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Cuba joins fight over Aussie plain packaging rules

| May 6, 2013

Cuba has become the latest country to launch a legal attack on Australia’s landmark plain packaging rules for tobacco at the World Trade Organization (WTO).

The laws came into effect last December and mean cigarettes can only be sold in brown packages with graphic health warnings. The WTO says Cuba has requested consultations with Australia on the legislation, which covers all tobacco products, not just cigarettes. Under the 159-nation WTO’s rules, requesting consultations is the first step in an often complex trade dispute settlement process which can last for several years.

The laws have already been challenged at the WTO by Cuba’s fellow cigar-producing nations Honduras and the Dominican Republic. In addition, the Ukraine has filed a suit at the Geneva-based body, which oversees its member nations’ respect for the rules of global commerce, according to the Australian news company ABC.

All the plaintiff countries maintain that Australia’s packaging law breaches international trade rules and intellectual property rights.

In the event that the WTO’s disputes settlement body finds in their favor, it would have the power to authorize retaliatory trade measures against Australia if the country failed to fall into line. The dispute with Australia marks the first-ever challenge by Cuba against a fellow member since it joined the global body in April 1995, four months after the WTO was founded in its current form.

The plain packaging laws have won wide praise from health organizations which are trying to curb smoking. But the government has faced a string of court challenges from tobacco firms.

Besides trade and intellectual property concerns, tobacco companies say there is no proof that plain packaging reduces smoking and have warned that the law sets a precedent that could spread to products such as alcohol.

UK plain packaging plan goes up in smoke

| May 2, 2013

U.K. Prime Minister David Cameron has scrapped plans to force all cigarettes to be sold in plain packs, according to a story published today in The Sun.

Health ministers had been considering the move for a year. Proponents had insisted making packages bland would put smokers off — and stop kids from picking up the habit.

Cameron initially backed the plan, but has been persuaded it would damage the packaging industry. There were also concerns it could cost £3 billion in lost tax revenue and tie up the Commons in bitter arguments.

Cameron has now ordered the proposed law to be pulled from next week’s Queen’s Speech.

A Whitehall source said: “Plain packaging may or may not be a good idea, but it’s nothing to do with the government’s key purpose. The PM is determined to strip down everything we do so we can concentrate all our efforts on voters’ essentials. That means growth, immigration and welfare reform.”

Officials in Australia, the first to enforce uniform packaging, have admitted there was still no evidence that they cut smoking.

Despite EU weakness, German smokers stay strong

| May 1, 2013

Alison Cooper, CEO of Imperial Tobacco, said cigarette and tobacco sales in Germany were “excellent,” despite the EU’s economic weakness, which hit the British multinational’s half-year profits.

“We are growing cigarette share, we are growing fine-cut share, and not just at the value end of the market. We have seen growth at the top-end in brands such as Davidoff and Gauloises,” Cooper told CNBC.

“We have seen excellent performance in that market,” she added.

However, Imperial Tobacco, the world’s fourth-largest cigarette company, said volumes were hit by difficult trading conditions in the broader EU, from where it makes two-thirds of its earnings.

Revenue in the six months leading to March 31 stood at £13.4 billion ($20.8 billion), down 4.2 percent on the previous year’s £14.0 billion. Operating profit was down 9.7 percent at £1.2 billion.

“The performance reflects the weak consumer environment across Europe, challenging competitive situation in the U.S. and the need to step up investment behind its key brands,” said Damian McNeela and Graham Jones, analysts at Panmure Gordon, in a research note released after the earnings announcement.

Cooper said revenues from key strategic brands, fine-cut tobaccos and snus (similar to American dipping tobacco) had increased, with improved volumes, and the company achieved revenue growth in the UK and Germany, plus Africa and a number of other emerging markets.

“Excise-driven market dynamics in Russia, and our transition to a new pricing strategy in the U.S. slowed our revenue and profit momentum in non-EU territories, masking the good growth we’re generating in Asia-Pacific and Africa and the Middle East,” Cooper said in a press release issued after the results.

Despite the weak economic environment, Cooper said consumers are not reducing their tobacco consumption.

She added that the EU market would remain tough for at least another 12-to-18 months.

Tax hike leaves retailers, puffers smoking mad

| April 25, 2013

An increase in in Canada’s Manitoba province’s tobacco tax has some smokers and tobacconists worried about the holes it’s expected to burn through their wallets and bottom lines.

On  April 16, the province announced an immediate $0.04 hike in the tax, to $0.29 per cigarette, as part of its 2013 budget, according to a story in the Brandon Sun.

Peter Patel, owner of Up In Smoke Tobacconist, said he was caught off guard when he first learned of the hike on the radio.

“People are mad,” said Patel, adding he spent all of last Wednesday updating his prices and cash registers.

“They should be informed beforehand.”

The increase amounts to an extra dollar per pack of 25 cigarettes and includes an extra $0.04 per gram on fine-cut and raw leaf tobacco. The province expects to bring in an extra $17.2 million from the tax, which will be redirected into health care.

Overall, Manitoba expects to collect $283 million from tobacco taxes this year. The increase makes Manitoba smokers the most heavily taxed in Canada.

BAT sales up 5 pct, driven by global brands

| April 25, 2013

British American Tobacco reported revenue growth of 5 percent at constant rates of exchange in the first quarter ended March 31, adding that global drive brand cigarette volumes grew by 1 percent.

The report stated:

  • Revenue growth of 1 percent at current rates of exchange.
  • Cigarette volumes from subsidiaries fell 3.7 percent to 160 billion, with a decrease of 3.4 percent for total tobacco volumes.
  • Board confident of another year of earnings growth in line with long term strategic goals.
  • Pricing environment remains strong despite difficult trading conditions in many parts of the world, notably southern Europe.
  • If current exchange rates persist for the rest of the year, the currency headwind that adversely impacted the quarter will reverse.
  • Group has sufficient financing and facilities available for the foreseeable future.
  • There have been no material events, transactions or changes in the financial position of the Group since the year end.
  • -Shares closed Wednesday at 3548 pence valuing the company at £68.25 billion.

IMHA urges brand protection

| April 25, 2013

The trade body representing the global hologram industry is urging organisations to review and if necessary redouble their brand protection and authentication strategies to stem the “hemorrhage” of counterfeit goods flowing out of china.

That’s the stark message from the International Hologram Manufacturers Association (IHMA) which was commenting on a new UN report that says a staggering 75 percent of all the fake goods seized worldwide between 2008 and 2010 came from China.

According to the UN Office on Drugs and Crime (UNODCO), these counterfeit goods make up almost 2 percent of global trade while organized crime groups, who deal in fake goods and drugs among other items, are pocketing $90 billion annually across the Far East region.

The Transnational Organised Crime in East Asia and the Pacific: A Threat Assessment is the most comprehensive study yet on the subject.

The report is a sobering reminder that the war on counterfeiting is far from over, says the IHMA, and will be a wake-up call for those desperate to protect brands and profits not only in the Far East but worldwide.