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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.

Park ban on smoking ‘excessive and unnecessary’

| June 26, 2015

A smokers’ group has criticised a ban on smoking and vaping in public parks in the county of Waterford, Ireland, describing the measure as ‘excessive and unnecessary’, according to a story in the Irish Times.

The Irish branch of Freedom Organisation for the Right to Enjoy Smoking Tobacco (Forest) was responding to the introduction by Waterford City and County Council of by-laws prohibiting smoking and swearing in its parks.

The new rules, designed to discourage ‘anti-social behaviour’, will ban also, among other things, barbecues, gambling, the use of firearms, religious ceremonies, horses and model airplanes.

The by-laws were passed by the council last week and will come into effect on July 1.

‘There is nothing anti-social about smoking in a public park,’ Forest said in a statement.

‘There is no risk to anyone else, including children. Most of the time, unless you’re very close, you won’t even be aware they’re doing it.’

And the group said it made even less sense to ban electronic cigarettes.

“Vaping is not smoking, however you look at it’ Forest said. ‘An increasing number of smokers are using e-cigarettes as a harm reduction or smoking cessation aid. Why ban something that some people are using to quit smoking?”

Forest said there were already laws to deal with people making loud or repeated profanities in public places. “These new rules are excessive and unnecessary’ it said. ‘The overwhelming majority of people know how to behave in public spaces without being regulated to an inch of their lives.”

Forest Éireann is funded by Forest UK, which receives donations from tobacco companies in Britain and Ireland.

NSW to continue allowing vaping in public

| June 26, 2015

The sale of electronic cigarettes to minors and their use in cars with minors present are due to be banned after new laws were passed in the parliament of New South Wales, Australia, according to a story by Nicole Hasham for the Sydney Morning Herald.

The new laws will mean also that the sale, packaging, advertising and display of the devices will be subjected to further regulation.

But after the introduction of the laws, electronic cigarettes may continue to be used in enclosed spaces such as cafés and on public transport because the government refused a push by other parties to have the devices treated like tobacco products.

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