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Hungary looking at plain packaging and special levy

| June 29, 2015

Hungary is considering the introduction of standardized packaging for tobacco products and the imposition of a special tax on tobacco companies, according to a story in Hungary Today.

A proposal on these matters is expected to be tabled in parliament later this year. But, according to the current plans, the construction of Budapest’s new hospital would be financed by a special tax levied upon tobacco companies.

Standardized tobacco packaging was implemented in Australia towards the end of 2012; Ireland and the UK are in the process of implementing standardized-packaging legislation; and some other countries are considering the introduction of such legislation.

Singapore display ban would bring host of problems

| June 29, 2015

Retailers in Singapore have said that a proposal to ban shops from displaying cigarettes will result in a host of problems, according to a story by Melissa Lin for the Straits Times.

Retailers are expecting to encounter confusion, longer transaction times and added business costs should the rule be implemented.

But most business owners said it was unlikely to affect sales much.

Under the proposed amendments to the Tobacco (Control of Advertisements and Sale) Act, retailers would have to keep tobacco products out of the sight of customers, in opaque storage units.

The measures were not practical given that shops sold more than 100 types of cigarettes, said Hong Poh Hin, vice-chairman of the Foochow Coffee Restaurant and Bar Merchants’ Association.

“Now, customers can point at a cigarette pack and we know where it is,” he said. “But if there’s a curtain covering the packs and my worker is new, how will they know where to find the correct pack? It’s not efficient.”

Another amendment to the Act will allow retailers to show, upon request, text-only price lists of tobacco products, which are currently prohibited because they are deemed to be a form of advertisement.

Alan Tay, chairman of the Singapore Mini Mart Association, would like to see the authorities go one step further. He said they should allow brand logos to be put on the price lists. Many mini-mart employees were Chinese-educated and might not be able to match the spoken brand names to the ones on the packs. “Quarrels are bound to happen when workers sell the wrong pack to customers,” he said.

Lilienne Chong, merchandise director at 7-Eleven, said many of its franchisees were small and medium-sized enterprises “already facing a very challenging operating environment”. “While we are fully supportive of the fundamental objectives behind the display ban… business will be affected,” she said.

Meanwhile, a 30-year old manager who has been smoking since he was 15 and who has been trying to quit smoking for seven months, said the measures were not good enough. “I don’t need to see the pack to crave a cigarette,” he said. “What matters most is the smell.”

Hungary confirms distribution contract award

| June 29, 2015

Hungary’s National Development Ministry confirmed on Thursday (June 25) that it had awarded to British American Tobacco and Taban Trafik a concession for the distribution of tobacco products to licensed retailers, according to a story.

This was despite its having received a more favorable bid from three other tobacco companies on June 24.

A joint bid submitted by Imperial Tobacco Hungary, JTI Hungary and Philip Morris Hungary had offered to pay HUF89.1 billion over 20 years for the exclusive right to supply national tobacco shops, 900 percent more than the HUF8.9 billion bid submitted by BAT and Taban Trafik.

In an announcement, the ministry said it had no choice but to reject the new bid by Imperial, JTI and PM because it did not conform to legal requirements and because the state had already signed a contract with BAT and Taban.

The announcement said also that the new offer was not legally binding; that it set a maximum amount for the concession fee despite the fact that this was to be determined by the budget act from the fifth year on; that the bid contained no business plan or detailed calculations; that the ministry had no way of verifying whether the bidders could be considered transparent organizations; and that Imperial proposed to outsource the distribution activity to a foreign company.

Getting into a bit of a flap over RYO pouch warnings

| June 29, 2015

The European Commission’s draft proposals for the positioning of health warnings on roll-your-own tobacco pouches is being circulated as a notification by the World Trade Organization’s Committee on Technical Barriers to Trade.

Article 9 of the EU’s new Tobacco Products Directive, which has to be transposed into national legislation by May 20, 2016, requires that general warnings (smoking kills or smoking kills – quit now) and information messages (tobacco smoke contains over 70 substances known to cause cancer) cover 50 percent of the surfaces on which they are placed.

But the exact positioning of these warnings is not set out in the directive; so the draft decision lays down rules for the positioning of the warnings on the three main forms of RYO pouches: wraparound pouches, flat bottomed pouches and standing pouches.

For wraparound pouches and flat bottomed pouches, the general warning and information message should be positioned on the two surfaces which become visible when the packages are fully opened.

So as to allow the industry to adapt its packages to the requirements of this decision, a grace period of two years is being granted to manufacturers of wraparound pouches in laminate material. This will mean that they may, until May 2018, put the information message on the surface that becomes visible when the package is partly opened and the general warning on the bottom surface that becomes visible when the package is fully opened.

For standing pouches, the warnings should be placed on the surfaces at the bottom of the pouch.

Sampoerna looking to comply with exchange ruling

| June 29, 2015

Philip Morris International said on Friday that its Indonesian subsidiary, Sampoerna, in which it holds a 98.18 percent interest, would explore options to comply with the Indonesian Stock Exchange’s (IDX) mandatory requirement of a minimum threshold for public shareholding.

On January 30, 2014, IDX introduced a regulation requiring all listed public companies to have at least 7.5 percent of their total paid up capital owned by the public by January 30, 2016.

‘Sampoerna has engaged investment banks to assist with the evaluation of various strategic options to fulfill this requirement’ PMI said in a note posted on its website.

‘These include potential capital market transactions.’

Andhra tobacco growers in ‘disastrous predicament’

| June 26, 2015

Flue-cured tobacco growers in the Indian state of Andhra Pradesh are facing a disastrous predicament, according to a story in the latest issue of the BBM Bommidala Group newsletter quoting the member of parliament, Y.V. Subba Reddy.

The MP said that there were no buyers for the low- to medium-grade flue-cured that accounted for more than 70 percent of production this year.

He has promised to take up the plight of the growers during the monsoon session of parliament and has urged growers not to make any ‘distress sales’ in the meantime.

Growers sold 38.58 million kg of flue-cured for an average price of Rs109.30 per kg after 80 days of auctions at the continuing 2015 sales season, according to Tobacco Board of India data.

Of the total, bright grades comprised 20.84 million kg, while 15.98 million kg comprised medium grades and 1.75 million kg low grades.

Concerned about the slow rate of auction sales, grower associations and Reddy have urged the Indian government to allow international cigarette manufacturers and leaf merchants to take part in the auctions directly, rather than, as now, through local partners.

Reddy has asked the board to make market interventions so as to provide relief for growers.

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