Swedish Match (Svenska Tandsticks)announces (4/25/2008)an additional investment in its Kungälv snus production plant in Western Sweden..

May 2, 2008 - Swedish Match has two snus production plants in Sweden one in Gothenburg and other in Kungälv. The investment of MSEK 265 (43.7 million USD) is in response to the strong demand for snus in the portion packed format. The Kungälv, built in 2003, plant is specialized in the Swedish Match unique “White Production Technology”, a white, dry portion packed snus with both regular and star formation filling of the cans. The investment is expected to be completed in the first half of 2010. ( Swedish Match AB invests in new production capacity in Sweden, Swedish Match AB, 4/25/2008) Swedish Match is the world's second largest maker of snuff and chewing tobacco and the snuff market leader in Sweden with a volume share of 90% at the end of 2006. Lorillard's Triumph Snus, being test marketed in Ohio and Georgia (March 2008), is a white portioned snus sold in a combi-lid can for used pouches. Triumph snus is the result of a partnership between Swedish Match and Lorillard. (TobaccoWatch.org) Read more...

Three of the four largest U.S. cigarette makers are no longer a smart investment..

May 2, 2008 - Stocks of cigarette makers were long thought of as recession safe havens. Shares of three have declined more sharply than the S&P 500 index since the start of the year of 2008. While the benchmark index has fallen nearly 6 percent, Altria Group Inc., the largest U.S. cigarette maker, slipped 14 percent, Reynolds American (RA) dropped 18 percent, and Loews Carolina Group fell 23 percent. The financial results for the first quarter were so bad that RA has already reduced their full year forecast. It used to be that smokers were unlikely to cut back on their habit even in an economic slowdown. But analysts point to bans on smoking in restaurants, bars and other public places that have been enacted since the last recession. Standard & Poor's last week said volumes of U.S. cigarette shipments this year should fall 3.5 percent, compared with a prior estimate of 2.7 percent. S&P believes shipment numbers will continue falling as a result of the smoking bans and higher cigarette prices. If Congress hikes the federal excise tax to $1 a pack, shipments could drop even further.

Entry into the smokeless tobacco arena expected to shore up the losses from decreases in cigarette sales have not worked out. Altria thought based on Marlboro brand strength they could roll out a Marlboro Snus and then Marlboro MST (that was suppose to compete with old reliables like Skoal and Copenhagen in the premium moist snuff segment) with immediate success. It hasn't happened for these products and the other smokeless products now being tested by RA and Loews. At one time we thought an acquisition would be needed for Altria to succeed in the smokeless arena. It was rumored that Altria would acquire either UST or Swedish Match but is this enough?? Cigarettes sales (2005) bring in around $82 billion a year while smokeless tobacco per year brings in $3.7 billion. It looks like at least in the USA the tobacco control folks are winning. On the international scene Philip Morris International (PMI) posted better-than-expected results for the first quarter and analysts expect PMI to continue beating expectations. Bar Graph Revenue 2000-2006 Altria - PM USA vs. Altia - PMI. Related News brief: Philip Morris International (PMI) has better prospects than Altria.. References: Market Spotlight: No relief from tobacco stocks, AP Online, 5/1/2008; Altria Headed South? By Colleen Paulson, 4/25/2008. Read more...

Secondhand (environmental,involuntary, passive) Smoke: Blood Vessel Damage Within Minutes..

May 1, 2008 - Secondhand (environmental,involuntary, passive) Smoke: Blood Vessel Damage Within Minutes.. Just 30 minutes in a smoky room can cause profound blood vessel injury in healthy young nonsmoking adults, greatly increasing the risk of cardiovascular disease, according to a new study published in the May 6 issue of the J Am Coll Cardiol, 51:1760-1771, 2008; 51:1760-1771. Study author Christian Heiss, MD, currently affiliated with the University RWTH Aachen in Germany, and colleagues in California evaluated blood vessel function in healthy, young, nonsmoking adults after they were exposed to a half hour of secondhand smoke at levels commonly found in public smoking areas. The study participants also underwent similar evaluations after exposure to smoke-free air on a different day. It was learned that in healthy nonsmokers, even brief exposure to secondhand smoke resulted in blood vessel dysfunction and interfered with the activity of endothelial progenitor cells (EPCs), which are believed to play a key role in repairing blood vessels. The damage to the EPCs appeared to last as long as a day. "The debate is over. The science is clear," the former U.S. Surgeon General Richard Carmona, MD, told reporters in June 2006. "There is no risk-free level of secondhand exposure," he said. At least let's stop people from smoking around kids especially in cars when the smoke is even more concentrated. It's a no brainer - let's get it done even the remaining smokers agree. Click on image to enlarge.. Read more...

British American Tobacco (BAT) - 100 years in Africa..

May 1, 2008 - On April 30, 2008 the British American Tobacco (BAT) celebrated 100 years of trade in Africa at its Annual General Meeting in London (on Wednesday, 30th April).

BAT is the second largest tobacco company in the world. BAT (K), British American Tobacco (K) Company ltd is a subsidiary of the London-based BAT, is the leading cigarette maker in sub-Saharan Africa boasting of 14 cigarette brands for the local and regional markets that include the whole Eastern, Central and Southern African, and the Indian Ocean Islands.(International premium brands include Dunhill, Pall Mall and Benson & Hedges.)

BAT sells cigarettes in at least 38 African countries and has more than a 90% market share in the following ten African Countries: Ghana, Kenya, Malawi, Mauritius, Nigeria, South Africa, Sierra Leone, Uganda, Zambia and Zimbabwe.

Smoking rates in Africa are rising most sharply among young people and women. BAT’s marketing associates its brands with glamour, style, beauty, sport and celebrity - methods it claims to have voluntarily given up in the UK 30 years ago. Smoking among 13 to 15-year-olds is 33% in some parts of Uganda. In Nigeria, smoking among young women rose ten-fold during the 1990s.

BAT breached its own weak marketing code by allowing cigarettes to be sold singly - popular with children. BAT acknowledged it had begun an investigation into the alleged marketing breaches, but has failed to report publicly on its findings. BAT remains upbeat about its prospects in Africa. An internal BAT document noted: “We should not be depressed simply because the total free world market appears to be declining. Within the total market, there are areas of strong growth, particularly in Asia and Africa…It is an exciting prospect.”

References: BAT's African Footprint, Action On Smoking & Health (ASH), 4/30/2008 and The British American Tobacco (K) Company ltd, Nairobist, 2/3/2007.

Click on subSahara Africa map to enlarge..


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Reynolds American first quarter 2008 profit disappointing..

April 30, 2008 - RAI posted weaker-than-expected first-quarter profit on Wednesday (4/30/2008) due to declines in sales of cigarette brands on which it focuses less marketing (non-growth brands) and pressure from competitors amid the weak U.S. economy. The maker of Camel cigarettes and Grizzly smokeless tobacco also cut its full-year profit forecast, citing the challenging economic environment. Its shares fell as much as 8 percent to a two-year low. "The guidance downgrade ... is due to an increasingly competitive environment in cigarette and smokeless," JP Morgan analyst Erik Bloomquist wrote in a research note. Reynolds Chief Executive Susan Ivey said the company was disappointed in the results and the performance of R.J. Reynolds but added that it faced a number of challenges. "We are ... continuing to see shifts between tobacco products and categories," she told analysts on a conference call, citing growth in such products as little cigars, roll-your-own cigarettes and moist snuff. The tough economy has not led many people to quit smoking, but it has resulted in more demand for deep-discount cigarettes and lower-priced products, Ivey said. Growth brands - Camel, Kool and Pall Mall – posted a combined share gain of 0.5 percentage points from the prior-year period, with a first-quarter share of 13.2 percent. That performance was driven by continued growth of Camel and Pall Mall, and a slight decline on Kool. Camel Snus, R.J. Reynolds’ first effort to broaden Camel’s appeal beyond cigarettes, is on track for a second-quarter expansion to nine additional major markets across the United States. Camel Snus, a smoke-free, spitless tobacco product that comes in a small pouch, is currently being tested in eight markets. With continued learning from this test, the company remains optimistic about the potential for this new product. Conwood - Moist-snuff category growth continued in the first quarter with a total industry volume increase of 5.5 percent. Gains on Grizzly, and Kodiak’s improved performance, drove Conwood’s total moist-snuff shipments up 1.2 share points to a first-quarter share of 26.9 percent. Grizzly’s continued growth further strengthened the brand’s position as the industry’s third-largest and fastest growing moist-snuff brand. That performance was aided by the recent launch of two new Grizzly styles – Snuff and Wintergreen Pouch – which are both being expanded nationally this year. References: Returning Value in a Challenging Time, Reynolds American Inc., 4/30/2008; Reynolds American profit disappoints, stock dips,Reuters, 4/30/2008. Read more...

Loews Q1 Profit Falls On Lower Revenues From CNA Financial, Lorillard..

April 29, 2008 - (Both companies are principal subsidiaries of Loews Corporation.) The company also said that Carolina Group's (CG - the tracking stock for Lowes' cigarette stake) first-quarter net income declined on higher expenses related to the proposed spin-off of Lorillard, and lower investment income. Lorillard, declined to $171 million from last year's $189 million. (Regarding the spinoff - completion of the proposed transaction is subject to a number of conditions, the company noted.) Lorillard Tobacco shipped 8,561,689,000 cigarettes during the three months to the end of March, marginally fewer than the 8,577,344,000 shipped during the first quarter of 2007. Shipments of full price brands were down from 7,960,182,000 during the first three months of 2007 to 7,847,719,000, while shipments of price/value brands were up from 427,070,000 to 567,504,000. Shipments of Lorillard’s full-price Newport brand were down from 7,731,573,000 to 7,650,379,000, while shipments of its price/value Maverick brand were up from 278,118,000 to 440,508,000. References: Lorillard shipments down marginally in first quarter; April 29, 2008; Loews Q1 Profit Falls On Lower Revenues From CNA Financial, Lorillard - Update [LTR]", April 29, 2008.
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Further initiatives by R.J. Reynolds Tobacco Co. (RJR)..

April 29, 2008 - RJR is lowering the number of pouches per container from 20 to 15 pouches and reducing the price per tin by 30 cents (Marlboro SNUS - 12 pouches, Lorillard's Triumph SNUS - 24 pouches, Skoal Dry - 20 pouches). (TobaccoWatch.org) David Howard spokesman for RJR - for the expanded Camel SNUS test market cities promotional and point of sale (POS) materials will continue to be similar as other test markets, including a free tin of Camel SNUS with the purchase of a tobacco product and coupons for free tins on the promotional side, as well as countertop and back bar refrigeration units for the POS. Two other initiatives are under way for the company Howard says -- new packaging for its Pall Mall line of cigarettes and a test of a new customizable cigarette. In April, the company will roll out new rounded edge packaging for its Pall Mall brand of cigarettes, in an effort to convey a more premium image of the product. In addition, the company will test Camel Crush, a cigarette that allows users to customize their experience with menthol. A capsule in the filter can be crushed anytime -- before lighting, while lit or near the end of smoking -- to add a menthol flavor to the cigarette, which is made of the Camel Light blend of tobacco, according to Howard, who noted that the product appeals to menthol and non-menthol smokers alike. A date and location of the test market could not be disclosed. ( R.J. Reynolds Expands Snus Tests, Convenience Store News, 4/29/2008)
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Swedish Match (Svenska Tandsticks)first quarter 2008 report..

April 27, 2008 - Swedish Match (Svenska Tandsticks)first quarter 2008 report.. Snuff/Snus: In Scandinavia, sales volumes measured in number of cans, were up by 8 percent during the first quarter compared to the previous year. As a result of the tax increase (effective January 1, 2008) sales volumes were unusually low in the first quarter of both 2007 and 2008. In the US, sales volumes during the first quarter were up by 22 percent compared to the same period in the previous year. Volumes for Longhorn and Timber Wolf combined were up by 7 percent. Volumes of Red Man moist snuff contributed significantly to the volume increase, as the brand began to be rolled out nationally. Cigars: Excluding the impact of acquisitions, sales in local currencies were down approximately 25 percent for premium cigars in the US primarily due to lower shipments to national accounts and trade destocking. It is expected that in the coming quarters there will be a return to more normal shipment levels for premium cigars. Sales of mass market cigars in the US also decreased. Higher shipments are expected for mass market cigars in the US from new product launches going forward. For the remainder of the year, sales and operating profit in the US should therefore improve. Chewing tobacco: sold primarily on the North American market, mainly in the southern US. Swedish Match is the leading producer of chewing tobacco in the US. Well known brands include Red Man and Southern Pride. The chewing tobacco segment shows a declining trend. During the first quarter, sales declined by 12 percent. Pipe tobacco and accessories: Swedish Match is one of the world’s largest pipe tobacco companies. The Borkum Riff brand is sold in over 60 countries. During the first quarter, sales declined by 3 percent. Lights: Swedish Match is the market leader in a number of markets for matches. The Group’s main brand for disposable lighters is Cricket. Swedish Match’s largest market for lighters is Russia. During the first quarter sales amounted to 347 MSEK (340), while operating profit amounted to 54 MSEK (57). Other operations include the distribution of tobacco products on the Swedish market, as well as corporate overheads. Sales in Other operations for the first quarter amounted to 484 MSEK (483). Sales were unusually low both in the first quarter of 2008 and 2007 as a result of high retail inventories at the beginning of the year in anticipation of the increased excise taxes for tobacco products. Read more...