,000 cartons of cigarettes seized and an injunction restraining CPC from further seizing and detaining its products.

The company sought also NGN300 million in damages from the CPC.

The CPC argued that the seizures were within its powers.

It said that the health warning on the Superkings packs did not conform to the requirements of the Nigerian Industrial Standard and that the name and address of the manufacturer or distributor were not legibly marked on each side of the packs, as was required.

Justice Evoh Stephen Chukwu held that the right to property was not absolute.

He found that the CPC had shown that the cigarettes in question were not in conformity with the laws and regulations of the country, and he dismissed CCV’s application.

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