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PMI and JTI acquire stakes in Russian distribution firm

| December 4, 2013

Philip Morris International and Japan Tobacco International are acquiring equity stakes of 20 percent each in Megapolis Distribution, the holding company of CJSC TK Megapolis, a major distributor in Russia.

The companies are paying $750 million each for their stakes. If Megapolis’ operational performance meets certain benchmarks during the four fiscal years following the closing of the agreement, PMI and JTI will each pay an additional $100 million.

Megapolis is one of Russia’s leading consumer goods distributors focusing principally on tobacco and beverages. It employs almost 15,000 employees and commands a direct store delivery system that reaches more than 150,000 points of sale. Megapolis handles approximately 70 percent of the cigarettes sold in Russia through its distribution agreements with PMI, Japan Tobacco International and Imperial Tobacco Group.

“We are delighted to reach this agreement with Megapolis, our proven distribution partner, which will support our business expansion in this profitable market,” said Miroslaw Zielinski, PMI’s president, Eastern Europe, Middle East & Africa Region and PMI Duty Free.

“Megapolis has been our partner since 2007 and has contributed to JTI’s success in the important Russian market,” commented Kevin Tomlinson, JTI’s regional president, commonwealth of independent states. “This acquisition will strengthen their distribution platform allowing us to implement our growth strategy in the region more efficiently and effectively.”

Tobacco Solutions Asia installs first filter facility

| December 4, 2013

tsalTobacco Solutions Asia (TSAL) has commissioned its first filter rod manufacturing facility, in South Africa.

The machine comprises a Hauni KDF line capable of supplying monoacetate filters in various diameters and lengths. The capacity is 8,500 rods per minute.

“This completes TSAL’s first African project,” says Frederick Maan, business development manager, TSAL. “We are also completing other related factories in D.R. Congo, Madagascar and Zambia. Given the robustness of the South African cigarette market, the establishment of our first line in South Africa is appropriate.’’

According to TSAL, Africa has some of the world’s faster-growing cigarette markets after Asia.

TSAL is a tobacco technical consulting firm offering feasibility studies, blend development, factory design, factory equipment procurement, factory implementation and factory technical management, among other services. The company is a fully owned subsidiary of Star Tobacco International.

Liggett to enter US e-cigarette market

| December 3, 2013

Zoom picZoom E-Cigs, an indirect subsidiary of the Vector Group, is due to launch Zoom e-cigarettes nationwide in the U.S. from January, according to a Business Wire story.

Sales and distribution of Zoom’s first e-cigarette, a non-rechargeable product, will be managed by Liggett Vector Brands.

Zoom, a 100 mm, low-weight product with a soft-tip filter, will be available in tobacco and menthol flavors, in bold and smooth styles. It will sell initially in single and three-pack formats.

Developed in combination with XEO Int. Ltd., an e-cigarette design and engineering company based at Hannover, Germany, Zoom is said to feature an exclusive, 130 mAh battery that delivers at least 300 “TRU-PUFFS”: the equivalent of about two packs of conventional cigarettes. At the same time, Zoom products use a proprietary U.S.-made e-liquid.

“We have carefully developed our flavorful Zoom e-cigarette brand to appeal to adult smokers in the growing e-cig market, and we are confident that if the category continues to expand, we will succeed with this compelling product,” said Ron Bernstein, CEO of Liggett Vector Brands.

“We have drawn on our own industry experience and research, German precision engineering, quality U.S. e-liquids developed under the guidance of Liggett tobacco experts and Chinese manufacturing expertise to create Zoom, which we believe is the best disposable e-cigarette available today.”

Gamucci in deal with retailer Tesco

| December 3, 2013
Umer Sheikh, one of founders of Gamucci, enjoys an electronic cigarette while awaiting a flight.

Umer Sheikh, one of founders of Gamucci, enjoys an electronic cigarette while awaiting a flight.

Gamucci today announced a deal with Tesco that will see Gamucci’s e-cigarettes on sale in about 2,000 Tesco Express Stores and Tesco Filling Stations across the U.K.

“This further strengthens Gamucci’s retail footprint in the U.K. and follows similar tie-ups with Waitrose, WHSmith and other leading retailers both within the U.K. and overseas,” Gamucci said in a press note.

Gamucci’s products will be included in a Tesco fixture as part of an e-cigarette category that will appear adjacent to existing tobacco merchandising fixtures.

“The Tesco deal further cements our position as one of the U.K.’s leading brands,” said John Dunne, head of U.K. sales at Gamucci.

“As the electronic cigarette market continues to develop, product quality and brand loyalty are becoming increasingly important.

“As Gamucci fully owns our manufacturing facility and produces to industry-leading quality standards, we have quickly gained a reputation for supplying the best electronic cigarettes in the category.”

Last week, Gamucci unveiled what was said to be the world’s first custom-built e-cigarette airport vaping zone, located airside in Terminal Four at Heathrow Airport.

“The Gamucci Zone is the first airport venue to offer a designated indoor area where passengers can enjoy electronic cigarettes,” the press note said.

There are now an estimated 1.6 million people using e-cigarettes in the U.K., while the e-cigarette industry is worth at least $3.5 billion globally, according to Euromonitor International.

Gamucci is experiencing year-on-year growth of more than 2,000 percent, according to Nielsen.

EU smokers could be left exposed by Commission plans for e-cigarettes

| December 2, 2013

European Commission proposals could leave tobacco smokers within the EU with easy access to tobacco cigarettes but little access to less risky alternatives to these products.

According to a story in the European Voice, the commission, whose proposal to regulate e-cigarettes as medicines was turned down by MEPs in October, is now putting forward other measures seen by some as being medicines regulation by the back door.

If the commission has its way, smokers might be left with no access to electronic cigarettes and—with the exception of tobacco users in Sweden—no access to snus.

The question of how to regulate e-cigarettes is said to be the biggest remaining obstacle to an agreement between MEPs and the member states on revising the European Union’s Tobacco Products Directive.

As negotiators from the European Parliament and the Council of Ministers prepare to meet in Brussels to finalise the text of a revision to the directive, lobbying about e-cigarettes is intensifying.

At issue are differences about whether e-cigarettes should be regulated lightly because they might prove useful to wean smokers off more harmful cigarettes, or whether e-cigarettes should be heavily regulated because they pose a health risk.

The European Voice says that, ahead of the negotiations, the commission has circulated a text that proposes introducing a series of restrictions on e-cigarettes, including banning those that produce levels of nicotine above 20 mg per ml of vapor or 10 mg/unit, and those with refillable cartridges or tanks. They would also ban e-cigarettes designed to taste like tobacco.

Thirteen health experts from Belgium, France, Greece, Italy, Poland and the U.K. have written a letter warning that the latest commission proposals could bring to an end the positive effect that safer electronic cigarettes have had in weaning smokers from tobacco cigarettes, which, they said, caused 700,000 premature deaths a year in the EU.

BAT ‘disappointed’ at BMJ U-turn on tobacco-industry funded research

| December 2, 2013

British American Tobacco has said that it is surprised and disappointed by the BMJ group of journals’ recent decision not to consider for publication any scientific studies funded by the tobacco industry.

BAT has spent an enormous amount of money in recent years setting up state-of-the-art facilities in which to carry out research into reduced-risk products, and it has placed great importance on publishing its findings and having those findings peer-reviewed.

But editors at the BMJ, Heart, Thorax and BMJ Open have said that they will not consider the publication of studies that had been funded in part or wholly by the tobacco industry.

In BAT’s response, Chief Scientific Officer Christopher J. Proctor said the BMJ’s new policy of banning consideration of scientific studies based on their source of funding was particularly disappointing in the light of its historical policy of encouraging robust scientific discourse independent of ideology.

Proctor said it was ironic that the BMJ had revised its prior view given that there was a new commitment to transparency of funding and potential conflicts of interest throughout the scientific world.

There was also a renewed interest in tobacco science.

Proctor’s response and the responses of other people are at

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