U.S. House Passes Bill to Prevent Tobacco Delivery By Mail..

September 13, 2008 - The U.S. House of Representatives on Wednesday, 9/10/2008 passed the Prevent All Cigarette Trafficking Act (PACT) (379-12) to give law enforcement new tools to crack down on smugglers of tobacco and curb illicit tobacco sales over the Internet. The bill makes it a felony for selling tobacco in violation of any state tax law. The legislation will also effectively end Internet tobacco smuggling by stopping shipments of cigarettes through the U.S. Postal Service. FedEx, UPS, and DHL have already agreed not to mail tobacco.

By some estimates, New York state loses $1 billion from tobacco smuggling, said Congressman Anthony Weiner (D-NY) the sponsor of the PACT Act. According to a recent Government Office of Accountability (GAO) report, Hezbollah profited $1.5 million from the sale of illegal tobacco from 1996-2000.

The bill included the provisions from Congressman John McHughs's (R-NY) "Do Not Mail Tobacco Bill." We must get the United States Postal Service (USPS) out of the tobacco delivery business.. and Protect Our Children - Make it illegal to use the U.S. Postal Service to deliver any form of tobacco product...

PACT now goes to the Senate for consideration.

Click here for details on this legislation..

References: House Passes Bill to Crack Down on Black Market Tobacco - PACT stops shipments of cigarettes through U.S. Postal Service, CSP Daily News, 9/12/2008 and McHugh “Do Not Mail Tobacco” Provisions Included in Legislation that Passes House - Provisions Would Stop Minors from Getting Cigarettes via U.S. Mail, The McHugh Report, 9/11/2008.

Congressional Democrats have scrapped plans for another vote on expansion of the SCHIP..

September 12, 2008 - Congressional Democrats have scrapped plans for another vote on expansion of the State Children’s Health Insurance Program (SCHIP), thus sparing Republicans from a politically difficult vote just weeks before elections this fall. Before the summer recess, Democrats had vowed repeatedly to force another vote on the popular program. But Democrats say they have shifted course, after concluding that President Bush would not sign their legislation and that they could not override his likely veto.

The legislation would expand SCHIP by $35 billion over the next five years, paid for by a 61-cent-per-pack federal excise tax (FET) tax increase on cigarettes and increases in the federal tax rates on other tobacco products.

Mr. Bush vetoed two earlier versions of the legislation, which he denounced as a dangerous step toward “government-run health care for every American,” and the House sustained those vetoes. (Bush vetoes 2nd bill expanding the State Children's Health Insurance Program (SCHIP)... and Bush's SCHIP veto stands..)

Some more related news briefs: AWMA urges grassroots effort to defeat FDA tobacco regulation and SCHIP.., U.S. House fails to override SCHIP expansion veto.. and Revised State Children's Health Insurance (S-CHIP) Bill...

Reference: Facing Veto, Democrats Drop Plan for Vote on Child Bill by ROBERT PEAR, 9/7/2008.

Revved Up - a new energy-infused smokeless tobacco product..

September 12, 2008 - Revved Up Inc. has introduced what it said is the first smokeless tobacco product infused with energy supplements. The plan is to introduce the product to convenience store executives in October 2008 at the National Association of Convenience Stores (NACS) tradeshow in Chicago. Doran said their firm also is negotiating with suppliers who provide tobacco products to military exchange outlets. The product is described an adaptation of the homemade caffeine and smokeless tobacco combo many Marines know well. The dip will come in two varieties, straight and wintergreen.

Reference: Energy Goes Smokeless Marine entrepreneurs rolling out energy-infused smokeless tobacco product, CSP News, 9/12/2008.

Maine - illegal to smoke in cars while children present..

September 12, 2008 - The State of Maine on Monday, September 1, 2008 made it illegal to smoke in a car while children are present. Maine's law authorizes police to hand out only warnings until Sept. 1, 2009, but after that violators can get $50 fines. In March 2008 the Maine House of Representatives voted by a 2-1 margin when riding with children under age 16. The cutoff age for the bill was lowered from 18 to 16 to garner enough legislative support for passage in the House. Bill to ban smoking in cars with children enacted in the State of Maine.. Bangor, Maine is believed to be the first city to outlaw smoking in cars with children.

Rep. Brian Duprey, R-Hampden, said he ordinarily would oppose legislation he sees as government interference in people's privacy. But Duprey, who runs a child care business, said he was moved to act after seeing tots arrive at his facilities smelling of tobacco and often sick. The developing lungs of young children are severely affected by exposure to secondhand smoke, the EPA says. Children receiving high doses of secondhand smoke like found in cars, run the greatest risk of damaging health effects. Vehicles Most Dangerous Space for Second-Hand Smoke Levels..

Banning smoking when children are in the car is a no-brainer - even Philip Morris agrees. David Sutton, a spokesman for Philip Morris USA said the company believes the public "should be guided by the conclusions of public health officials regarding the health effects of secondhand smoke" and "particular care should be exercised where children are concerned."

Reference: Car-smoking law kicks in, SunJournal.com, 9/1/2008.

California, Arkansas and Louisiana have passed similar laws (California became the 3rd state. Arkansas now bans smoking in cars with children age 6 and younger, while Louisiana has limited the ban when children 13 and younger are in the vehicle.), as have Puerto Rico. Arkansas claims to be the first jurisdiction in the world to ban smoking in vehicles carrying kids.

Canada: - enacted or proposed: Ontario, Nova Scotia, New Brunswick, British Columbia, Yukon and Okotoks, Alberta.

Australia - enacted or proposed: South Australia, Tasmania, New South Wales and Victoria.

SUMMARY: Laws Banning Smoking in Vehicles Carrying Children – International Overview
Canadian Cancer Society, August 19, 2008

CDC reports in just 5-years tobacco caused 2.4 Million cases of cancer..

September 11, 2008 - Some 2.4 million Americans were diagnosed with tobacco-related cancer from 1999 to 2004, according to a massive new report from the Centers for Disease Control (CDC). Almost half of those diagnosed suffered from lung and bronchial cancer, according to the CDC report.

The report, Surveillance for Cancers Associated with Tobacco Use --- United States, 1999—2004, represents the most comprehensive study of its kind ever conducted, covering all types of tobacco-related cancers for more than 90 percent of the U.S. population.

"The data in this report provides additional, strong evidence of the serious harm related to tobacco," said Sherri Stewart, Ph.D., lead author of the study in a press release. "We've long known tobacco was associated with lung and laryngeal cancer, but this study gives us even greater clarity. The rates for these two cancers were highest in areas with the highest prevalence of tobacco use."

Those areas, according to the CDC, are mainly in the South, with Kentucky showing the highest rate of lung caner in both men and women. Kentucky also reported the highest percentage of smokers in the nation at 28.6 percent. The lowest smoking rates were found in the Western states of Utah (10.4%), California (18.5%) and Montana (18.5%).

Reference: Surveillance for Cancers Associated with Tobacco Use --- United States, 1999--2004,Sherri L. Stewart, PhD et al., MMWR (Morbidity & Mortality Weekly Reports) Surveillance Summaries, September 5, 2008 / 57(SS08);1-33.

British American Tobacco (BAT) Misleading Russian Consumers..

September 11, 2008 - Russia's top health officer, (Director of Rospotrebnadzor [The Federal Consumer Protection and Human Welfare Agency]) Gennady Onishchenko, said Monday (9/8/2008) his governmental agency is suing British American Tobacco's Russian office for misleading the consumers. Onishchenko signed a lawsuit against BAT for "misleading the consumers" and infringing on their rights. In July, Onishchenko launched a ferocious attack on global tobacco companies, threatening them with legal action for "nicotine genocide." He said the corporations were making huge profits at the expense of Russians' health.

According to Euromonitor International, Russia ranks fourth worldwide in annual per capita consumption, with approximately 2,665 cigarettes smoked. Tobacco use kills some 400,000 Russians every year, and the number of Russian smokers is among the highest in the world with more than one-third of the population smoking. Sixty percent of Russian men and up to 30 percent of Russian women smoke.

BAT, one of Russia's leading tobacco companies (with 22 percent of the Russian cigarette market), suggests that Russians' taste for cigarettes is developing rather than declining. Tobacco sales, continue to grow by between 3 and 4 percent per year by volume. BAT International cigarette brands include: Lucky Strike, Pall Mall, Kent and Dunhill.

References: Russian officials sue British American Tobacco, The Associated Press - International Herald Tribune, 9/8/2008. September 8, 2008; President Putin Completes Russia’s Ratification of Tobacco Control Treaty, Matthew L. Myers, President, Campaign for Tobacco-Free Kids, 4/25/2008; Russia Edges Closer To Ratifying FCTC, Medical News Today, 1/18/2008.

Russia in April 2008 became the 155th nation to ratify the
WHO Framework Convention on Tobacco Control (FCTC) Treaty.

Related news brief: Russian State Duma (Parliament) ratified the framework convention of the World Health Organization (WHO) on tobacco control..

Finally Pennsylvania's Smoking Ban Takes Effect Today..

September 11, 2008 - The law bans cigarettes, cigars and pipe smoking inside public places including restaurants, office buildings, schools, sports arenas, theaters and bus and train stations. The amended Clean Indoor Air Act introduced by state Senator Stewart Greenleaf, as Senate Bill 246 and signed into law by Gov. Ed Rendell on June 13, 2008. Senator Greenleaf, "This is a great victory, but it came as the result of much compromise - it had to. For 15 years Greenleaf had been attempting to get a statewide smoking ban passed in the Legislature and met with resistance from special interest groups and their sympathetic legislators. (Even though 80 percent of Pennsylvanians want a smoke-free work and play environment, said Pennsylvania State Health Department spokeswoman Holli Senior.) Greenleaf was finally able to get the measure voted on for the first time in the Senate Public Health and Welfare Committee in January, 2008. Business owners and smokers who violate the new Pennsylvania Clean Indoor Air Act risk penalties ranging from $250 to $1,000.

Pennsylvania's law is not as strict as the other surrounding states and it comes after a bitter battle that left a bad taste in some people's mouths. Some of the compromises include: bars and taverns whose food sales comprise no more than 20 percent of gross annual sales are permitted to have smoking, even if the bar is connected to an eating area, as long as the eating area has a separate entrance and ventilation system. For casino owners smoking will be allowed on 25 percent of the gaming floor - 50 percent if economic hardship can be proven because of the smoking limitation.

Pennsylvania is the 25th state to go smoke free along with the District of Columbia and Puerto Rico. Senior noted that more than 20,000 Pennsylvania adults die each year from their own smoking and approximately 300,000 Pennsylvanians under the age of 18 die either directly or indirectly because of smoking. Nationally, it is estimated that between 1 million and 3 million adult non-smokers die each year from exposure to second-hand smoke, noted Senior. "Over $5 billion in annual health care costs in Pennsylvania are directly caused by smoking," said the state health department spokeswoman.

Related news briefs: Ed Rendell, governor of Pennsylvania wants to pay for providing health insurance and Pennsylvania Governor Ed Rendell is proposing an excise tax on tobacco...

References: Impending smoking ban has diners breathing easy by Patti Mengers, delcotimes.com, 9/6/2008 and Ashtrays Put Away As Pa. Smoking Ban Takes Effect, NBC10.com, 9/11/2008.

Click on image to enlarge.. - Governor Rendell with signed bill to amend The Clean Air Indoor Act.


Altria will continue to test Marlboro Smokeless Tobacco Products..

September 9, 2008 - Altria claims they will continue to test Marlboro smokeless tobacco products after the acquisition of UST, Inc.. "We believe Marlboro has a role in the smokeless business," Altria CEO Michael Szymanczyk said during an investor call. "And frankly, this acquisition will add some benefits to the brand in terms of our ability to carry that forward in a financially disciplined way." Altria being financially disciplined in test marketing their smokeless products...

Regarding the smokeless, spitless tobacco product - Snus that is being tested in the U.S.. UST, Inc. executives are very disappointed in sales of the entire SNUS segment..

Initially, it was felt that just the Marlboro brands would make the smokeless entries successful. This just has not happened. Nik Modi, a UBS tobacco analyst has stated, "The Marlboro brand name is not as transferable as many originally believed." Altria's growth depends on the Marlboro name.. Kessler, CEO UST: Clearly Marlboro is a great cigarette brand. That said, history clearly shows that it is difficult to extend brands from one category to another. UST, Inc. NOT Worried About New Moist Snuff Entry - Marlboro.

While Altria expects cigarette consumption to decline about 3.5 percent this year, an acquisition of UST would give it a leading position in a $3.7 billion category of the tobacco business that is growing about 6 percent to 7 percent a year - overall moist snuff volumes grew about 7% in 2007 but UST's can volume, led by its pricey Copenhagen and Skoal brands, trailed behind at only 3.1% UST's premium brands (like Copenhagen, Skoal) have been losing market share to price-value/discount brands like R.J. Reynolds/Conwood's Grizzly brand. Marlboro moist snuff (MST) competes with UST's premium brands but at lower cost. UST's discount brand Husky does not sell as well as Grizzly. Ten years ago UST owned more than 80% of the smokeless tobacco market. By late 2004, the company;s market share had slipped to 68% and today it's less than 60%.

In response to a Kraft/CSP(Convenience Store/Petroleum)Daily News poll which asked, "If/when the Altria-UST deal goes through, what will happen to Philip Morris' Marlboro Moist Smokeless Tobacco?", more than 40% of the more than 110 respondents said "UST's brands will lead to its fading away." Nearly 35% said, "UST's expertise will help it thrive," nearly 6% said "other" and more than 17% said "I'm not sure."

References: Altria To Keep Testing Marlboro Products In Smokeless Market, Dow Jones, 9/8/2008; Altria Still Testing Smokeless Marlboro - Not pulling plug with UST acquisition, CSP Daily News, 9/10/2008 and UST Isn't Up to Snuff by Charles L. Norton, RealMoney.com, 4/11/2008.


Walgreen: San Francisco’s Tobacco Ban Is Unfair..

September 10, 2008 - Walgreens Co. - California is trying to stop San Francisco from banning the sale of cigarettes and other tobacco products at pharmacies in the city.

A city ordinance banning sales of tobacco products at pharmacies is set to take place October 1, 2008.

The drug store chain (52 Walgreens pharmacies in San Francisco) alleges the new law is anticompetitive and unconstitutional, because it doesn't ban tobacco sales at grocery stores and wholesale clubs that also have pharmacies. The California Supreme Court set a September 30, 2008 hearing date for preliminary injunction.

Reference: Walgreen fights tobacco sale ban in pharmacies: report, Reuters, 9/10/2008; Walgreen: San Francisco’s Tobacco Ban Is Unfair Posted by Jacob Goldstein, The Wall Street Journal Health Blog, 9/10/2008 and "Walgreen Fights Tobacco Sales Ban Retailer Asks Court To Block Ordinance In San Francisco" by Ann Zimmerman, B8, The Wall Street Journal, 9/10/2008.

Boston pharmacies may be next.

Click on image to enlarge..


Camel brand will increasingly become the face of Reynolds.

September 10, 2008 - Reynolds American Inc. (RAI) and its subsidiary R.J. Reynolds Tobacco Co. (RJR) said Tuesday (9/9/2008) they were cutting about 10 percent (will layoff 570 - 16 percent in Winston-Salem, N.C. - their home base), of their American work force as the company restructures its portfolio. The cuts are expected to begin in the third quarter and last through the end of 2009.

Reynolds' plans are designed to focus on core businesses (the total tobacco business model)and redirect resources to areas of growth. Among the changes: The company is scaling back marketing and promotional support for its Kool menthol brand cigarettes, while boosting the amount of money it spends on Camel brand menthol products. The Pall Mall label will remain one of the company's growth brands. The Camel Family.

R.J. Reynolds had been focusing its investment in Camel, Kool, and Pall Mall to accelerate the brands' market-share growth. Other brands like Winston, Salem, Doral, Misty, Capri,.. are called Support Brands and are only provided limited marketing support. RAI for the 1st quarter of 2008 had very disappointing financial results due mainly to declines in sales of these support brands and pressure from competitors amid the weak U.S. economy. Also, RJR has spent large sums of money promoting Camel SNUS without success. RJR has had so many promotions mainly giving away free cans of Snus that they most have given away more cans than they sold.

The acquisition of smokeless tobacco maker Conwood has been one of the bright spots for Reynolds. Second-quarter 2008 growth on Conwood's flagship Grizzly brand accounted for almost half of the industry's total moist-snuff volume growth of 7.7% compared with the prior-year quarter.

Reynolds' move comes after its bigger rival, Philip Morris USA owner Altria Group, said Monday it would buy UST, the maker of Skoal and Copenhagen, for $10.4 billion. Some tobacco analysts have projected that Reynolds may be positioning itself to acquire Lorillard Tobacco Co. of Greensboro. Lorillard has the No. 1 menthol brand, Newport. (Menthol cigarette shipments declined by 3.9 percent last year, compared with a 5.5 percent decline for regular cigarettes. Last year about 28% of cigarette sales were menthols.) RJR has gone national with Camel Crush - a cigarette that can be converted into a menthol.

References: Reynolds to cut 570 jobs Company dealing with 'realities' of its market by Richard Craver, Winston-Salem Journal, 9/10/2008; "Reynolds Bets on Camels As It Grows Cool on Kools" by Laureen Etter, The Wall Street Journal, B1, 9/10/2008; and Reynolds American aims for smoke-free tobacco growth, Silobreaker.com, 9/10/2008.

Click on image to enlarge.. - RJR Headquarters Building built in 1929, the 2--story building was the South's 1st skyscraper and later became the model for the Empire State Building in NYC.


UST to become a wholly owned subsidiary of Altria..

September 9, 2008 - Altria Group Inc.** and UST, INC. officially announced yesterday, 9/8/2008 that they have entered into an agreement for Altria to acquire all outstanding shares of UST. The all-cash transaction is valued at approximately $11.7 billion (EUR 8.2 billion), which includes the assumption of approximately $1.3 billion of debt.

According to Michael E. Szymanczyk, Altria’s chairman and chief executive, “The combination of Altria and UST creates the premier tobacco company in the United States with leading brands in cigarettes - Marlboro, smokeless tobacco - Skoal/Copenhagen and machine-made large cigars - Black& Mild.”

Murray S. Kessler, chairman and CEO of UST, will be named vice chair of Altria, reporting directly to Szymanczyk, and will oversee the integration. "I don't think there's any question that both of these companies are doing just fine. But there's also no question [that] when you put them together, the consolidation creates an extraordinary amount of value for consumers and for shareholders. And that's why it's smart to do this. It's not that one can't perform without the other. When you put them together, you can get much more value than when they're apart," Szymanczyk added during the investor call.

Altria prides itself on their high powered sales force, e.g. soon after acquiring John Middleton, Inc. (Black&Mild Cigars) its sales force was cut. It is doubted this will happen with UST.

References: Altria Scoops Up UST - $11.7 billion deal adds moist smokeless tobacco leader to cigarette, cigar stable, CSP Daily News, 9/9/2008. and Altria to buy UST for $10.4 billion, Reuters, 9/8/2008.

** - Altria owns approximately 28.5% of SABMiller (South African Breweries - Miller) plc.


C-store update - The Secret Shopper & More..

Tobacco companies are hiring people to go into convenience(c) stores and tell the clerk that they have a craving for nicotine at work but smoking is no longer allowed and then ask is there an alternative. As part of the pubic awareness/education program the clerk as part of the sales team is expected to recommend an alternative such as Camel SNUS. Retailers play a significant role.. - from PM USA Newsletter, November 2007.

Look for many more smokeless tobacco products such as a product like Tic-Tats or even toothpicks laced with nicotine (likely using tobacco to avoid FDA oversight). Tobacco Products When You Can't Smoke...

Mike Szymanczyk now the CEO of Altria, Inc. states that Philip Morris owes
their success to the ability to connect with adult tobacco consumers through the
in-store experience
and the development of one-to-one relationships using their
database of 25 million adult cigarette smokers (Remarks, Investor Presentation,

The main growth in moist snuff tobacco is price-value/discount segment. RJ Reynolds Tobacco/Conwood has Grizzly and soon to be Philip Morris USA/UST, Inc has Husky. Grizzly outsells Husky 4 to 1 or even more. The c-store owner comments some cans of Husky have to be returned because the date to sell by has expired. Comparison U.S. Smokeless Tobacco Players: No. 1 UST and No. 2 Conwood...;


Philip Morris International (PMI) extends deadline on offer to buy Rothmans..

September 8, 2008 - PMI said Friday, 9/5/2008 it had extended a deadline on its offer to buy cigarette maker Rothmans for $1.95 billion, in order to meet a requirement under Canadian regulatory rules. PMI said the extension was to allow for a 45-day review period under the Investment Canada Act. The offer period is being extended to Sept. 16 to give time for the review to be completed. Last month, the company received an advance ruling certificate from the Canadian Commissioner of Competition for the deal.

Reference: Philip Morris International extends Rothmans offer deadline to allow Canadian Review, Canadian Business online, 9/5/2008.

Related news briefs: PMI can't use the Marlboro brand name in Canada..; PMI - Rothman creating legal and public relations headaches.. and Philip Morris International to buy Toronto based Rothmans Inc...

National Tobacco to Close Production Plant in Louisville, KY..

September 7, 2008 - National Tobacco Co. will close factory by the end of next year, eliminating the jobs of between 80 and 100 people who cut, flavor and package Beech Nut loose leaf chewing tobacco and other products.

Beech Nut, the No. 3 chewing tobacco, continues to decline in popularity losing about 7 percent of the market each year. What's more, the 108-year-old factory at 3029 Muhammad Ali is obsolete, he said yesterday. The company decided to outsource the production to an Owensboro, Ky., plant owned by Swedish Match North America Inc. National will keep approximately 100 marketing, finance and other personnel at its 26-acre site at 30th Street and Muhammad Ali Boulevard in Louisville, KY.

In 1988: National Tobacco Corporation is formed to acquire Lorillard's smokeless tobacco products like Beech Nut.

Reference: National Tobacco Co. to close Louisville operation by Jere Downs, Louisville Courier-Journal.com, 9/6/2008.

Indonesians smoking more than ever before..

September 7, 2008 - The World Health Organization says more than 70 million adults regularly smoke in Indonesia, a six-fold increase over the past 40 years. An estimated 400,000 people will die this year from smoking-related diseases. But Finance Minister Mulyani Indrawati says the economy and job creation are the government's number-one priority. And Indonesia's tobacco industry, through farming, production and sales provides an economic lifeline for millions of people.

The government says it wants to reduce smoking, particularly among young people. But just how this will be achieved is unclear. Smoking in most public places is banned in the capital, Jakarta, but the three-year-old law is rarely enforced. Cigarette companies regularly hold promotions in parks, concerts and sports venues. Lots of advertising of the tobacco everywhere. You can see here on the roads, even in front of schools. How come? If they want to reduce it they have to ban those kinds of advertisement[s] near the school, on television during the kind of early times," said Thabrany. "And they [tobacco companies] support also sport events, where the young people are there."

Although prices for food, transportation and energy have risen, cigarette prices have not. The global average for tobacco taxes is 70 percent of the sales price. In Indonesia the average is 37 percent. But some, including the popular kretek or clove cigarette, are taxed at 21 percent.

Dr. Sarah Barber, an economist, has just completed a study of Indonesia's tobacco economy. She says raising taxes would reduce smoking rates and help the economy.

Related news briefs: Indonesia further rise in the excise tax would hurt the cigarette industry..; Alicia Keys - Jakarta Concert (July 31st) tobacco companies forced to withdraw sponsorship.. and Most Indonesians support moves to ban tobacco advertisements..

Reference: Indonesia Tobacco Sales Grow, Raising Health FearsVoice of America, 9/3/2008 and Smoker’s Paradise, Asia Sentinel, 1/22/2007.