Tag Archives: tobacco companies

Tobacco Companies Should be Banned From Advertising at Labour Party Conferences

Philip Morris

After a robacco company bought space at Labour Party conference, Shadow Health Secretary Andy Burnham said that tobacco companies should be banned from advertising at such events. He became angry when he found out that the party has taken money from Philip Morris, the maker of Marlboro cigarettes, which has a stand in the exhibition in Brighton.

Another spot has been sold to the Tobacco Retailers’ Alliance, a group which is against plain packaging. But the policy is supported by the Labour front bench.  Mr Burnham said that he would like the conference to be totally tobacco-free and this is his firm position.  “My request to the party is to make conference tobacco-free.”

Labour has  over and over again accused the Tories who hired the lobbyist Lynton Crosby as a key election adviser and who brought tobacco companies to the heart of Downing Street.  Mr Crosby’s lobbying firm is reported to have worked in favour of Philip Morris. He was brought in shortly before the Government cancelled plans to standardise packets.

He denies any statement about conversations with Prime Minister David Cameron on the subject.  This week Shadow public health minister Diane Abbott revealed the row at a meeting.  “The health team, led by Andy Burnham, did make representations to the party about this and we were not able to get that changed,” she said. “The health team is not happy about that.”

Labour leader Ed Miliband  on the recent conference criticized the influence of the tobacco companies on the Government in his introduction to the annual report of the party’s National Executive Council (NEC). “Britain’s children don’t have corporate lobbyists looking after their interests, like the big tobacco companies do.”

Labour members say that permitting any particular organisation to display at the conference does not reflect the party opinions.  “The Labour Party exhibition includes stands from a wide range of charities, companies and organisations putting forward their points of view,” a spokesman said. “This does not mean the Labour Party supports the view put forward by the exhibitor.”

Big Tobacco Earns €104m in Profits From Sales in Ireland

cigarettes

Earlier the information about how much tobacco companies earn in Ireland was hidden from public but today the value of the Irish market to Big Tobacco has been revealed for the first time.

A new study says that the Big Tobacco in Ireland in 2011 made  €227 on sales and profits of €104m. Moreover, after excise duties they enjoyed profit margins of up to 55% which is 3 times more than achieved food and drink manufacturers.

The study was conducted by Dr Robert Branston of the University of Bath. He said that Ireland is one of the easiest markets in Europe for cigarette companies to get a profit. 79% of the cost of a cigarettes package goes to the state in form of taxes and the rest is profit for manufacturers.

The study showed that leading tobacco maker Japan Tobacco International, which produces Benson & Hedges and Silk Cut, sold €112m worth of tobacco to Irish consumers in 2011.

Imperial Tobacco, the maker of Davidoff and Richmond, made €80m. British American Tobacco which produces famous Lucky Strike cigarettes made about €35m. As to new competitors, these days it is hard for them to enter the Irish market due to severe control on tobacco ads.

Dr Branston said that while Ireland earned €1.42bn in taxes on tobacco during 2011, this amount dropped by €2bn cost of caring for smoking-related diseases.

Tobacco companies can continue to modify premium prices and make big profits because their products are very cheap to make and competition in such a highly regulated market is very limited. What makes tobacco companies to fight tobacco control measures is great profitability.

The study was commissioned by the Irish Heart Foundation and the Irish Cancer Society. They say that the Department of Health is allowing these big profit margins through ineffective tax policies. They require tobacco taxes to be increased.

Retailers selling cigarettes cheap to meet plain packaging rules

Plain Cigarette Packs

Cigarettes have been available for less than $5 per pack as sellers get rid of branded stock that got unlawful from December 1.

Starting with December 1, sellers had to put aside any branded cigarettes and return it to cigarette makers so it could be eliminated.

All tobacco products must now be marketed in plain packaging with health warning labels covering 75% of the pack.

Rather than hand over their unsold cigarettes, some retailers are almost giving freely.

A News Limited review of 100 shops across Australia identified widespread discounts.

One in six shops surveyed were marketing 20s for as little as $10. A shop in Adelaide was offering branded cigarette packs for just $5.

Plain-packaged cigarettes were also being greatly reduced.

Action on Smoking and Health chief Anne Jones said the tobacco companies had endangered to flood the market with low-cost cigarettes after plain packaging was released and this could be the cause plain-packaged cigarettes were being marketed inexpensively.

But cigarette firms rejected they were employed in discounting.

Imperial Tobacco Australia reports up to 540 million cigarette sticks covered in now {unlawful branded packaging will have to be eliminated due to the new regulations.

From December 1, people selling tobacco in branded packaging confront fines of $1320 to $220,000 according to the new plain-packaging program.

A corporation can get penalties of $6600 to $1.1 million.

Nevertheless, Health Minister Tanya Plibersek said her main goal is big cigarette makers, and those supervising the new regulations are not likely to go in hard against mum-and-dad shopkeepers in the first instance.

“If we had a large chain intentionally breaking the regulations selling branded tobacco imported, then we would go for a maximum fine,” she said.

Scores of sellers spoken to by News Limited said sales had slipped since plain-packaged cigarettes first started to reach stores more than two months ago.

More than a quarter of shops surveyed described drops, some by up to 25%.

Cancer Council Australia chief Professor Ian Olver said that the proposed purpose of the plain packs to discourage new smokers may surpass expectations and also help current smokers to stop smoking.

Federal Government is dealing with a challenge to the laws under World Trade Organisation rules.

5 Dividend Kings in the Tobacco Industry

Tobacco Firms Logos

This article represents tobacco companies that have high dividend yields, strong balance sheet reports and enough free cash flow to support their dividend payout ratios.

Philip Morris International, Inc (PM) is an attractive perspective having an exciting dividend yield of 3.5 per cent. The tobacco company possesses continuous growth in reference to high unit sales and net income.

Tobacco Firms Logos

Logos of major tobacco companies

Particularly in the recent past, Lorillard Inc. (LO)’s stock has performed well and has exceeded the market and opponents alike. The cigarette maker has attractive dividend yield of 4.9 per cent. The company’s high payout ratio and corresponding free cash flows make it a dividend stock with a stated value.

As well, in spite of Reynolds American Inc.‘s (RAI) earnings being downward adjustment, the tobacco firm remains an attractive input as it has dividend yield of 5.5 per cent. Reynolds provides a good record of returning money to its shareholders by means of dividends.

Altria Group (MO) and British American Tobacco (BTI) are the two stocks offering a strong cash flow situation. Altria Group offers dividend yields of 4.9% and British American Tobacco – of 5.8%.

China National Tobacco Co. is the biggest tobacco company in the world in the terms of volume.

Now five dominated tobacco companies in the market are: Altria, British American Tobacco, Imperial Tobacco, Japan Tobacco and Philip Morris International.

Since strict restrictions were enacted regarding tobacco manufacturers, the Tobacco Industry in the U.S. experienced negative consequences. Along with regulations, tobacco industry suffered from law suits. They will continue to create problems to financial situation of the Tobacco Industry.

The three major cigarette makers in the Tobacco Industry in the U.S. are Philip Morris, Reynolds American Inc. and Lorillard.

Key Industry Drivers:

Prices: Raised prices for tobacco products decline consumption among adult people, negatively affecting the industry.

Marketing: monetary assets invested in marketing by cigarette manufacturers are key for their profitability. These assets go to licensed tobacco retailers so they can sell their products in the most visible locations. The chart demonstrates the amount of assets invested by cigarette manufacturers in marketing their products, an amount that is higher than the marketing expenses for junk food and alcohol combined.

Risks: The Tobacco Industry is heavily imposed by taxes and various extra taxes have been suggested for the industry, but have yet to be established. However, despite taxation that can damage the company’s profitability, the company has performed well.

Tobacco giants reap monster profits

Cigarettes Pile

The biggest of the three, Philip Morris (Australia) increased its profits last calendar year to $376.7 million, up more than $65 million on the previous year.

Its revenue was more than $908 million. It spent just $51.4 million on raw materials.

Cigarettes Pile

A pile of cigarettes

Imperial Tobacco Australia made $34.2 million, up more than $5 million in the year to the end of September.

Both results outpaced the performance of the Australian share market, which fell 15.2 per cent for the year.

British American Tobacco Australia does not separately disclose its profit figures, but said profit was up in Australia “as a result of cost-saving initiatives, favourable exchange movements and higher pricing, partially offset by additional costs associated with the campaign against plain packaging”.

All three tobacco companies are party to the plain-packaging case, which is seeking to block the Government’s plans to force cigarette makers to uniformly encase their  products in drab  olive green packaging.

The case started in the High Court last week.

The industry is arguing, among other things, that plain packaging will lead to more people smoking, a loss of government excise, and more profits for organised crime.

“There are so many serious consequences involved with plain packaging … the tobacco black market will be flooded with counterfeit cigarettes as they’ll be easier to copy and smuggle into the country,” BAT spokesman Scott McIntyre says in a press release.

The companies are arguing the case on constitutional grounds, saying the Government is infringing their intellectual property rights – basically taking over their brands.

The Government argues it is not acquiring the brands, just restricting their use “in a manner appropriate and adapted to reducing harm to … the public”.

Cancer Council Australia chief Ian Olver says the industry’s estimates of the potential size of the illicit tobacco trade and the government projections were poles apart.

“They’re claiming absolutely ridiculous levels of illicit trade based on a report that they provided all the information for,” he said.

Lorillard + Blu = Good for Business?

Blu Ecigs Set

Last week, along with its 2012 first quarter results, Lorillard made the announcement that it would be the first of the big three tobacco manufacturers to enter the e-cigarette game with by purchasing Charlotte, N.C-based blu ecigs.

It’s notable that this move marks not only Lorillard‘s first venture into the world of e-cigarettes–but its first venture into any form of alternative tobacco.

Blu Ecigs Set

E-cigarette company Blu Ecigs

In an earnings conference call, Lorillard chairman, president and CEO Murray Kessler acknowledged that after so many of Lorillard’s competitors had already entered the smokeless and snus game, the Newport name probably couldn’t offer anything new.

The same is not true of e-cigarettes, which Kessler said will allow his company to enter the smokeless market “the Lorillard way.”

Jason Healy, president and co-founder of blu ecigs, said that he sees the acquisition as a positive not only for his company, but for the entire industry. “This is a very exciting time for us and an extremely positive step forward for the electronic cigarette industry, which by nature and age has been lacking a lot of the resources necessary to truly take this product to the next level,” he told Tobacco E-News/CSP Daily News.

While access to Lorillard’s resources will undoubtedly help blu, it’s easy to understand why other e-cigarette manufacturers could be nervous about the move. With the current industry being so fragmented, is this the first step towards a monopoly by the big three tobacco companies? What are the implications for other companies? Will they soon be made obsolete, swallowed up or put out of business by the involvement of larger tobacco companies?

Despite these concerns, the response from other e-cigarette companies–large and small–has been positive.

Sherry Cassaw, managing partner of the Kennesaw, Ga.-based Intellicig USA, said, “It was simply a matter of time before one of the tobacco companies made the move to include e-cigarettes to their product line.”

She added, “It makes sense that tobacco-free products have a future, just like snus and other alternative products have in this market. This merger shows the tobacco companies are recognizing the future of e-cigarettes and do not want to lose out on the e-cig business.”

As for what the news means for her company, Cassaw is confident Intellicig’s products will speak for themselves. “Intellicig is so different from the competition that we welcome the attention the merger will bring to electronic cigarettes,” Cassaw said.

Indeed, many e-cigarette manufacturers at last week’s NATO Show shared Cassaw’s view. Representatives from Northbrook, Ill.-based Fin, Livingston, N.J.-based Logic ecig and Scottsdale, Ariz.-based NJOY all expressed certainty that the boosted competition will simply help weed out inferior products, making the e-cigarette category stronger as a whole.

For their part, blu ecigs executives are excited to have Lorillard on board to help them elevate the image and reputation of the industry.

“I have always said that electronic cigarettes have a tremendous responsibility, and this step will allow us to ensure that we continue to live up to and exceed that responsibility,” Healy said.

Tobacco companies will battle branding ban through courts

Plain Marlboro Pack

Alison Cooper, chief executive of the FTSE 100 tobacco giant, which owns labels such as Davidoff, said the industry in the UK would “absolutely” challenge through the courts efforts by the Government to introduce plain packaging for cigarettes and other products.

Health Secretary, Andrew Lansley, last month published a consultation on plans to strip cigarette packets of their colourful logos and branding, which tobacco companies argue will do little to curb smoking and make it easier for criminals to gain a bigger slice of the market.

Plain Marlboro Pack

Plain Marlboro cigarettes pack

Tobacco companies mounted a legal challenge against similar plans in Australia, the result of which is expected within the next few months.

When asked if the industry would do the same in the UK, Ms Cooper said: “It’s absolutely something we would challenge but I’m really hoping we don’t get to that.”

Vince Cable is under mounting pressure to intervene in the bitter face-off between the tobacco industry and the Department of Health. Cigarette companies are pressing the Business Secretary to take charge of the consultation on plain packaging amid claims Mr Lansley has demonstrated a lack of “objectivity”.

Ms Cooper has written to Mr Cable and the Prime Minister expressing concern about Mr Lansley’s stance after he said last month the Government wants tobacco companies to have “no business” in the UK. Imperial Tobacco and other manufacturers such as Silk Cut-owner JTI want Cable’s Department for Business, Innovation and Skills (BIS) to step in to ensure that issues such as the potential impact on jobs will not be lost amid the health debate.

It is estimated that 70,000 Britons are directly or indirectly employed by the tobacco industry and it contributes between £10.5bn and £12.5bn per annum to the Treasury’s coffers.

The industry calculates one in four cigarettes smoked in the UK is bought from smugglers or counterfeiters – a figure that is expected to rise if the industry is regulated more tightly.

Tobacco Industry Coming with Attractive Cigarette Packages

Black Cigarette Pack

While governments of several countries are thinking of imposing bans on attractive cigarette packages to reduce the mortality rates associated with smoking, tobacco companies are out with much more attractive packages to entice young people.

It has been discovered that the companies are going to bring out the new packages soon, which would be similar to perfume bottle or will be assisted with lids that will flip open like a lighter.

Black Cigarette Pack

Black&white cigarette pack

Although, it has been discovered from the past reports that the companies’ strategies to lure young people has reduced significantly since the past few years. It is being expected that the new cigarette packages will be far more attractive than the previous ones and will attract more of the new generation people to smoking.

Latest reports put forth by the Department of Health, Cancer Research UK stated that the tactics that the tobacco industry has deployed for the marketing of the products are much more discouraging.

The findings of the report suggest that due to the attractive packages, as young as six year old children fall into the habit of smoking. The Director of tobacco control for the charity, Jean King asserted that the children in the age group ranging between six and 11 are easily attracted towards the luring packages.

He emphasized that the children without acknowledging the side-effects of the product in the due course of life, just fall into the habit.

He affirmed that the industry has changed the designs rapidly, after the ban of print and billboard advertising of tobacco 10 years ago. Since then, they have set out different packages which attract different age groups and sex, like they introduced the long, slender cigarettes contained in pastel colored packs, indicating femininity, style and sophistication, which besieged young women.

Rather, an official of the industry exaggerated that when they have no other strategy to promote smoking; they choose to introduce attractive packages for marketing.

Branding ban likely for tobacco products

Marlboro Display

The Government will likely follow the lead of Australia and ban all branding from tobacco products.

Cabinet has agreed in principle to the introduction of plain packaging for the products.

Marlboro Display

Marlboro cigarettes pack

Associate Minister of Health and Maori Party co-leader Tariana Turia says it is still subject to the outcome of public consultation but is confident the regime will be implemented.

She says it will be significant for the Government to achieve its goal of making New Zealand smokefree by 2025.

“Smoking is the single biggest cause of preventable death and disease in New Zealand, and we must be prepared to take bold steps towards achieving our goal.

Mrs Turia says there are strong arguments for following Australia in stopping tobacco companies from using the design and appearance of their packaging to promote their products.

“I am confident that we can bring in a plain packaging regime that will meet all our international commitments, including a major global treaty on tobacco control as well as a range of multilateral, regional and bilateral trade and investment agreements,” she says.

The plan is in the process of being rolled out in Australia but a number of tobacco giants are taking their Government to court over the matter.

Graphic warnings on cigarettes to be argued in April

Graphic Cigarette Warning

WASHINGTON (Legal Newsline) – Appeals in the tobacco industry’s challenge of new graphic warning labels being imposed by the federal government are scheduled for next month.

On Monday, the U.S. Court of Appeals for the District of Columbia Circuit scheduled oral arguments for April 10 in the federal government’s appeal of two lower court rulings in favor of R.J. Reynolds Tobacco and four other companies.

Graphic Cigarette Warning

One of nine graphic images proposed by FDA: A man wearing a T-shirt with a "no smoking" symbol and the words "I QUIT."

In a motion on March 9, the tobacco companies asked for an “expedited but orderly” briefing schedule. The court complied, and briefing will be completed by Friday.

Should the three-judge panel from the D.C. Circuit affirm the rulings of U.S. District Judge Richard Leon, it will be in conflict with a recent decision by the Sixth Circuit.

The appeals concern Leon’s granting of a preliminary injunction against the warning labels, which include diseased lungs and a cadaver with chest staples, and summary judgment in favor of the tobacco companies.

“(A)lthough the government contends that it has a compelling interest — ‘conveying to consumers generally and adolescents in particular, the devastating consequences of smoking and nicotine addiction,’ — its ‘stated purpose does not seem to comport with the thrust of its arguments, or with the evidence it offers to support the rule,'” Leon wrote.

“To the contrary, it is clear that the government’s actual purpose is not to inform or educate, but rather to advocate a change in behavior — specifically to encourage smoking cessation and to discourage potential new smokers from starting.”

The Family Smoking Prevention and Tobacco Control Act of 2009 gave the federal Food and Drug Administration the authority to regulate the manufacture and sale of tobacco products. After new warning statements were implemented, the FDA proposed nine graphic images.

In addition to the two previously mentioned, images that were included were:

-A man exhaling cigarette smoke through a tracheotomy hole in his throat;

-Cigarette smoke enveloping an infant being kissed by its mother;

-A mouth filled with cancerous lesions;

-A man breathing into an oxygen mask;

-A crying woman;

-A man wearing a T-shirt with a “no smoking” symbol and the words “I QUIT.”

The images were supposed to take up 50 percent of the front and back portions of cigarette packaging. They also needed to be held to a higher First Amendment standard, Leon wrote.

Leon also wrote that the images were misleading.

“(T)he graphic images are neither factual nor accurate,” Leon wrote. “For example, the image of the body on an autopsy table suggests that smoking leads to autopsies; but the government provides no support to show that autopsies are a common consequence of smoking.

“Indeed, it makes no attempt to do so. Instead, it contends that the image symbolizes that ‘smoking kills 443,000 Americans each year.’ The image, however, does not provide that factual information.”

Among the groups supporting the warning labels were 22 state attorneys general who joined in a brief that claimed Leon had failed to recognize the public health threat posed by smoking when he granted the preliminary injunction.

The states that joined the brief are Alaska, Arizona, Arkansas, California, Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, Mississippi, Montana, New Hampshire, New Mexico, Ohio, Rhode Island, South Dakota, Utah, Vermont, Washington and West Virginia.

Judge Eric Clay wrote the Sixth Circuit’s opinion in the related case, which was decided last week.

“We return to where we began — the lack of consumer awareness of tobacco’s serious health risks resulting from the decades-long deception by tobacco companies,” Judge Eric L. Clay wrote for the Sixth Circuit. “Ample evidence establishes that current warnings do not effectively inform consumers of the health risks of tobacco use and that consumers do not understand these risks.

“It is beyond cavil that adolescents are a target of the marketing expertise of tobacco companies, a targeting that exists precisely because of intertwined advantages — or for the young, disadvantages — the coupling of immaturity of risk perception with the evidence that the vast majority of regular smokers made the decision to begin smoking as an adolescent.”

Clay continued, “It bears emphasizing that the risks here include the undisputed fact that plaintiffs’ products literally kill users and, often, members of the families of users: Tobacco products kill up to one-half of the people who use them as they are intended to be used.

“Against this backdrop, the Act requires graphic and textual warnings that convey the factual health risks of smoking to provide consumers with truthful information as they make decisions about purchasing and using tobacco products.”

The judges who will decide the D.C. case are Judith Ann Wilson Rogers, Janice Rogers Brown and senior status judge A. Raymond Randolph.

Rogers was appointed by President Bill Clinton in 1994, Brown by President George W. Bush in 2005 and Randolph by President George H.W. Bush in 1990.