Tobacco Update (6/5/2008) presented by Nik Modi, UBS Tobacco Analyst..

June 6, 2008 - Modi commented on the rough first quarter 2008. Industry volume down 3% to 4%. Richmond, Va.-based Philip Morris USA (PM) was down 1.2% in the quarter, while Winston-Salem, N.C.-based R.J. Reynolds took a hit with a 12% drop. Cigarette manufacturers, according to Modi, are feeling the heat from stockholders and are moving to cut promotional incentives and raise prices. (In Raleigh, NC PM within two months again raised the price on a carton of Marlboro and Basic one dollar and c-store owner off invoice rebate on a carton of Marlboro went $3.50 to $2.90. The monthly check per carton
of Marlboro from $3 to $2, Basic from $2 to $1 and eliminated for Parliament - TW.) Modi said that one of the subcategories supporting tobacco is moist smokeless tobacco (MST), up a healthy 7%. In addition, premium brands showed a 2% growth in volume. (We find in the Raleigh, NC area MST users are moving away from MST premium brands (e.g., Skoal, Copenhagen, Kodiak) to price/value brands especially Conwood's Grizzly.- TW) Modi's comments gave a boost to shares of UST (U.S. snuff players.) whose shares had been down 12% thanks to concerns about competition from PM, and speculators no longer believed PM would buy UST and competition from the deeply discounted brand Bobcat. Modi also commented on the potential impact of FDA regulations and the upcoming Lorillard spinoff. References: Tobacco Tumult a leading a category takes beating in first-quarter 2008 by Angel Abcede, CSP Daily News, 6/6/2008 and Analyst Upgrade Boosts UST by Carl Gutierrez, Forbes.com.

National Day of Sweden (Sveriges nationaldag), June 6, 2008..

June 6, 2008 - Today Swedes will celebrate their national day for the second time since it became a public holiday. Demonstrations of national pride don’t come naturally to Swedes since Sweden has not taken part in any of the wars of the modern era.

Many people believe the use of oral snuff started as a Swedish custom. It may have been a combination of inhaling snuff through the nose and chewing tobacco that led to the use of oral snuff. Swedes first started tucking snuff (known in Sweden as SNUS) under the lip at the end of the 1700s. Swedes imigrate to America. A couple comments from Swedes on snus. (1)Anne of Anne's Foods, Stockholm, Sweden - I'd say flavored snus is actually really traditional, people have been flavoring their tobacco for ages here. It's part of the tradition - and these snus flavors that we were presented with are definitely old and not something new and fancy. In fact, I don't think we have many heavily flavored kinds - some though, mostly marketed towards women. (2)The fact that people in Sweden consume such a vast amount of snus says something about the level of culture in this country. For me the habit is repulsive and I am glad I don’t have to kiss a woman who uses it. It is in par with the consumption of surströmming, i.e. rotten fish. (Goran Hansson - Blog Skaneland)

"Please get tobacco out of our kids faces," Dr. Harley Stanton (elected as President of the Asia-Pacific Assoc. for the Control of Tobacco)..

June 6, 2008 - More Canadian provinces ban tobacco displays in c-stores to protect their children while in the U.S.A. tobacco companies take charge of c-store space with total disregard for the impact on children.. Click on image to enlarge.. As can be seen this very large sign was placed at the entrance to this c-store; note the tag "Pleasure Loves Company." It is well known that the display of cigarette packages functions much like cigarette advertising in the minds of children, increasing their perception that cigarettes are easy to obtain and facilitating their recall of brand names (Wakefield M et al., Health Education Research 2006;21(3):338-347). We have been warned that test marketing of Marlboro and Camel branded smokeless products will have an instant appeal to youth. In the U.S tobacco control people anxiously await the passage of legislation that will allow the U.S Food and Drug Administration (FDA) regulation of the tobacco industry. But we now find this legislation moving through the U.S. congress represents the results of negotiations between the Campaign for Tobacco-Free Kids and Philip Morris (PM). Mike Szymanczyk now the CEO of Altria, Inc. (the parent of PM USA) tells stockholders PM has been directly involved in the process of writing the bill. Let's get rid of all tobacco advertising and put all tobacco products under the counter.
80% of smokers want a ban on tobacco advertising in shops to stop youngsters starting the habit.. (TobaccoWatch.org)

Lorillard May Be Takeover Target After Spinoff..

June 5, 2008 - Lorillard Inc., the cigarette producer being spun off by Loews Corp., may attract takeover bids from Reynolds American Inc. and Imperial Tobacco Group Plc as shrinking U.S. cigarette demand forces manufacturers to combine, according to reports from two analysts. Filippe Goossens (a Credit Suisse analyst) and Erik Bloomquist (an analyst at J.P. Morgan Securities Ltd.) believe Reynolds, the second-largest U.S. tobacco company, may try to buy Lorillard in the next year or two. Another possible bidder is London-based

Imperial, which last year acquired Commonwealth Brands, the fourth-largest U.S. cigarette maker. Buying Lorillard would possibly require Reynolds to sell menthol brands Kool and Salem to satisfy U.S. antitrust regulators, Bloomquist said.

Lorillard, led by Chief Executive Officer Martin Orlowsky, increased Newport's share of U.S. smokers to 9.85 percent in the first quarter, up 0.3 percentage point from a year earlier. (Newport sales are strongest in the eastern part of the U.S.)Menthol cigarettes including Altria Group Inc.'s Marlboro and Reynolds's Kool accounted for 28.4 percent of the U.S. cigarette market, Orlowsky told analysts April 28, 2008. Lorillard shipped 7.65 billion Newport cigarettes in the first quarter, 1 percent less than a year earlier. Total U.S. cigarette shipments dropped faster, falling 3.3 percent, Orlowsky said. Reference: Lorillard May Be Takeover Target After Spinoff., by Chris Burritt, Bloomberg.com, 6/4/2008. More on Menthol and Tobacco Smoking. (TobaccoWatch.org)

Next week, the Loews Corp. will formally spin off its entire interest in Lorillard Inc..

June 4, 2008 - Next week, the Loews Corp. will formally spin off its entire interest in Lorillard Inc., the 3rd largest tobacco company in the U.S. and producer of its largest menthol brand, Newport.. Loews Corp. will formally spin off its entire interest in Lorillard Inc. to the Carolina Group in a tax-free transaction that will make Lorillard a publicly traded company. The new entity will be traded as LO on the New York Stock Exchange as of June 10. UBS tobacco analyst Nik Modi says, "With menthol capturing greater market share in the premium cigarette business–paced by Newport as well as more recent investments by Philip Morris USA and Reynolds American–the spinoff should make Lorillard even more formidable." Modi added that Newport's top share in menthol comes even though it is the least promoted brand among the mainstream cigarette brands and carries the highest price point in the segment. (In Raleigh, NC in the last couple weeks Newport has gone up a $1.00/carton - TM) Lorillard has a Snus product called Triumph Snus, being test marketed in Ohio and Georgia (March 2008). Triumph snus is the result of a partnership between Swedish Match and Lorillard. News briefs related to spinoff: Loews to Spin Off Lorillard, Newport Cigarette Maker.. and Loews Q1 Profit Falls On Lower Revenues From CNA Financial, Lorillard... The Growth of Lorillard's Newport Cigarettes. (TobaccoWatch.org)

Tobacco One, Inc. announced today(6/3/2008) that they have entered into an agreement to purchase a leading U.S. tobacco product manufacturer..

June 3, 2008 - Tobacco One, Inc. announced today(6/3/2008) that they have entered into an agreement to purchase a leading U.S. tobacco product manufacturer.. Under the terms of the agreement the acquisition is for $9.5 million in cash and seller carried financing and the name of the manufacturer is not be disclosed at this time. This manufacturer currently produces several types of tobacco products including cigarettes, cigars and roll your own tobaccos under various brand names within the United States. NO MENTION OF SMOKELESS TOBACCO.. At present, Tobacco One, Inc.,a publicly trade company located in Scottsdale, AZ, markets two tobacco products. Gallardo cigars that come in 12-different flavors and Bravo cigarettes. There is also a cigarette-like product called Bravo on the market containing no nicotine made from the leaves of lettuce.

Wegmans Food Markets and DeCicco Markets Praised..

June 3, 2008 - Anti-Tobacco groups praised Wegmans Food Markets and DeCicco Markets for discontinuing the sale of tobacco products at their stores.

American Lung Association of New York State presented Wegmans with the Lung Champion Award to recognize the Rochester, N.Y.-based grocer’s January 2008 decision to stop the sale of tobacco products at all 70 of its locations. Besides banning the sale of tobacco products, Wegmans now offers a quit-smoking program for its employees.

DeCicco Supermarkets were honored at the sixth annual “No Thanks, Big Tobacco” appreciation event sponsored by the Elmsford, N.Y.-based Tobacco Control Partners of the Lower Hudson Valley.

Other grocers that have recently stopped carrying cigarettes include six New Jersey ShopRites operated by ShopRites of Cherry Hill, Budwey Supermarket stores in upstate New York, and Andronico’s in Albany, Calif., Progressive Grocer reported.

Reference:
Wegmans, DeCicco Markets Ditch Cigarettes, Consumer Affairs.com, 6/2/2008.

R.J. Reynolds Tobacco will reduce size of Camel SNUS coolers..

June 2, 2008 - Basically the container takes up too much prime space in c-stores. Since the product has been a slow seller store owners have been placing the cooler under the counters. Also - other tobacco companies that have a major say on where tobacco advertisements and products are placed complain about the amount of space the cooler occupies. The new cooler is suppose to be small enough to be placed on the shelf next to other tobacco products. The number of pouches in a can of Camel SNUS has been reduced to 16 pouches and the price reduced by about 30-cents. Reynolds' sales people tell others that Camel SNUS is the only authentic Swedish SNUS sold in the U.S. Swedish SNUS is kept in a cooler prior to sale. British American Tobacco (BAT) was manufacturing Camel Snus in Sweden for RJR. Now the same process is being used to manufacture Camel Snus in Winston Salem, North Carolina. (TobaccoWatch.org)

South Carolina - Tobacco Tax Increase Killed - State House Fails to Override Governor's Veto..

June 1, 2008 - The plan to raise the state's lowest-in-the-nation cigarette tax from 7-cent per pack to 57 cents was defeated 54-57 Tuesday (May 27, 2008) when the House fell some 20 votes short of the two-thirds needed to override a veto by Gov. Mark Sanford. The plan would have generated an estimated $159 million but lawmakers can't agree on how the money should be spent. Governor Sanford, "We've been calling for an increase to the cigarette tax for five years, but the question has always been what happens to the money." Advocates for raising the tax stated that the bigger issue: a higher tax means fewer kids, teens and adults smoking and a healthier state. The group's spokeswomen, Kelly Davis, noted if lawmakers cannot agree on how to spend this money then raise the tax and decide later. References: Governor Vetoes Cigarette Tax and Raising the cigarette tax: Anger in debate’s ashes by JOHN O’CONNOR, TheState.com, 5/29/2008. See related news briefs: Tobacco Tax Increase – What’s Wrong with South Carolina?? and In 2008 will the politicians do what's right for the State of South Carolina??. Click on image to enlarge..

Sweden - Umeå ICA suerpermarket - no cigarettes for sale..

June 1, 2008 - Umeå branch of supermarket chain Ica in northern Sweden is clearing its shelves of cigarettes. As of June 1st, Ica in Umeå will be the first grocery store in Sweden to throw out all tobacco products apart from snus, the chewing tobacco popular in Sweden, E24 reports.

Manager Mats Calla felt that the supermarket’s support of local sports and healthy living was at odds with sales of cigarettes. The store was apparently inspired by other countries and the US where many grocery stores have stopped stocking cigarettes.

Stubbing out those cigarettes is sure to make a dent in the store’s economy. Last year, Ica Umeå’s sales of tobacco were 1.5 million kronor ($250,500), but Mats Calla believes many other stores will follow suit in the end.

Instead of cigarettes, Ica in Umeå will offer its customers anti-smoking products to help them kick the habit.

U.S. stores that have removed all tobacco products: Detroit Area Hiller's Markets..; San Francisco, Boston, Wegmans Food Markets and DeCicco Markets..

Reference: No butts or ifs for cigarettes at Ica, The Local, 5/11/2008.

Click on image to enlarge..

Nebraska's Smoke Free Law Goes into Effect June 1, 2009..

June 1, 2008 -  All Nebraska workplaces, including restaurants, bars and gaming facilities, will be smoke-free, thanks to the Legislature and signed into law by Governor Dave Heineman (February 2008). Many cities in Nebraska already have smoking bans. Lincoln and Omaha have their own public indoor smoking ordinances, covering roughly half of the state’s residents. Lincoln’s ban prohibits smoking in all bars and restaurants, while Omaha’s ban has been more controversial because it prohibits smoking only in bars that serve food and do not offer keno. Ron Asher of North Platte, representing the Nebraska Medical Association, said health care costs for smoking-related illnesses in the state have grown to $1.2 billion. Much of it is paid for by the nonsmoking majority of the population, he said. The City of North Platte City Council (May 20, 2008) passed an ordinance prohibiting smoking in all city facilities. No smoking is allowed within 25-feet of any city facility or inside any city park. Those who do and get caught could get fined up to $1,000. References: Heineman signs smoking ban, by NATE JENKINS, The Associated Press, 2/26/2008; Statewide smoking ban considered, Nebraskalegislature.gov; Council votes to ban smoking in public parks by Frank Graham (North Platte Bulletin) - 5/21/2008