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Imperial selects Greensboro for U.S. operations

| October 22, 2014

Imperial Tobacco Group has selected Greensboro, North Carolina, as the location of the new company it is forming from its existing business in the United States and the announced acquisition of brands and assets resulting from the Reynolds American and Lorillard transaction. The transaction is subject to approval by the U.S. Federal Trade Commission and the companies’ respective shareholders.

The acquisition will make Imperial the third largest tobacco company in the U.S. with a 10 percent share of the cigarette market.

Following consummation of the acquired brands and assets, the new company will be based at Lorillard’s current headquarters, 714 Green Valley Road in Greensboro. The headquarters will be home to Lorillard employees and a number of Commonwealth-Altadis employees who will relocate from Fort Lauderdale, Florida. Imperial Tobacco also has a number of employees at its factory in Reidsville.

In a statement, Imperial said, “It makes the most sense to make the headquarters of the new company in Greensboro, in a building we will own outright when the transaction is completed. This wonderful facility is in the heart of tobacco country, near our factories and has the infrastructure to accommodate the enlarged business. We are discussing relocation with our employees in Fort Lauderdale and when we are in a position to give further updates on the transaction, we will.”



BAT’s volume down slightly at 3Q mark

| October 22, 2014

British American Tobacco’s cigarette volumes during the nine months to the end of September, at 495 billion, were down by about 1.2 percent on those of the nine months to the end of September 2013.

According to an interim management statement posted on the company’s website, volumes were increased in the company’s Asia-Pacific region by about 0.7 percent to 150 billion, and were steady in its EEMEA (Eastern Europe, Middle East and Africa) region, at 168 billion.

But volumes were down in the Americas by about 2.1 percent to 95 billion, and down in Western Europe by about 5.7 percent to 82 billion.

Total tobacco volumes, incorporating OTPs calculated as stick-equivalents, were down by about 1.1 percent to 515 billion.

BAT reported that its volumes had grown in many markets, including those in countries of the Middle East, Bangladesh, Venezuela, Pakistan, Ukraine, Turkey and Indonesia, but had been more than offset by lower volumes in Russia, Vietnam, Brazil, Poland and Canada, mainly driven by industry declines.

Volume cigarette sales were said to have increased by 6.2 percent in respect of the company’s five Global Drive Brands, whose combined market share had continued to grow strongly in key markets. Dunhill’s volume increased by 3.5 percent, with good growth in Indonesia, Brazil and South Korea partially offset by a market decline in Malaysia. Kent’s volume decreased by 2.7 percent mainly due to market contraction in Russia and Romania, partially offset by good growth in countries of the Middle East and in Japan.

Lucky Strike’s volume was said to have been down slightly, with increases in Mexico, Russia and Spain more than offset by decreases in Chile and Poland. Pall Mall’s volume was up by 7.7 percent as a result of growth in Pakistan, South Africa, Chile, Mexico, Argentina and Poland, partially offset by declines in Italy, Russia and the UK. Rothmans’ volumes grew by 37.0 percent with strong performances in Russia, Italy, Ukraine and the UK, slightly offset by a decline in Egypt.

Fine Cut volume continued to grow, up by 0.3 percent, with good performances in Hungary, Germany and Belgium. Both Pall Mall and Lucky Strike fine cut grew volume. Pall Mall remains the leading fine cut brand in Western Europe.

Group revenue for the nine months to the end of September, at constant rates of exchange, grew by 2.4 percent on that of the nine months to the end of September 2013, while group revenue at current exchange rates fell by 9.6 percent.

“The Group grew revenue at constant rates of exchange as a result of a slightly better price mix, despite increased competitive pricing activity in some of our key markets,” said chief executive, Nicandro Durante.

“Our volume performance reflects our broad geographic spread, increased market share and excellent growth of our Global Drive Brands.

“Although currency movements impacted our reported results, the Group continues to perform well and we are on track to deliver another year of good earnings growth at constant rates of exchange.”

Nicotine products on the up but Camel and Grizzly do the heavy lifting at RAI

| October 22, 2014

Reynolds American Inc (RAI) yesterday reported that R.J. Reynolds’ domestic cigarette volume shipments during the three months to the end of September, at 16.2 billion, were down by 2.9 percent on those of the three months to the end of September 2013.

Reynolds’ growth brands volume, at 11.1 billion, was up by 0.7 percent, with Camel volume up by 3.0 percent to 5.7 billion but Pall Mall volume down by 1.5 percent to 5.5 billion.

Other cigarette brand volume was down by 10.1 percent to 5.0 billion.

Premium brands volume was down by 1.9 percent to 9.5 billion and value brands volume was down by 4.4 percent to 6.7 billion, giving a premium-to-total volume mix of 58.6 percent, up from 57.9 percent.

Reynolds’ market share during the three months to the end of September, at 26.6 percent, was down by 0.1 of a percentage point on that of the three months to the end of September 2013.

The share held by Camel increased by 0.4 of a percentage point to 10.4 percent and that held by Pall Mall increased by 0.1 of a percentage point to 9.3 percent, giving Reynolds a growth-brand share of 19.7 percent, up 0.3 of a percentage point.

The share held by other brands fell by 0.4 of a percentage point to 6.9 percent.

At Santa Fe, cigarette sales – all of Natural American Spirit – during the three months to the end of September, at 1.1 billion, were up by 7.9 percent on those of the three months to the end of September 2013.

Santa Fe’s share of the retail market increased by 0.2 of a percentage point to 1.7 percent.

Meanwhile, American Snuff’s moist snuff volume shipments during the three months to the end of September, at 120.1 million cans, were up by 2.9 percent on those of the three months to the end of September 2013.

Grizzly volume was up by 3.6 percent to 108.7 million cans, while the volume of other brands taken together was down by 3.3 percent to 11.3 million cans.

American’s share of the domestic market during the three months to the end of September, at 34.0 percent, was down by 0.2 of a percentage point on that of the three months to the end of September 2013.

Grizzly’s share rose by 0.1 of a percentage point to capture 31.1 percent, while the share of other brands fell by 0.2 of a percentage point to 2.9 percent.

RAI’s net sales for the three months to the end of September, at $2,240 million, were up by 4.9 percent on those of the three months to the end of September 2013.

Reported operating income was up by 2.7 percent to $812 million, while adjusted operating income was up by 5.4 percent to $852 million.

Reported net income was up by 2.2 percent to $467 million, while adjusted net income was up by 7.9 percent to $505 million.

And reported net income per diluted share was up by 4.8 percent to $0.88, while adjusted net income per diluted share was up by 10.5 percent to $0.95.

“I’m very pleased to report another strong performance by our operating companies, which drove Reynolds American’s earnings and margin higher in the third quarter,” said president and CEO, Susan M. Cameron. “All of our reportable business segments increased both profit and margin during the quarter, while they continued to enhance their powerful key brands…

“The expansion of R.J. Reynolds Vapor Company’s VUSE Digital Vapor Cigarette is going very well. “VUSE will be available in almost 70,000 selected retail outlets by early next week, and that will be followed by another wave of expansion early next year.”

In reference to Niconovum USA having begun national distribution of its ZONNIC gum, a nicotine-replacement therapy product, in September, Cameron said results were positive with strong interest from retailers and smokers.

“ZONNIC is expected to be in about 8,000 selected outlets by the end of this month, and its retail availability will continue to grow through the rest of the year.”

Cameron said that RAI was continuing to work diligently to obtain the necessary regulatory, shareholder and other approvals for the company’s proposed acquisition of Lorillard and the divestiture of select brands and assets to a subsidiary of Imperial Tobacco Group.

“RAI is currently responding to a second request for additional information from the US Federal Trade Commission, and the company recently filed its preliminary joint proxy statement/prospectus with the US Securities and Exchange Commission,” she said. “This process is proceeding smoothly, and we remain confident that the transaction will be completed by mid-2015.”

Swisher buys Drew Estate

| October 21, 2014

Swisher International is acquiring Drew Estate Tobacco Co. Drew Estate will continue to operate under its current management team as a subsidiary of Swisher. The transaction is expected to close during the fourth quarter of 2014. Terms of the transaction have not been disclosed.

“We are excited to join the distinguished team at Swisher,” said Michael Cellucci, president of Drew Estate. “After spending the past few months interacting with the Swisher team, we have come to understand their commitment to the cigar and OTP categories, as well as the premium cigar segment. After the transaction closes, we will continue to run our business as we have in the past, and will be able to leverage the resources of Swisher to continue our growth with a renewed focus on our commitment to quality products and people—two of the core principles of the Drew Estate belief system.”

“As a global leader in the cigar and OTP categories, Swisher prides itself on developing, manufacturing, and distributing the most innovative and high quality tobacco products available. I see those same principles in Drew Estate,” said Peter Ghiloni, president and CEO of Swisher International.

“The products produced by Drew Estate and its distribution partners Joya De Nicaragua, Royal Agio Cigars, and Tsuge pipes are top-quality market leaders in their respective segments. The creativity, passion and innovation of Drew Estate employees and management are a perfect match for Swisher, and we look forward to welcoming them to our family.”




Call for menthol cigarette ban in Ontario

| October 21, 2014

Ontario doctors want the provincial government to reintroduce legislation to ban tobacco products with candy and fruit flavours, and to add menthol cigarettes to the prohibited list, according to a Canadian Press story.

A previous bill died when a June election was called.

That legislation would have exempted menthol cigarettes from the restrictions on flavoured tobacco, an exemption the Ontario Medical Association (OMA) wants eliminated.

The Ontario doctors’ lobby says new data shows that underage smokers who use menthol cigarettes smoke more often, and are more likely to continue the habit as adults.

“The evidence clearly shows that menthol makes it easier and more likely for kids to smoke,” said OMA president Dr. Ved Tandan in a release. “Ontario’s doctors are calling on government to ban menthol and candy-flavoured tobacco products now.”

The Canadian Cancer Society, too, has said that menthol cigarettes must be included for any ban on sales of flavoured tobacco to be effective.

Macau extends public smoking ban

| October 21, 2014

From January 1, Macau will implement a universal ban on tobacco smoking in public places not previously legislated for: bars, clubs, saunas and massage parlours, according to a story in the Macau Business Daily.

Most indoor public spaces in Macau have had a smoking ban in force since January 1, 2012.

The newspaper, quoting Health Bureau director, Lei Chin Ion, said the government was currently talking about the latest extension to the smoking ban with the sectors that will be affected by it.

At the same time, the government had by Friday approved 18 of 28 applications for the setting up of smoking lounges at gaming venues.

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