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BAT’s first quarter cigarette volume down 3.6 percent

| April 29, 2015

British American Tobacco’s cigarette volume during the three months to the end of March, at 152 billion, was said by the company to be down by about 3.6 percent on that of the first quarter of 2014, 158 billion.

Volumes were depressed in each of the company’s four regions: from 50 billion to 49 billion in its Asia Pacific region; from 31 billion to 29 billion in its Americas region; from 24 billion to 23 billion in its Western Europe region; and from 53 billion to 51 billion in its Eastern Europe, Middle East and Africa region.

According to an interim management statement issued today, BAT’s five Global Drive Brands recorded a volume increase of 5.7 percent. ‘Dunhill volume increased by 1.2 percent, as good growth in Indonesia and Brazil outweighed lower volume in South Korea and the GCC [Gulf Co-operation Council countries],’ BAT said.

‘Kent volume was 1.6 percent lower, as higher volume in Iran and Turkey was more than offset by lower volume in Russia, Japan and Romania.

‘Lucky Strike was 5.0 percent higher with increases in Mexico, France and Belgium more than compensating for lower volume in Japan and Italy.

‘Pall Mall volume was up 2.4 percent as growth in Pakistan, Poland and Mexico more than offset reductions in Italy and Russia.

‘Rothmans volume increased by 36.9 percent, driven by a strong performance in a number of markets, including Russia, Australia, Kazakhstan, Turkey and Italy.

Meanwhile, the company’s total tobacco volume, including the volume of tobacco products other than cigarettes calculated as cigarette stick equivalents, fell by about 3.6 percent from 164 billion to 158 billion.

BAT reported that the trading environment remained ‘challenging due to continued pressure on consumers’ disposable income worldwide and the impact of adverse exchange rates at a transactional level’.

However, it said that Vype had continued to deliver excellent organic growth in the UK e-cigarette market, providing a strong platform for planned launches in other countries in 2015.

‘We remain on track to launch Voke, a nicotine inhalation product licensed as a medicine, in the UK later this year, and we continue to make good progress in tobacco heating products, with plans to test market a product in 2015,’ it added.

Group revenue for the three months to the end of March, at constant rates of exchange, grew by 1.7 per cent on that of the three months to the end of March 2014, but fell by 5.8 percent at current exchange rates.

“The Group continued to perform well in the first three months of the year despite the challenging trading environment,” chief executive Nicandro Durante said in presenting the results.

“Our market share increased by 40 bps driven by our Global Drive Brands which continue to deliver strong share and volume growth.

“Revenue increased at constant rates of exchange, driven by pricing more than offsetting lower volume, while adverse exchange rate movements led to a reduction in reported revenue.

“I remain confident that we will deliver another year of good earnings growth at constant rates of exchange, with performance significantly skewed to the second half of the year principally due to a strong first-half volume comparator and the timing of price increases.”

Indonesian excise bands cause health concerns

| April 29, 2015

The Indonesian Consumer Foundation (YLKI) said yesterday that the pictorial health warnings on more than half of the tobacco product packs it had examined as part of a survey had excise bands over the top of them, according to a story in The Jakarta Post.

Government regulations stipulate that cigarette packs must carry pictorial warnings that must not be covered by anything, including excise bands.

According to a version of the story relayed by the TMA, the survey, which was conducted from February to March, looked at tobacco products offered by PT Hanjaya Mandala Sampoerna (PMI), PT Bentoel (BAT), PT Gudang Garam, PT Djarum, and by ‘local’ companies such as Nojorono Tobacco International.

PT Bentoel was said to have had the lowest compliance with the regulation with all of the pictorial warnings on the sampled products covered by excise bands.

Local brands led in compliance with 65 percent.

YLKI urged the Finance Ministry to issue slimmer excise bands along with regulations governing the placement of the bands.

Rajasthan mulls once-a-month ban on tobacco sales

| April 29, 2015

The Indian state of Rajasthan is considering introducing a ban on the sale of all tobacco products during one day of each month, according to a story in the latest issue of the BBM Bommidala Group newsletter.

Under the proposal, the tobacco ‘dry day’ would see also the organization of events in schools and colleges aimed at creating awareness about the dangers of tobacco consumption.

Zimbabwe’s leaf tobacco export earnings soar

| April 29, 2015

Zimbabwe has earned US$224.0 million from the export of 35.2 million kg of semi-processed tobacco this year, according to a story in The Herald quoting figures from the Tobacco Industry and Marketing Board.

This season’s figures are said to be increased from the US$58.6 million kg earned from the export of 16.4 million kg during the same period of last year.

Given that these figures are correct, it means that the average export price has gone from US$3.57 per kg at the start of last year to US$6.36 per kg at the beginning of this year.

Although the processing and export of leaf tobacco take time, which makes it difficult directly to link farm prices with export prices, it would seem that export prices have been increasing rapidly at the same time as grower prices have been plummeting.

Industry observers will no doubt be keeping their eyes on export volumes. The explanation given in Zimbabwe for low grower prices has had to do with quality problems, something that should be reflected in lowered processing yields and, therefore, lowered export volumes.

RAI’s sustainability report available online

| April 29, 2015

Reynolds American Inc.’s 2014 Sustainability Report, which ‘highlights the latest initiatives by RAI and its subsidiaries to ensure a sustainable commercial future while addressing stakeholder expectations’, is now available on the company’s website (

“Sustainable business practices are good for our businesses and they are the right thing to do,” said RAI president and CEO Susan M. Cameron. “This report showcases the work our companies are doing to meet the changing expectations of adult tobacco consumers; promote the well-being of employees and the communities in which they live; and minimize the environmental impact of both operations and products,” she said.

According to a note posted on the RAI’s website, the focus is on three areas of activity: Youth Tobacco Prevention, Tobacco Harm Reduction and Commercial Integrity. ‘By effectively executing strategies behind these three pillars, RAI and its subsidiaries are leading change in the tobacco industry by driving innovation throughout their businesses, redefining enjoyment for adult tobacco consumers, reducing the harm caused by smoking and accelerating the decline in youth tobacco use,’ the note said.

A plague of low flue-cured prices afflicting growers

| April 28, 2015

Lower farm prices are plaguing flue-cured tobacco growers around the world, according to a story in the most recent issue of the India-based BBM Bommidala Group newsletter.

The story reported that prices had fallen by 14 percent in Brazil, 10 percent in Zimbabwe, eight percent in the US and four percent in Tanzania.

And in the Indian state of Karnataka, with flue-cured auctions nearly finished, the average price was said to be down by more than 16 percent on that of the 2013-14 sales season.

With about 100.12 million kg of an estimated 103.50 million kg Karnataka crop having been sold, the average price stood atRs108.68 per kg, down from Rs129.92 per kg during the 2013-14 season.

The highest bid for Karnataka flue-cured this season was Rs169 per kg.

The generally lower flue-cured prices were put down to oversupply.

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