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Fallout from PM-Uruguay lawsuit feeds opposition to international trade deals

| October 23, 2014

As Philip Morris International sues Uruguay over health warnings and restrictions on sub-brands, the country – population 3.4 million – has found itself a test case for big business lawsuits that could hit the EU, according to a story in The Independent.

On a wider front, Uruguay has unwittingly found itself at the center of rising opposition to international free trade deals.

PM is suing Uruguay because the country has increased the size of the health warnings on cigarette packs from 50 percent to 80 percent, and because it has clamped down on tobacco companies’ use of sub-brands or brand variants.

The company is taking its legal action under the terms of a bilateral trade agreement between Switzerland and Uruguay.

The trade deal has at its heart a provision allowing Swiss multinationals the right to sue the Uruguayan people if they bring in legislation that will damage the multinationals’ profits.

The litigation can be brought before tribunals known as international-state dispute settlements (ISDS), which are ruled upon by lawyers under the auspices of the World Trade Organization.

Such an ISDS agreement is also core to the EU’s planned Transatlantic Trade and Investment Partnership (TTIP) treaty being negotiated with the US.

The critics of TTIP fear the tribunals will see US multinationals sue European governments in such areas as regulating tobacco, health and safety, and quality controls.

The full story is at:

Male student smoking ‘stubbornly high’

| October 23, 2014


In South Korea, one in four male high school seniors smokes cigarettes habitually, according to a story in The Korea Times.

The Ministry of Education said on Wednesday that 24.5 percent of male high school seniors were currently smokers, down from 27.0 percent during 2006.

The latest figure is higher than that for any other grade in middle and high schools. Among all male students in middle and high schools, the current smoking rate is 14.0 percent, down from 14.3 percent during 2005.

Meanwhile, smoking among female students in middle and high schools has fallen to 4.0 percent from 8.9 percent during 2005.

The education and health ministries and Korea’s disease control center surveyed 80,000 middle and high school students to conduct the annual research.

‘Male students’ smoking rate is stubbornly high,’ the education ministry said in a statement. ‘Given that the smoking rate of male high school seniors is 12 times higher than that of middle school first graders, we are trying to find ways to effectively educate younger teenagers about the negative effects of cigarettes.’

‘Curiosity’ is the biggest reason for trying the first cigarette, according to 54.4 percent of smokers.

But the data showed also that a student with a close friend who smoked was 25 times more likely to smoke than was a student who did not have a smoker as a close friend.

The education and health ministries expect the smoking rate will decrease when the government raises cigarette prices from an average of WON2,500 per pack to WON4,500 starting next year.

The government is expecting that consumption will decrease too with the banning of cigarette advertisements at retail stores and with the introduction of graphic warnings, which some believe are especially effective in curbing smoking among teenagers.

Researchers say e-cigarettes might be smoking gateway – want more studies

| October 23, 2014

The use of electronic cigarettes has more than tripled among students in Poland during the past three years, according to research led by Maciej Goniewicz, PhD, PharmD, of the Department of Health Behavior at the Roswell Park Cancer Institute (RPCI).

The study, published online ahead of appearing in the Journal of Adolescent Health (JAH), was conducted in collaboration with researchers at the Medical University of Silesia in Poland.

“Our research suggests that e-cigarette use is rapidly increasing among youth in Poland,” said Goniewicz. “This study adds to a growing body of evidence that e-cigarette use is increasing not only among adult smokers, but also among adolescents around the world. Further studies are necessary to illuminate our understanding of the reasons for this phenomenon and to help determine if e-cigarettes are a gateway to traditional cigarette use.”

The researchers analyzed e-cigarette use among 1,760 students aged 15 to 19 attending 17 schools during 2010-2011 and 1,970 students attending 21 schools during 2013-2014. Students from 13 schools participated in both studies.

The share of students who had ever tried e-cigarettes increased from 16.8 percent during 2010-2011 to 61.1 percent during 2013-20 14.

At the same time, e-cigarette use increased from 5.5 percent to 29.9 percent.

The number of adolescents who used traditional tobacco products [smoked] also increased, from 23.9 percent to 38 percent.

Use of both e-cigarettes and traditional cigarettes increased from 65.3 percent to 72.4 percent.

Goniewicz said these findings suggested that e-cigarettes were not replacing conventional tobacco cigarettes.

The report is at:

Indonesian manufacturers shed workers ahead of 2015 cigarette excise hike

| October 23, 2014

Ismanu Soemiran, chairman of the Joint Association of Indonesian Cigarette Manufacturers, has objected to the cigarette excise hike set by the Finance Ministry to come into effect next year, according to an story.

Many factories had closed already, Ismanu said, and the remaining ones would be forced to cut their costs.

“There will be workforce reduction in companies that stay in business,” Ismanu told Tempo on Monday.

Ismanu said he was disappointed by the Finance Ministry’s decision to overlook the protests of about 700 national cigarette industry players that were being crushed by market reductions.

“The most affected ones are definitely medium and small scale industries,” he said.

However, bigger companies are also shedding workers. In May, Sampoerna laid off about 5,000 employees, Tempo reported, while last month Bentoel offered early retirement to 8,000 employees, and, two weeks ago, Gudang Garam, fired 4,288 workers.

Meanwhile, Ismanu predicted that the excise hike would trigger the circulation of illicit cigarettes. “That would be counterproductive to the government’s objective to raise tax revenues, right?,” he said.

Finance Minister Muhammad Chatib Basri said last week that he had signed the new Minister of Finance regulation on the excise increase. Cigarette excise would be raised by an average of 8.72 percent in 2015, he said.

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.”

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