Rothmans, Benson & Hedges - threatens to close factory in Quebec..

September 24, 2009 - Canadian tobacco heavyweight Rothmans, Benson & Hedges (RBH - an operating subsidiary of Rothmans, which is owned by Philip Morris International (PMI)) is threatening to close a Quebec factory employing more than 300 people if Ottawa doesn't narrow the scope of a bill aimed at stopping the manufacture of candy- and fruit-flavoured cigars and cigarettes.

The Harper government promised the legislation during last year's election campaign as a means of cracking down on tobacco products that appeal to children. But concerns over its Quebec impact are making Conservative Members of Parliament (MP) in that province eager to accommodate Rothmans.

Rothmans says the legislation, Bill C-32, is too broad and would also ban flavourings traditionally employed to make “American-blend” cigarettes in Canada for local and export markets. Far less popular with Canadians than Virginia tobacco cigarettes, an American blend of several tobaccos can include sweeteners or flavourings to dispel bitter or harsh tastes. These cigarettes, however, don't taste like candy or fruit.

Rothmans spokesman Bert Van Gossum: “The current wording of Bill C-32 puts the future of RBH's factory in Quebec City in jeopardy. RBH employs 750 people in Canada, including more than 300 in its Quebec factory alone.” Gossum: his company backs efforts to ban fruit- and candy-flavoured cigars and cigarettes, but says if the legislation isn't fixed it will undermine Rothmans's current business plan in Canada.

His company said a key motivation for Philip Morris's purchase last year of a 100-per-cent interest in Rothmans was to “take advantage of excess manufacturing capacity” in Canada, including the Quebec plant. The idea is to use this equipment to make Philip Morris International's global brands for export markets in addition to local sales.

Anti-smoking groups, however, say an amendment that allows additional flavouring would create a loophole that could be exploited by the tobacco industry to make cigarettes taste better.

Rob Cunningham Canadian Cancer Society senior policy analyst: “Because of advertising restrictions and better warnings, markets have declined, and they see flavours as a means to recruit kids and discourage quitting. That's why it's essential this bill not be weakened.” Mr. Cunningham said threatening job losses is a familiar tactic for the tobacco industry when confronted with new restrictions or laws. “But after laws were adopted those jobs remained in place.”

Bill C-32 passed the Commons earlier this year and is being studied by the Senate. Quebec Tory MP Maxime Bernier said in a posting on his blog yesterday that Conservatives from his province are going to press for changes to Bill C-32.

“We are going to try to raise this issue with our colleagues in other provinces so that the Senate adopts amendments that would exclude American blended cigarettes from the list of products that would be banned,” Mr. Bernier wrote.

Blended cigarettes manufactured by Rothmans at its Quebec plant include Rooftop, Gitanes, Gauloises and Carreras.

Josée Bellemare, spokeswoman for federal Health Minister Leona Aglukkaq, defended Bill C-32's current scope. She said “American-style” cigarettes represent less than 1 per cent of all sold in Canada, and firms will get time to reformulate them without banned flavourings. “Less than half … actually contain flavourings that would be impacted by the bill.”

Reference: Amend tobacco bill or Quebeckers will lose jobs, U.S. firm warns, Steven Chase, Globe and Mail, 9/24/2009.

Bill C-32 related news briefs: Canadian House of Commons passes bill to prevent production of mini-cigars or cigarillos..; Canada - Bill C-32 to amend Tobacco Products Control Act...