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Ousted retailers could be compensated

| May 10, 2013

The Hungarian government is considering what it should do to compensate tobacco-product retailers who missed out when tobacco retail licenses were recently put out to tender, according to an All Hungary Media Group story (AHMG).

Legislation passed in September last year provided for the establishment of a state monopoly of the retail sale of tobacco products from July 1, 2013. The process, overseen by the National Tobacco Trade Non-profit (NTTN) organization, has involved putting out for tender a limited number of tobacco retail concessions.

Prime Minister Viktor Orban apparently told public radio Kossuth the government was working to ensure that people whose livelihoods depended on selling tobacco products, but who had failed in their bids for licenses, stayed in business.

And ruling Fidesz party group leader Antal Rogan said he supported the idea of compensation.

But asked whether plans were afoot to ban family members of local council officials from getting licenses, Rogan said such a move would create more problems than it would solve.

Meanwhile, NTTN has refused a socialist MP’s request for access to documents containing bids submitted for the recent tenders.

The company rejected Csaba Toth’s request to view the bids, arguing that even though NTTN was publicly owned, it was not a state agency and so it did not have to disclose such information.

Toth said he would appeal to the National Development Ministry.

Opposition parties have sharply criticized the government for the tobacco tender, alleging that Fidesz party members had influenced the process.

Earlier this year, the NTTN was forced to announce a second tender in 1,417 communities from which no applications had been received during the initial tender.

RAI increases quarterly dividend

| May 10, 2013

Reynolds American Inc. said yesterday that its board of directors had approved a 6.8 percent increase in the quarterly cash dividend on the company’s common stock, taking it from $0.59 per share ($2.36 per share annualized) to $0.63 per share ($2.52 per share annualized).

The dividend will be payable on July 1 to shareholders of record on June 10.

“This increase is in line with the company’s policy of returning about 80 percent of net income to shareholders in the form of dividends, and underscores our commitment to returning value to shareholders,” said CFO Thomas R. Adams.

Tobacco the crop of choice in Zimbabwe

| May 9, 2013

Zimbabwe had sold 107 million kg of flue-cured tobacco for a total of $400 million by the end of the 55th day of sales, according to a story in the Zimbabwe Herald.

By the same stage of last season’s sales, 84 million kg of flue-cured had been sold for  $315 million.

The Tobacco Industry and Marketing Board was said to be confident that this season’s 170 million kg target would be surpassed.

And the Zimbabwe Commercial Farmers’ Union vice president, Johnson Mapira, was quoted as saying that tobacco production was expected to continue to increase because of favourable farm prices. Tobacco was the only crop where farmers were guaranteed good prices and instant cash.

Mapira said the good payment method used in respect of tobacco sales meant that tobacco farmers did not have problems paying their workers. And he said that farmers were now using some of the proceeds from tobacco to support other projects.

Tobacco industry has little to fear from EU TPD proposals

| May 9, 2013

The European Commission believes that its proposed revisions to the Tobacco Products Directive would, if adopted, have limited adverse impact on the tobacco industry – and some positive impacts.

“The adoption of the proposal for a revised Tobacco Products Directive was preceded by a thorough impact assessment, including an assessment of the economic impacts on the tobacco industry, their upstream suppliers (e.g. growers, ingredients suppliers, paper industry) and downstream distributors (wholesale, retail),” the commission stated in a written answer to questions posed by the Czech MEP, Ivo Strejček.

“It is estimated that the proposal will result in a reduction in the consumption of tobacco products of no more than 2 percent within a five year period following the transposition of the Directive. The adverse impact on the industry would therefore remain limited. Jobs lost in the production of cigarettes would be offset by the creation of jobs in other sectors, reflecting ex-smokers’ expenditure on such sectors.

“In addition, the proposal is expected to lead to some benefits for the industry through reduced production costs as a result of harmonization (one … production line instead of different production lines to comply with different national rules) and through the expected reduction in illicit trade (as a result of the proposed measures on tracking and tracing of products). Even the most specialized tobacco retailers do not generate more than 50 percent of their revenues from tobacco products, thus the impact is not expected to be disproportionate.”

The commission said that to avoid imposing an unnecessary burden on small- to medium-sized enterprises, pipe tobacco, cigars and cigarillos were exempted from the stricter labelling and ingredients rules that the revisions proposed for other tobacco products. The proposal, it added, was neutral in respect of the different types of tobacco, Virginia, Burley and oriental. This meant that smaller farms involved in Burley and oriental tobacco production would not be affected.

E-cigarettes under threat in EU

| May 9, 2013

The European Commission has said that the majority of e-cigarettes sold in the EU would most likely fall under pharmaceutical legislation if the commission’s proposed revisions to its Tobacco Products Directive were to be accepted. The commission has proposed that e-cigarettes would fall under the legal framework for medicinal products if they contained levels of nicotine above certain thresholds.

It is generally thought that, for cost or technical reasons, most e-cigarette companies would struggle to have their above-the-threshold products authorized under pharmaceutical laws, and that below-the-threshold products would be unacceptable to many consumers.

“The nicotine threshold has been identified by considering the nicotine content of nicotine replacement therapies that have already received a marketing authorization by Member States,” the commission said in a written answer to two questions raised by the Polish MEP, Filip Kaczmarek.

“For electronic cigarettes below the thresholds, the commission proposal foresees that they carry health warnings. They would also have to comply with the General Product Safety Directive as … is the case at the moment.”

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.