More evidence - tobacco displays increase the risk of teens smoking..

July 4, 2008 - New research from New Zealand confirms international evidence that tobacco displays encourage children to start smoking.

Dr Janine Paynter, told the Public Health Association conference that the Action on Smoking and Health survey of 14 and 15 year olds found a clear link between the number of times children visited dairies, supermarket or service stations and the likelihood they are susceptible to smoking or had experimented with smoking.

It was recommended that tobacco displays be removed from retail outlets. Dr. Paynter: "It is not going to stop all teens smoking but we believe it will stop a proportion of them doing so. Anything that can be done to protect children from an addictive and deadly habit like smoking is worthwhile. It is important that teens get the message that tobacco products are not everyday, normal products like the bread and milk alongside which they are sold."

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, 3/11/2008).

Reference: Tobacco displays increase risk of teens smoking,Press Release: Public Health Association, Scoop - Independent News, 7/3/2008.

In neighboring Australia, the State of New South Wales has recently approved a series of tobacco control measures; one of these is the elimination of tobacco displays.

Click on image to enlarge..

Thailand - cigarette and liquor prices are expected to rise once new measures for calculating excise taxes take effect..

August 6, 2008 - The cabinet yesterday approved draft amendments of four acts -- the Liquor Act, Excise Tax Act, Excise Tariff Act and Tobacco Act -- under which ex-factory prices would be clarified to make it easier for calculating taxes.Taxes on tobacco, currently levied at 80 percent, would be raised to 90 percent if the new legislation takes effect.

As we know, tobacco taxes are probably the single most cost-effective intervention for adult health in the world. A tripling of the excise tax would roughly double the price of cigarettes (as has happened in New York City), preventing about three million deaths per year by 2030. (Tobacco tax can prevent certain death (A global killer is ripping through the world's poorer countries largely unchecked), Professor Prabhat Jha, Bangkok's Independent Newspaper 1/2/2008.

Thailand has adopted the toughest tobacco controls of any developing country. Among its main initiatives were mandatory pack warnings detailing the negative impact that smoking has on health, a ban on the advertising of cigarettes brands at point-of-sale locations, an increase in excise tax on tobacco products and the
banning of smoking in more public places. All of this have contributed to the downward trend in cigarettes consumption in Thailand.

Reference: 'Sin Taxes' Could Rise: Liquor and Tobacco Valuations Reviewed by Chatrudee Theparat & Woranuj Maneerungsee, Bangkok Post, 8/6/2008.

Thailand has ratified the
WHO Framework Convention on Tobacco Control (FCTC) Treaty.


Altria being financially disciplined in test marketing their smokeless products..

August 6, 2008 - On June 12, 2008 we reported that Altria was falling short on growth because of slowness in developing smokeless tobacco products.

From Todd Sullivan's Value Plays, Altria Earnings Q2 2008 call notes.

Altria Q2 2008 earning calls there was only one question on Altria's entry into the area of smokeless and cigar usage.

Here is the sole exchange on it:
David Adelman - Morgan Stanley
"Okay and then secondly Dave I am curious about your reactions to the observation particularly given some increased pace of movement within tobacco but outside the cigarette category that you are not moving more aggressively with respect to moist smokeless tobacco and particular and perhaps Snus the, the test market I think in Atlanta of moist smokeless started last October, its almost the year ago its really has an expanded materially and I just wonder the outside perception is there is a lack of urgency on those types of efforts because you are not moving. It would appear with great speed. So I am just curious about your reaction that observation."

David R. Beran - Executive Vice President and Chief Financial Officer
"Yes, and out of it not characterize it as a lack of urgency, I would characterize it as and we want to make sure that we do this in a financially disciplined way, and when I say financially disciplined that we go out. We have tested all elements of the overall value equation behind both snus and with snuff and we got it completely right, then we won't incorporate that into our plans. And right now, both of those initiatives are investment spent for us and our goal is to take it from investment spend to being, making a profit. But right we are in... these test markets are what I call burning laboratories and make sure we get it right."
Related news brief:Even with poor SNUS sales in the U.S. and Canada - these guys aren't going away...

EU plans 'fire-safe' cigarettes..

August 6, 2008 - The EU Commission said Tuesday, August 5, 2008 that all cigarettes sold throughout the European Union will be self-extinguishing "fire-safe" brands (reduced ignition propensity (RIP) cigarettes) by 2011. Last year the 27 member states approved a commission proposal which would require the tobacco industry to use fire-retardant paper in all cigarettes to cut down on the number of sometimes fatal fires caused by dropped cigarettes each year. (EU to insist on fire-safe cigarettes..)

It is thought that by 2011 at the latest these cigarettes will be on the market, and that this will not really lead to price increases of cigarettes. Liggett Group, a U.S. cigarette producer voluntarily will convert all of its domestic cigarette production standards to meet all state fire safety standards by January 2009.

Such cigarettes, which go out in a minute if they are not puffed, are already on sale in Canada and parts of the United States. Starting in January 2009 Australia may require all cigarettes manufactured and sold throughout Australia to be self-extinguishing..

Data from 14 EU member states (along with Iceland and Norway) show that cigarette-related fires account for some 11,000 blazes every year, with 520 deaths and 1,600 injuries. The elderly are disproportionately affected. U.S. research shows that cigarettes are the leading cause of home fire fatalities every year, according to the European Commission. Dropped cigarettes are also a major cause of forest fires.

Reference: EU plans 'fire-safe' cigarettes,BBC, 8/6/2008;
EU to force smokers to use `fire-safe' cigarettes
,, 5/28/2007.

Liggett's Grand Prix Snus will be introduced this month.

August 5, 2008 - Grand Prix snus is being introduced this month by the Liggett Group, a subsidiary of the Vector Group Ltd. The premium quality pouched tobacco will be offered in Original, Spearmint and Wintergreen flavors to select retailers in Portland, Ore.; Kansas City, Mo; Indianapolis; Dallas/Fort Worth, Texas; Raleigh, N.C.; Orlando, Fla.; and Columbus, Ohio.

Related news brief: Grand Prix SNUS - Why Take the Risk on SNUS?? - A Product Consumers Find Unacceptable..

Reference: Grand Prix Snus, Convenience Store News, 8/5/2008.


Even with poor SNUS sales in the U.S. and Canada - these guys aren't going away

July 30, 2008 - In general the test marketing of SNUS products in both United States and Canada have been poor. For example, UST Executives are very disappointed in the sales of the entire SNUS segment. The entire segment itself has gained very little traction, and they had plans to be more aggressive. From their perspective, the category still has not gained significant traction and are disappointed in the consumer response to it. What they are seeing in market for all of the players is, versus some reasonable velocities in the early days when they were very heavily promoted, sequentially the volume has really not held up and has declined overtime. Mr. Kessler, the UST CEO, has stated that nine of ten smokers who try smokeless tobacco reject the product. They wonder whether the American consumer is really interested in this form of tobacco or not. More from UST management.

UST announced that they have renamed Skoal Dry to Skoal Snus. Susan M. Ivey - Chairman, President and Chief Executive Officer of Reynolds American, Inc. believes this is a positive step that the SNUS category is now more uniformly named across all of the brands that are out there. She claims that SNUS has been established as the spitless (or spitfree) category.(Reynolds American, Inc Q2 2008 Earnings Call, Seeking Alpha, 7/30/2008.)

Sales of Camel SNUS has been poor at best. They have tried so many promotions but we bet they have had to give away more cans than they have sold. We just could not believe how they could expand their major metropolitan markets across the country, test marketing to additional urban areas.

Altria - Philip Morris USA (PM) - their original entry Taboka failed and has been removed and Marlboro SNUS hasn't done much better. As we know, PM considers Marlboro more than a cigarette - a brand that stands for superior tobacco flavor. It was felt just using the Marlboro name would create value in new businesses such as SNUS and the Moist Smokeless Tobacco entry. (Altria Group, Inc., Investor Presentation, New York, March 11, 2008) But market tests find that even the name Marlboro doesn't seem to sell the Marlboro smokeless products. 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..; Philip Morris USA (PM) continues to stumble in the smokeless tobacco arena...

We questioned why back in February 2008 with the poor performance of snus market why the Liggett Group would want to introduce another product - Grand Prix Snus.

These guys aren't going away. David Beran, Executive Vice President and Chief Financial Officer said Philip Morris USA believes it can offset declining cigarette consumption by moving more aggresively into the smokeless tobacco and spitfree smokeless-tobacco pouches called SNUS. Without PMI - Altria's Net Income Drops 58%..

R.J. Reynolds along with the others see considerable potential for this smoke-free product, and these companies continue to refine its efforts to create awareness and educate adult tobacco consumers about this new category.

Many more news briefs within the library that support these conclusions.

Morocco bans tobacco smoking in public places..

August 4, 2008 - Rabat, Morocco - Morocco's House of Representatives, the kingdom's lower House, Wednesday, July 23, 2008, passed a bill banning smoking in public places, tobacco advertising and selling to minors, a statement by the legislative institution said Thursday.

The bill, passed unanimously, is aimed at reinforcing the legal measures to prevent tobacco smoking, filling the legal gap that the absence of sanctions represented, limiting the bad effects of tobacco smoking and generating additional financial resources.

According to the statement, the measure is also aimed at protecting citizens' health, particularly that of youths and minors, and intends to expand the ban of tobacco smoking in all enclosed public places, including public buildings and means of public transport.

The new law allows the police to draw up reports on any breach, the statement said.

Morocco bans tobacco smoking in public places
, Afrique en ligne (African News), 7/24/2008.

As of June 3, 2008 Morocco had signed the FCTC public health treaty but it had not yet been ratified.


Imperial Tobacco acquires rest of Swedish Tobacco Company Skruf Snus AB..

August 4, 2008 - Imperial Tobacco Group, the world’s fourth largest tobacco company, said last week that it purchased the remaining 57 per cent of Swedish snuff maker Skruf in June for a “non-material” price.

Skruf Snus AB on September 20, 2005 entered into a strategic alliance with Imperial Tobacco Group Plc. As part of the alliance Imperial Tobacco had acquired a 43.5% stake in Skruf Snus. At this time, the companies signed a distribution agreement under which Skruf Snus would distribute certain Imperial Tobacco products on the Swedish market.

The most popular Skruf snus is the Skruf strong snus (Skruf stark in Swedish), it was
launched in 2005. Skruf stark is produced with a higher number of tobacco leafs and therefore has about 35% more nicotine than regular snus.
More on Skruf snus products.

Related news brief: Imperial Tobacco Gets Approval to Sell Brands in U.S..

More New South Wales - Sweeping Anti-Tobacco Measures..

August 4, 2008 - Do you recognize the adult in the image - it's the Honorable Morris Iemma, the Premier of the State of New South Wales, Australia. The premier along with his cabinet refused to give in to the pressure applied by big tobacco and did what is best to protect the health of their constituents.

Tobacco industry is now under threat as the New South Wales smoking restrictions become law. As we know, tobacco advertising and marketing contribute significantly to the use of tobacco products by children and adults. 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, 3/11/2008). No longer coffin nails peddlers will be able to connect with kids and the majority of adult smokers that want to quit.

Premier MORRIS IEMMA: We're announcing the toughest and most sweeping reforms to tobacco laws in the nation and it's all about protecting the health of our children and our grandchildren. (Public health expert Professor Simon Chapman tells the ABC's Philippa McDonald tough new NSW laws are the biggest anti-smoking step in Australia since 1976.)

Professor Mike Daube, president of the Australian Council on Smoking and Health, has indicated it's time that we move to plain packaging of cigarettes. This would be good.. André Calantzopoulos, the Chief Operating Officer of Philip Morris International (PMI), has stated that PMI is strongly opposed to generic packaging. (London, Tobacco Conference, 6/27/2008) More Professor Daube: New South Wales is going to be one of the leading states around the world in eliminating the dangers of tobacco but what has to be done first is to have these anti-tobacco measures accepted throughout the nation.

Australia has one of the lowest levels of smoking anywhere in the world, with only 18 per cent of men and 16 per cent of women regular smokers, down from 40 per cent of men and 32 per cent of women in 1983.

Reference: Tobacco industry under threat over NSW smoking sale laws by Jayne Margetts, PM - 7/30/2008 and New_South_Wales_bans_cigarette_displays,, 7/30/2008.

Directly related news brief: New South Wales - tough new anti-tobacco laws approved.. and New South Wales - Big Tobacco Influencing Cabinet's Decision... For more on Australia and anti-tobacco measures do a random search.

Smokeless tobacco is banned in Australia. First to act were a number of states; then a ban was placed on the products federally in 1991. Read more...

Lorillard Q2 2008 Results..

August 4, 2008 - Q2 2008 was the first quarter for Lorillard, Inc. as an independent public company after its separation from Loews Corporation in June 10, 2008. Loews Corp posted a second-quarter profit of $4.96 billion on Monday, reflecting the split-off of its Lorillard Inc tobacco unit.

Total Lorillard wholesale shipment volume for the second quarter of 2008 of 9.667 billion units was down 0.2 of a percent compared with the second quarter of 2007. Domestic wholesale shipments were down 0.1 of a percent for the same period. Newport's domestic wholesale shipments declined 1.5% in the second quarter of 2008 compared to the second quarter of 2007, largely as the result of a substantial quantity of promotional units shipped in the second quarter of 2007 with no corresponding activity in the second quarter of 2008. According to Lorillard's proprietary retail shipment database, Newport continued to increase its retail market share during the second quarter of 2008 by .43 share points over the second quarter of 2007. See table below: Lorillard - Selected Domestic Retail Market Share Data..

Newport, gives Lorillard 94% of its revenue, 92% of its volumes, 34% share of all menthol cigarette sales in the US, as well as an overall domestic tobacco market share of 10%.
The only other cigarette in Lorillard's stable that shows growth is the price/value (discount) brand Maverick.

Lorillard, Inc. Reports Second Quarter 2008 Results
, PR Newswire, 28/2008.

Marin County, North of San Francisco, May Ban Tobacco Sales At Pharmacies..

August 3, 2008 - SAN RAFAEL (AP) ― Marin County (located in the North San Francisco Bay Area, across the Golden Gate Bridge) health officials are working on a plan to ban the sale of tobacco products at pharmacies. Officials say the Marin County ordinance would be similar to a ban approved in San Francisco this past week. Larry Meredith, who directs Marin's health department, says the proposal is aimed at improving the health of county residents. The plan could be brought before the Board of Supervisors this fall.

On July 30. 2008, San Francisco became the first U.S. city to ban the sale of tobacco products in drug stores, which could be fined up to $1,000 for each violation. The ban doesn't apply to supermarkets or convenience stores.

The San Francisco citywide ban was modeled on rules enacted in eight Canadian provinces. The Province of Ontario banned the sale of tobacco products in pharmacies in 1994. Since then, seven Canadian provinces and territories have legislated an end to the sale of tobacco products in pharmacies. Pharmacy sales of tobacco products are also banned in the United Kingdom, France and Italy. There is no evidence of adverse economic impact on pharmacies.

Reference: Marin County May Ban Tobacco Sales At Pharmacies", - Associated Press, 8/2/2008 and San Francisco Bans Cigarette Sales in Pharmacies by Carol Southard,, 8/1/2008.