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Lorillard stakes claim as leader of global electronic cigarette industry

| October 2, 2013

Lorillard said yesterday that it had acquired all of the assets and operations of Skycig, a U.K.-based electronic cigarette business.

In a note posted on its website, Lorillard said the acquisition provided it with a major U.K. electronic cigarette brand and, along with its U.S. electronic cigarette brand, Blu Ecigs, “a global presence in the rapidly growing worldwide e-cigarette category.” “Skycig is expected to benefit from Lorillard’s significant sales, marketing, regulatory, research and development expertise to further strengthen its competitive position in the U.K. e-cigarette market,” the note said.

Lorillard is paying £30 million in cash immediately and will pay an additional amount of up to £30 million in 2016 contingent on the “achievement of certain financial performance benchmarks.”

“Skycig is a leading premium brand of electronic cigarettes in the U.K.,” said Lorillard. “From its formation in 2011, it has achieved strong growth and has procured exceptional control over the manufacturing process, providing it with a unique ability to develop and commercialize high-quality products and meet continued developments in the regulatory environment.

“Skycig will operate as a separate operating subsidiary under Lorillard’s ownership, and it is Lorillard’s intention to retain Skycig’s current management team and its current business locations in Great Britain.”

“It has been Lorillard’s mission to be first and best in the electronic cigarette category, and with the acquisition of Skycig, our mission is now a global one,” said Murray Kessler, Lorillard chairman, president and CEO.

“We believe that with the addition of Skycig, Lorillard is uniquely positioned to lead the global e-cigarette industry to reach its full potential, and to do so in a responsible manner.

“We firmly believe that e-cigarettes may present the most significant harm reduction option ever made available to smokers in the U.S. and abroad, and we look forward to working with regulators around the world to confirm this conclusion.”

New anti-tobacco alliance in Thailand comes armed with warning

| October 2, 2013

Doctors and academics in Thailand have together formed the National Alliance for Tobacco Control (NATC) in order to strengthen the country’s anti-smoking messages, according to a story in the Bangkok Post.

The alliance, officially launched on Tuesday, said that its first mission was to support the public health policy of enforcing bigger health warning images on cigarette packaging.

NATC representative, Somsri Pausawasdi, president of the Physicians and Public Health Personnel Network for a Non-Smoking Society, said the formation of the alliance was prompted by a lawsuit launched by tobacco interests against the Public Health Ministry recently.

The lawsuit opposed a regulation requiring cigarette companies to increase the size of cigarette-pack health warnings from 55 percent to 85 percent of the front and back surfaces.

The regulation was scheduled to take effect today, but the Central Administrative Court ordered the ministry to suspend its enforcement while the court considered the lawsuit.

Wanchai Supachaturat, a member of the Medical Association of Thailand, said the tobacco companies opposed the change because they feared it could lead to a drop in the number of smokers, and thus cut into their profits.

In September, the ministry filed an appeal with the Supreme Administrative Court asking that the ministry be allowed to require the bigger health warnings.

First Bangladeshi MD at BAT Bangladesh

| October 2, 2013

Shehzad Munim yesterday became the first Bangladeshi to take over as managing director of British American Tobacco Bangladesh (BATB), according to a story in The Daily Star.

Prior to his latest appointment, Munim worked as the marketing director for BAT’s South Asia region.
Munim joined BATB after graduating from the Institute of Business Administration of Dhaka University in 1997.

In 16 years at BAT, he has served in senior management roles in Australia, Bangladesh, New Zealand and South Asia, based in Pakistan.

Excise rise ‘shocking and disappointing’

| October 2, 2013

The Malaysian government has raised the excise duty on tobacco by 14 percent ahead of its 2014 budget due on Oct. 25, and the country’s biggest cigarette manufacturer has described the move as “shocking and disappointing,” according to a story by Pauline Ng for the Business Times.

The increase was gazetted on Friday.

“Such a move will exacerbate the already high levels of illegal cigarettes in Malaysia and dampen all efforts that have been taken thus far to address this national scourge,” British American Tobacco Malaysia managing director Stefano Clini said in a statement on Sunday.

Over the years, the Confederation of Malaysian Tobacco Manufacturers has highlighted the growth of illicit cigarettes, which are estimated to account for at least a third of the total market in the country and to cost the government more than MYR2 billion in lost taxes.

Meanwhile, a taxation expert was quoted in a story in The Star as saying that excise tax hikes needed to be implemented gradually to avoid destabilizing the legal cigarette market.

International Tax and Investment Centre President Daniel A. Witt said an increase that was too high implemented over too short a term could shock the market and create a demand for black market goods.

“Increasing excise tax should be done in a predictable way to stabilize the legal market, meaning those who can be taxed,” said Witt, who presented the Asia-11: Illicit Toba­cco Indicator 2012 study to the media on Monday. Asia-11 is a report on the illicit cigarette trade among 11 countries in 2012.

Alliance completes monitoring obligation

| October 2, 2013

Alliance One International says that it has fulfilled its obligations under separate settlement agreements with the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).

On Aug. 6, 2010, Alliance entered into agreements with the DOJ and the SEC to resolve those agencies’ respective investigations relating to violations under the Foreign Corrupt Practices Act, which involved conduct occurring prior to the merger that formed Alliance in May 2005.

These settlements required the company to retain an independent compliance monitor for a term of three years.

And on Sept. 30, it fulfilled its obligations under the agreements, “including the successful and on-time completion of its compliance monitorship,” Alliance said in a note posted on its website.

The Alliance note is at


PMI acquisition will up Algerian earnings

| October 1, 2013

Philip Morris International said yesterday it had entered into a definitive agreement to acquire 49 percent of the shares of United Arab Emirates-based Arab Investors-TA (AITA) for $625 million.

Through this acquisition, PMI will secure an almost 25 percent economic interest in the Société des Tabacs Algéro-Emiratie (STAEM), a joint venture that is 51 percent owned by AITA and 49 percent owned by the Algerian state-owned Société Nationale des Tabacs et Allumettes SpA, the market leader.

“STAEM, with which PMI has had a successful partnership since 2005, manufactures and distributes under license PMI’s Marlboro and L&M brands, which together hold a significant share of the international trademarks sold in Algeria, placing PMI’s brand portfolio as the second largest in the market,” PMI said in a note posted on its website. ‘This equity investment in AITA will provide PMI with enhanced earnings from Algeria and is projected to be accretive to PMI’s earnings per share as of 2014.”

Commenting on the deal, Miroslaw Zielinski, PMI’s president, Eastern Europe, Middle East & Africa region and PMI Duty Free, said that Algeria, with the fourth-largest GDP in Africa and an estimated cigarette market of 30 billion units, held tremendous potential for future growth.

“This agreement confirms our confidence in the Algerian economy, the cigarette industry and their long-term prospects. Over the last five years, Algeria has been a key driver of the growth of our premium brands in North Africa, and the investment we are announcing today will significantly enhance our prospects in the country.

“Our new partnership with the UAE-based investors, from whom we are acquiring the 49 percent interest in AITA, also opens additional business opportunities in Egypt and certain other North African and Middle Eastern markets where there is potential for further expansion.”

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