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Smokers’ loss is tobacco stores’ gain

| September 4, 2014

The share prices of South Korea’s convenience stores are on the rise on expectations of tobacco price hikes, according to a story in The Korea Economic Daily.

As was reported here yesterday, Korea’s Health and Welfare Minister, Moon Hyung-pyo, said on Tuesday that he hoped to see cigarette prices nearly doubled during the next six years so as to reduce the country’s smoking rate.

Moon said prices should be raised to at least WON3,300 ($3.24) per pack immediately, partly to reflect the general rise in consumer prices, and to WON4,500 by 2020.

The Daily reported that at 09:09 hours yesterday, the shares of GS Retail were traded at WON25,050, up 6.60 percent (WON1,550) from the previous day’s closing price. BGF Retail shares were traded at WON66,700, up 3.73 percent (WON2,400) from WON64,300.

At the same time, KT&G shares rose by 1.67 percent (WON1,600) to WON97,300.

The newspaper quoted Hyundai Securities as saying that the major beneficiaries of the cigarette price hike would be convenience stores, given the share of tobacco sales revenue in total convenience store revenue was very high.

Protection sought for child farm workers

| September 4, 2014

Fifty US-based organizations have called on President Obama to protect children working on US tobacco farms.

The letter, issued last week by the Child Labor Coalition (CLC) and 15 other groups, expressed alarm that children were risking acute nicotine poisoning, pesticide poisoning, and other health and safety hazards in US tobacco fields.

They asked the president to take narrowly-tailored regulatory action to protect child workers, who are ‘allowed’ under labor law to work in tobacco fields at the age of 12.

The letter, signed by organizations representing millions of teachers, healthcare professionals, workers, farm workers, and advocates concerned about the safety, education, and welfare of children, also asked the president to call on the Department of Labor to conduct targeted field investigations to ensure that no children under 12 are working in the fields illegally.

“Child tobacco workers reported working long hours, often in extreme heat and without protective gear,” said Dr. Lorretta Johnson, co-chair of the CLC and the secretary-treasurer of the American Federation of Teachers.

“Unfortunately, child labor is a common practice in the United States, and it’s legal.

“We stand with Human Rights Watch, the CLC, and many others to call attention to the great dangers faced by children working on tobacco farms.

“We urge the administration to take measures to end hazardous child labor in tobacco farming.”

Lorillard and Zippo battle over blu brand

| September 4, 2014

Lorillard said yesterday that two of its electronic cigarette subsidiary companies, Cygnet UK Trading Ltd and Lorillard Technologies, Inc. d/b/a blu eCigs, had filed for an injunction and declarations with the High Court of Justice in London, England, to protect their BLU ECIGS® trademarks in the UK and throughout the rest of Europe.

In a note posted on its website (, Lorillard said the injunction ‘seeks to restrain Zippo Manufacturing Company (“Zippo”) from threatening Lorillard and others with proceedings in the UK for alleged infringements of Zippo’s trademarks and the declarations seek to validate Lorillard’s rights to market and sell their products throughout Europe under the BLU ECIGS® brands’.

As was reported here on August 20, last month Zippo said that it has been granted a preliminary injunction in Germany against Cygnet, preventing Cygnet from using the blu brand name for e-cigarettes sold in that country.

The Regional Court of Frankfurt am Main was said to have agreed with Zippo that the blu e-cigarette brand created a likelihood of confusion with Zippo’s EU trademark BLU, used in connection with its line of high performance, precision butane lighters and fuel.

The court found the confusion was due to the high degree of similarity between the marks, an existing similarity between the parties’ respective goods and the Zippo BLU mark’s ‘at least’ average degree of distinctiveness.

Zippo’s action in Germany and the resulting preliminary injunction against Cygnet was said to have been part of Zippo’s ongoing, global effort to protect its worldwide portfolio of its BLU trademarks.

Zippo had commenced proceedings to oppose applications to register, or to cancel trademark registrations, for the blu electronic cigarette brand in the US, Canada, Mexico and the EU.

Sweden was said to have already rejected outright Lorillard’s application to register a trademark for blu.

Cigarette tax hike is Indian government’s ‘biggest achievement’ of first 100 days

| September 3, 2014

The Economic Times of India has said that the biggest achievement during the first 100 days of the new Indian government has been the imposition of the largest-ever hike in excise duty on cigarettes.

As was reported here on July 16, the Indian Finance Minister, Arun Jaitley, steeply increased excise taxes on cigarettes as part of the 2014 Budget

The specific tax on cigarettes was increased by 11-72 per cent, depending on the length of the product, with similar hikes being made on cigars, cheroots and cigarillos.

Excise was increased from 12 percent to 16 percent on pan masala, from 50 percent to 55 percent on unmanufactured tobacco, and from 60 percent to 70 percent on zarda scented tobacco, gutkha and chewing tobaccos.

Shortly after the budget announcement, the Tobacco Institute of India said the steep duty increases on cigarettes, coming as they did on the back of sharp rises in the previous two years, would provide a further fillip to the growing illicit trade in India, which already accounted for 19 percent of the cigarette market.

Public health experts, however, say the hikes will not only boost revenue generation but also help reduce the nation’s disease burden, particularly cancer, by dissuading people from using tobacco products.

About 275 million Indians (35 percent of the adult population and 14 percent of children aged 13-15 years) are users of tobacco, mainly smokeless tobacco.

Korea looking to raise cigarette prices

| September 3, 2014

South Korea’s Health and Welfare Minister, Moon Hyung-pyo, said yesterday that he hoped to see cigarette prices nearly doubled during the next six years so as to reduce the country’s smoking rate, according to a story in The Korea Herald.

Moon said prices should be raised to at least WON3,300 ($3.24) per pack immediately, partly to reflect the general rise in consumer prices, and to WON4,500 by 2020.

The average price of cigarettes among OECD (Organization for Economic Co-operation and Development) countries is $6.40 per pack, but more than 70 percent of the cigarettes sold in South Korea are priced at $2.46 (WON2,500) per pack or less.

The most recent price increase on cigarettes – WON500 per pack – was brought in during 2004.

“I believe we must actively work to cut the country’s smoking rate if we believe that the high smoking rate is becoming a serious issue,” Moon said.

“The most effective policy is to raise the tobacco tax,” he said, noting that the country’s overall smoking rate had dropped by about 15 percent when the government raised cigarette prices in 2004.

This is not a new story. In the middle of June, the Herald reported that the health ministry was planning to raise cigarette prices.

The June announcement came after the country received a notice from the World Health Organization that Korea should raise cigarette prices by 50 percent.

US flue-cured auctions open to low prices

| September 3, 2014

Prices were low at the US’ first flue-cured auction of the season at Old Belt Tobacco Sales, Rural Hall, North Carolina, on August 26, according to a story by Christopher Bickers in his Tobacco Farmer Newsletter.

‘About 125,000 pounds (out of 200,000 offered) sold in the range of $1.10 per pound, with a practical top of $1.50,’ said Bickers.

’This was way below the average of 2013, and there was considerable tag tearing [farmers refusing to accept the prices offered].’

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