C-store Update: Conwood's/Grizzly - No. 1 Price value/discount moist snuff..

October 11, 2008 - From 2000 to 2006 moist snuff sales have increased and now account for 71% of the smokeless tobacco market (HR Apert et al., Tobacco Control 17:332-338, 2008). 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.

Comparison U.S. Smokeless Tobacco Players: No. 1 UST and No. 2 Conwood...

Reynolds American stated that second-quarter growth of Conwood's Grizzly brand accounted for almost half of the industry's total moist-snuff volume growth of 7.7% compared with the prior-year quarter.

Altria wants to tweak the sales of UST's premium brands Skoal and Copenhagen to return these to at least modest share growth. C-store personnel are finding when the price of these premium brands are reduced - like the 2-cans for $6 promotion - those sucking on Grizzly will purchase the premium brands instead.

Secret Shoppers are becoming more frequent. This person asked the clerk about Camel Crush and then Camel Snus - the clerk gave the proper answer and won a $20 gift card. Tobacco companies expect retailers to play a significant role in selling their products.. - from PM USA Newsletter, November 2007.

Related news brief: C-store update - tobacco product displays at checkout counter..
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Imperial Tobacco Survey - Canadian Illegal Tobacco Trade..

October 11, 2008 - Based on a survey of 1,201 Canadians over a 3-day period Imperial Tobacco feels the federal government should make illegal tobacco one of its priorities. [Imperial Tobacco Canada (a wholly owned indirect subsidiary of British American Tobacco(BAT) - BAT is the largest stockholder in Reynolds American with approximately 42% of shares) dominates the Canadian cigarette market with at least 60 percent of sales.]

Illegal cigarette sales are costing the Canadian federal and provincial governments $1.6-billion a year in lost taxes. The provinces of Quebec and Ontario are by far the biggest consumers of illegal cigarettes. Nearly half (48.6%) of the
cigarettes bought in Ontario and 40% of those purchased in Quebec were illegal. Almost half of Canadians (47.9%) believe that youth access to illegal tobacco is a major problem.

As a result of the public opinion it is felt the government must propose practical solutions to counter the illegal tobacco problem. Perhaps, Imperial would like the government to again to reduce taxes on legal tobacco in order to lower the price of cigarettes and thus discourage contraband production and distribution.

It is interesting to note that that Imperial Tobacco Canada Ltd and Rothmans Benson & Hedges Inc have admitted aiding the illegal tobacco trade.

The Canadian federal government has recently introduced a tobacco stamp to combat contraband.

References: Canadians recognize that illegal tobacco sales are a problem for the country and look to governments for answers, CNW Group, 10/9/2008; Illegal cigarette sales costing the government, tobacco industry
by Nicole Feenstra, National Post, 8/2/2007 and Illegal tobacco trade not a priority in Canada, Tobacco Reporter, 9/10/2008.

Imperial Tobacco Canada is the same company that introduced Du Maurier Snus claiming that it fulfills it commitment to test market a reduced harm product, as compared to cigarettes in Edmonton retail outlets. Les Hagen of the lobby group Action on Smoking and Health noted that Alberta currently accounts for 40 per cent of the smokeless tobacco market in Canada. Hagen dismissed the company's efforts to portray snus as less harmful than cigarettes as "a hollow public relations gesture."
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Canada - Docs Want to Know More Tobacco Smuggling Settlement..

Physicians for a Smoke-Free Canada said Tuesday, October 7, 2008 the organization will lobby members of the Public Accounts Committee to hold hearings on the negotiations that led to a final $1.2-billion smuggling settlement between Canadian government and the country's two largest tobacco companies, Imperial Tobacco and Rothmans Inc.

The physicians last month asked auditor general Sheila Fraser for an investigation of the agreement, which was signed July 31, 2008 but she turned them down. Fraser said in a letter to the group that the government's decision to agree to the settlement was a policy decision. "Under the legislation that governs our work, we do not evaluate the merits of government policies," Fraser said.

Cynthia Callard, executive director of Smoke-Free Canada, said that the "wall of secrecy" that surrounds the agreement must be penetrated.

Reference: Lift cloud of smoke from tobacco smuggling deal: Doctors
Group says government let cigarette companies off the hook, Canwest News Service, 10/07/2008.
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Shell Signs Deal With 47 State AGs to Curb Minor Tobacco Sales..

October 10, 2008 - Attorneys general of 46 states and the District of Columbia entered into an agreement with Shell Oil that is designed to curb tobacco sales to minors. Shell and its joint venture, Motiva Enterprises, have agreed to adopt procedures designed to reduce sales of cigarettes to minors. (The four states that didn't participate in the settlement were Indiana, North Carolina, North Dakota and Wisconsin.)

Nationwide, the agreement affects more than 13,000 of Shell's 14,000 outlets. Under the agreement, Shell also will pay $100,000 for the costs incurred by the states in investigation and negotiation.


The agreement includes the following provisions:
* Retail personnel will receive training about the health risks associated with childhood tobacco use.
* Shell will administer independent compliance checks to monitor sales practices at certain Shell convenience stores, to ensure they are not selling tobacco to minors.
* States will impose sanctions against contract operators that sell tobacco to minors.
* Vending machines and self-service displays that sell tobacco products will be forbidden at Shell-associated c-stores.
* In-store tobacco advertisements will be limited to reduce youth demand for tobacco products.
* Shell will require all c-store operators to notify the company if tobacco products are sold to minors in violation of the law.

Other recent multi-state agreements cover gas station convenience stores selling fuel under the Conoco, Phillips 66 or 76, Exxon, Mobil, BP, Amoco, ARCO and Chevron brand names, and retail and pharmacy chains Kroger, 7-Eleven, Walgreens, Rite Aid, CVS and Wal-Mart.

Reference: Shell Signs Deal With 47 State AGs to Curb Minor Tobacco Sales, Convenience Store/Petroleum News, 10/9/2008 and Shell, 46 States and DC, to Curb Youth Tobacco Sales (Update2) by Andrew Harris, Bloomberg.com, 10/8/2008.

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San Francisco files brief to oppose bid by PM USA to block the banning of tobacco sales in pharmacies..

October 9, 2008 - Attorneys for the city of San Francisco made the argument in a brief filed with U.S. District Judge Claudia Wilken of Oakland Thursday (10/9/2008) that the city's ban on cigarette sales by pharmacies has nothing to do with free speech. Philip Morris USA (PM), the nation's largest tobacco company, claims the ban violates its First Amendment right of free speech by putting an end to cigarette advertising and displays in the pharmacy stores. PM argued in its September 25, 2008 lawsuit that the purpose and effect of the ordinance is "to suppress communications directed to adult smokers" in violation of the company's free-speech right.

Wilken will hold a hearing in Oakland on October 30, 2008 on the tobacco company's request for a preliminary injunction. Last month, she declined to grant a temporary restraining order that would have blocked the ban from going into effect on Oct. 1, 2008. A San Francisco Superior Court judge also refused to suspend the ordinance in a separate lawsuit filed by Walgreen Co., and the measure took effect as scheduled.

Lawyers from the office of City Attorney Dennis Herrera argued in today's filing that Philip Morris' free speech claim shows "no respect for the Constitution (and) no respect for the power of cities to protect the health of their citizens. The brief contends that if the measure "can prevent just a few young people from taking up smoking, becoming addicted to nicotine, and developing cancer, that would greatly outweigh any minimal, speculative financial loss that might be incurred by the tobacco industry.

Reference: San Francisco Says Smoking Ads Are Not Free Speech, NBC11.com, 10/9/2008.

Related news briefs: Philip Morris challenges San Francisco pharmacy tobacco ban..; Walgreen: San Francisco’s Tobacco Ban Is Unfair..; San Francisco - All Tobacco Products Banned in All Pharmacies..; San Francisco critical vote - bar tobacco sales pharmacies.. and SAN FRANCISCO Ban on tobacco at drug stores sought...
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Virginia Slims "Purse Pack" Available 1st Quarter 2009..

October 9, 2008 - Philip Morris USA will introduce its new pink "Purse Packs" for select Virginia Slims brands by the first quarter of 2009. The Purse Pack, available for Virginia Slims Super Slims Ultra Lights and Virginia Slims Super Slims Lights, is pink, sleek rectangular packaging with square ends. It holds 20 sticks that are smaller in diameter than a typical smoke. "We think it will have a unique appeal to folks who smoke Virginia Slims," said a Philip Morris rep. Advertising, via Leo Burnett, Chicago, is currently being developed. It likely will include direct and event marketing, plus POP (point-of-purchase) support.

Philip Morris already claims about 58% of the Ultra Light market share and intends to use the compact Purse Pack to make headway in the Light category. It has its sights set squarely on the only other super slim entry, Capri, which is handled by R.J. Reynolds Tobacco.

Philip Morris had just six line extensions, including Marlboro Smooth and Marlboro 72, during the past 12 months. This was about half of RJR's new launches, yet Philip Morris grabbed 2 share points and $180 million in sales, per the company. RJR, a unit of Reynolds American, reported that Camel's market share grew 0.2 percentage points to 8% during the second quarter although sales declined 7% from the comparable 2007 quarter. Marlboro grew 0.8 share points to grab a record 41.8% of market share while Virginia Slims declined 0.2 percentage points to 2% share of the retail market, per IRI.

Reference: Virginia Slims Hopes to Look Prettier in Pink by Mike Beirne, Brandweek, 10/8/2008.

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Cash-constrained households prefer cell phone use over tobacco consumption..

October 9, 2008 - According to a new World Bank study, cell phone ownership could affect tobacco consumption because individuals might pay for their communication with money they would have spent on tobacco. Using panel data from 2,100 households in 135 communities in the Philippines collected in 2003 and 2006 -- just as cell phones were catching on -- researchers found that that the percentage of households owning a cell phone more than quadrupled.

Moreover: Cell phone ownership led to a 20 percent decline in monthly tobacco consumption; Among households in which at least one member smoked in 2003, purchasing a cell phone leads to a 32.6 percent decrease in tobacco consumption per adult over the age of 15; This is equivalent to one less pack of 20 cigarettes per month per adult.

The authors conclude that tobacco and cell phones have a special relationship: cash-constrained household have to make a trade-off between the two luxuries, and the social status once signaled by burning up your money on smokes can now be conferred by yapping away on a flashy new phone.

Paper: Labonne, Julien and Chase, Robert S.,So You Want to Quit Smoking: Have You Tried a Mobile Phone?(June 1, 2008). World Bank Policy Research Working Paper No. 4657 Abstract.

Another study showed smoking drives people deeper in poverty. The Philippines’ poorest households spend 2.5 percent of their money on tobacco use – higher than their expenditure for health (1.3 percent) and education (1.6 percent). The Philippine government earns around P90-billion (1,895,399,931.82USD) from the tobacco industry. But the public-health spending on smoking-related diseases reaches about P270-billion (5,686,199,795.45USD) annually. (Studies show smoking drives people deeper in poverty by Llanesca T. Panti, Reporter, The Manila Times, 10/8/2008.)

Reference: WANT TO QUIT SMOKING? TRY A CELL PHONE, Daily Policy Digest (Health Issues), 9/29/2008.

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R.J. Reynolds Dissolvables - it looks like candy..

October 8, 2008 - R.J. Reynolds Tobacco Co. (RJR) is introducing three dissolvable smokeless products in its latest bid to make its tobacco more accessible within a society that's clamping down on smoking. The dissolvable products -- a pellet (Camel Orbs), a twisted stick the size of a toothpick (Camel Sticks) and a film strip for the tongue (Camel Strips) -- had their debut at this week's National Association of Convenience Stores convention. The products are made of finely milled tobacco and come in the flavor styles of fresh and mellow, spokeswoman Maura Payne said. The products last from two to three minutes for the strips, 10 to 15 minutes for the orbs and 20 to 30 minutes for the sticks.

The RJR sales people have been telling c-store owners these products would be coming.

RJ Reynolds Products at a Glance.

Reynolds said that it is the first major U.S. tobacco manufacturer to offer the products. Star Scientific Inc., a smaller manufacturer based in Petersburg, Va., has been selling its dissolvable tobacco products -- Ariva® and Stonewall® -- in select regional and national chains such as Food Lion and 7-Eleven.

Reynolds plans to test the new products in Indianapolis; Columbus, Ohio; and Portland, Ore. The orbs and sticks products will have their debut in January 2009 and the strips in the second quarter. Although Reynolds does not dictate retail prices, the company said that the dissolvable products should sell at a comparable price to a tin of Camel Snus, which is between $4 and $4.50.

It's very likely these products will appeal to kids - STOP THE INTRODUCTION NOW. Matthew Myers, the president of the Campaign for Tobacco-Free Kids, "These products are flavored and packaged like candy, and very likely will appeal to children."

References: R.J. Reynolds Preps Dissolvable Tobacco by Mike Beirne, 10/8/2008 and Reynolds moves to be on top when smoke clears (Dissolvable tobacco offered as smoking bans proliferate; critics say it looks like candy) by Richard Craver, Winston_Salem Journal, 10/8/2008.
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U.S. Supreme Court 2008-2009 term, Altria v Good (07-562)..

October 8, 2008 - At the first Supreme Court arguments session for the 2008-2009 term, a lawsuit (Altria Group Inc. v Good, 07-562) filed by three Mainers accuses Altria Group Inc. of deceptive and unfair advertising regarding their "light" cigarettes. The suit claimed the tobacco company's marketing practices violated Maine's Unfair Trade Practices Law. Philip Morris argued to stop a lawsuit alleging it engaged in advertising fraud by claiming light and low-tar cigarettes weren't as harmful as regular cigarette products. The company's primary argument is that the Federal Trade Commission's (FTC) regulation of tobacco product labeling, which has allowed light and low-tar claims to appear on labeling, bars lawsuits based on state advertising fraud laws.

Several conservative justices tied the case to earlier Supreme Court precedent that has preempted state-level cases when federal agencies are involved in oversight of an industry. Chief Justice John Roberts Jr., for example, cited last year's 9-1 ruling in Riegel v. Medtronic Inc. (MDT), which barred a state lawsuit on medical devices because of federal device regulations.

Several liberal justices, meanwhile, suggested they think the tobacco advertising law at issue may not bar lawsuits over light cigarettes.

Justice Samuel Alito (a conservative judge)and other justices blasted the FTC for continuing to allow cigarette companies to make light cigarette claims. "You've created this whole problem," Alito said, lecturing Douglas Hallward-Driemeier, an assistant to the U.S. Solicitor General. "You have misled everyone who bought these cigarettes for a long time." (Hallward-Driemeier appeared before the court to argue the FTC regulations don't bar the consumer lawsuit against Philip Morris, but the justices gave him little time to lay out the government's position.)

The Court appeared split on whether consumers in Maine can sue Altria Group Inc.'s Philip Morris unit over the advertising of light and low-tar cigarettes, but a narrow majority may rule in favor of the tobacco giant.

A Philip Morris victory in this case would blunt perhaps the most significant legal hazard for the tobacco industry. The high court's decision by July 2009, could block as many as 40 similar lawsuits that seek billions of dollars from Philip Morris, Reynolds American Inc.'s R.J. Reynolds Tobacco and other cigarette makers.

Reference: UPDATE:US Supreme Court Appears Split In Altria Cigarettes CaseBy Mark H. Anderson, Dow Jones Newswires; 10/6/2008 and Altria Seeks `Knockout Blow' in Supreme Court `Lights' Case by Greg Stohr, Bloomberg.com, 10/6/2008.
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ASH calls for a debate in England on banning smoking in all cars with kids present..

October 8, 2008 - Action on Smoking and Health (Ash) is calling for a debate in England on banning smoking in all cars. Is a debate necessary - this is a no-brainer - just get it done.

The first Anniversary (July 1,2008) of England's smokefree law shows the public ready to accept even stronger tobacco control measures. A government survey revealed that in England: 77% of adults support a ban on smoking in cars carrying children under the age of 18.

In developing the British Department of Health's new National Tobacco Control Strategy the second main area entitled: Protecting children and young adults from smoking includes the statement protecting children from secondhand smoke to prevent future generations suffering poor health caused by tobacco. (On May 31, 2008 the British Government's Department of Health (DH) released the paper on the the future of tobacco control.)

Vehicles Have Been Found to be the Most Dangerous Space for Second-Hand Smoke Levels.. Secondhand (environmental,involuntary, passive) Smoke: Blood Vessel Damage Within Minutes...

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."

Related news briefs: Nicotine Dependence in Kids Exposed to Second-Hand Smoke.. and Maine - illegal to smoke in cars while children present...

Reference: CALL TO BAN SMOKING IN YOUR CAR by Martyn Brown, Daily Express, 10/8/2008.

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TobaccoWatch.org

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Grocery Store Chain - Cigarettes $1.00 per pack..

October 7, 2008 - During a recent visit to a local grocery store we were shocked to find a grocery cart filled with cigarettes in an area where all shoppers pass, selling for $1.00 per pack.

Fundamental to tobacco control is convincing governments to sharply raise tobacco taxes and as a result the cost of a pack of cigarettes increases. Numerous economic studies in peer-reviewed journals have documented that cigarette tax or price increases reduce both adult and underage smoking. The general consensus is that every 10 percent increase in the real price of cigarettes reduces overall cigarette consumption by approximately three to five percent, reduces the number of young-adult smokers by 3.5 percent, and reduces the number of kids who smoke by six or seven percent.

This effort is defeated if the store turns around and sells cigarettes for a cheaper price. Cigarettes and most moist snuff products do not carry an expiration date (do have some coded value) and the tobacco can not be returned to the manufacturer. UST's Skoal and Copenhagen have an expiration date and can be returned for credit. At least one c-store owner we have talked to thinks UST Inc. (with no regulations in place) reconstitutes the expired tobacco and again returns it to the marketplace for sale - more on this aspect later. UST salesman..

Reference: RAISING CIGARETTE TAXES REDUCES SMOKING, ESPECIALLY AMONG KIDS (AND THE CIGARETTE COMPANIES KNOW IT)

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Michael Rubens Bloomberg - ELF Award winner 2008

October 7, 2008 - On Sunday, October 5, 2008 the European Lung Foundation (ELF) award was awarded to Michael Rubens Bloomberg, Mayor of New York City, to mark his outstanding contributions to combat tobacco use worldwide.

Michael Bloomberg has donated $375 million over six years to five key partner organizations (The Campaign for Tobacco-Free Kids, Centers for Disease Control and Prevention Foundation, The Johns Hopkins Bloomberg School of Public Health, The World Health Organisation and The World Lung Foundation). This campaign aims to help people quit smoking and reduce the number of deaths caused by smoking, by improving anti-smoking education, increasing the price of tobacco and making more places smoke free.

As an example of Bloomberg’s work, New York City now has 200,000 fewer smokers than it did four years ago. Bloomberg has more than doubled tobacco control funding in low and middle income countries to try and extend this success across the world.

The funding provided by Bloomberg has already enabled the formation of MPOWER^**, a package of the six most important and effective tobacco control policies that are proven to reduce tobacco use. Once these policies are enforced together, they will prevent young people from starting to smoke, will help current smokers to quit, will protect non-smokers against the dangers of second hand tobacco smoke and will free citizens worldwide from the harm of tobacco.

If smoking rates continue to stay at current levels without intervention, a predicted one billion people are expected to die from tobacco use this century. Bloomberg’s generous contribution has the potential to save thousands of lives by benefitting the world’s smokers and non-smokers.

**MPOWER:
Monitor tobacco use and the policies to prevent it .
Protect people from tobacco smoke
Offer people help to quit tobacco use
Warn about the dangers of tobacco
Enforce bans on tobacco advertising, promotion and sponsorship
Raise taxes on tobacco

Reference: Michael Rubens Bloomberg - ELF Award winner 2008, European Lung Foundation, 10/5/2008.

ELF is the public voice of the European Respiratory Society.

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Chinese cigarettes go global - Golden Deer Cigarettes..

October 6, 2008 - China National Tobacco Corp. and Switzerland-based Philip Morris International have established a partnership which allows PMI to produce its Marlboro brand cigarettes at Chinese factories in return for marketing three of China's domestic cigarette brands globally. The three brands are Dubliss, Harmony, and RGD; initial markets are in Latin America and Central and Eastern Europe.
(Chinese cigarettes to go global)

In 2006, Shanghai Tobacco has taken steps to implement a strategy of turning Golden Deer into a major international cigarette brand. The 8mg “Golden Deer”(yellow) cigarettes and 5mg “Golden Deer”(white) cigarettes were launched in succession in the Taiwan market, and received good response. After about six months’ efforts, the 10mg “Golden Deer”(blue) cigarettes entered Taiwan market successfully.

After succeeding in Taiwan taxable markets were developed South America, the Middle East, Australia and other countries and regions. Shanghai Tobacco Group managed to step up development of the taxable market in the Philippines by strengthening coordination with local dealers, and had the 10mg Golden Deer go on the taxable market in the country. According to information on its sales on the local taxable market over the past more than two weeks, Golden Deer, as a high- and medium-grade cigarette products on the local market, and has won favor from young consumers in terms of both packaging and flavor. Golden Deer, which was launched in the Philippines on September 5, is described as a 10 mg cigarette. (Golden Deer grazing on Philippines market)

A related news brief: Made-in-China Marlboros - a major mistake by Philip Morris International..

References: 10mg “Golden Deer”(Blue) Cigarettes Enter Taiwan Market Successfully, ChinaRealNews, 8/31/2008; Golden Deer Cigarettes go on Taxable Market in the PhilippinesTobaccoChina, 10/6/2008 and Three Chinese Cigarette Brands to March into International markets, ChinaRealNews, 1/31/2008.

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U.S. Supreme Court: Good v. Altria Group,.

October 5, 2008 - The first Monday in October by law is the opening of the U.S. Supreme Court's new term. In the first lawsuit to be considered filed by three Mainers accuses Altria Group Inc. of deceptive and unfair advertising regarding their "light" cigarettes. The suit claimed the tobacco company's marketing practices violated Maine's Unfair Trade Practices Law. A federal judge initially issued a summary judgment in the cigarette makers' favor, ruling that the claims were pre-empted by the Federal Cigarette Labeling and Advertising Act, which says states can't impose any requirements on the advertising or promotion of cigarettes. The 1st U.S. Circuit Court of Appeals in Boston later found that the claims are not pre-empted by federal law.

The question before the Supreme Court is whether state-law challenges to advertising claims about tar and nicotine yields are pre-empted by federal law.

The plaintiffs contend, Altria - formerly known as the Philip Morris Companies - misled smokers into thinking that light cigarettes, with less tar and nicotine, were less hazardous to health. If the Supreme Court rules in favor of the three smokers, who enjoy the support of the U.S. government and Federal Trade Commission, the result could be a tsunami of lawsuits that could cost the tobacco industry billions of dollars.

Reference: 2 Maine cases go to US Supreme Court, Boston.com, 10/5/2008; More Detail: Good v. Altria Group.
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