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Imperial Tobacco Group Commented Plain Packaging in the UK

Imperial Tobacco

Imperial Tobacco Group Ltd. has agreed to spend $7.1 billion to buy all of Lorillard Inc.’s operations outside its Newport brand in a three-way deal involving Reynolds, the manufacturer of cheapest Camel Blue cigarettes.

Imperial offered comments to BAT on the plain packaging proposal, saying “it is regrettable that this issue has been caught up in knee-jerk electioneering at the expense of evidence-based policy making.”

“We have a fundamental right to differentiate our brands from those of competitors. Legal action is always a last resort, but when legislation is published, we will be considering our options.”

Wells Fargo Securities analyst Bonnie Herzog said plain packaging in Australia “hasn’t dramatically changed underlying consumption trends, but illicit trade has increased and value has been destroyed in that market as consumer down-trading to non-premium brands has accelerated.”

“Although this news is a disappointing development for the global tobacco industry, we think this is a manageable risk for the industry and will remain relatively contained.”

John Sweeney, a marketing professor at UNC Chapel Hill, said a GOP-controlled Congress, along with the majority of GOP-controlled state legislatures, will mean “little legislation restricting the freedom of established controversial products, from guns to tobacco.”

Dr. Gilbert Ross, medical and executive director of the pro-business American Council on Science and Health, said plain packaging likely would induce a higher level of illicit trade in the United States.

“One thing I can predict with some confidence: plain packaging will enhance counterfeiters’ and smugglers’ ability to sell their cigarettes tax-free and free of age requirements,” Ross said.

“I therefore posit that the net of plain packaging may turn out to be a detriment to public health, whether overseas or back in the USA.”

 
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Posted by on January 27, 2015 in Tobacco News

 

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Impact of the Plain Packaging Reforms on Tobacco Use

The November 2013 study Mr Argent referred to was conducted by London Economics, a UK economic and policy consultancy firm, and commissioned by Philip Morris International, which sells branded cigarettes in 180 markets. London Economics surveyed Australian adults three times: between July and October 2012, before the new regulations began; in March 2013, three months after their full implementation; and in July 2013. The November report was “an interim assessment” of the firm’s analysis of the impact of plain packaging on smoking prevalence.

The study did not directly address the impact of plain packaging on potential new smokers, despite this being the government’s stated policy priority. It found that the largest group of tobacco consumers, those who smoke daily, fell from 20.4 per cent of the adult population before plain packs became mandatory to 19.5 per cent three months afterwards. The number of daily smokers then rose to 20 per cent in July 2013. Respondents who said they were weekly but not daily smokers initially fell, then returned to the pre-implementation level of 2.1 per cent. “Less than weekly” smoking fell from 2.3 per cent to 1.9 per cent and then rose to 2.2 per cent.

The study also found the number of people who claimed never to have smoked increased from 45.6 per cent in the second half of 2012 to 46.6 per cent in July 2013. Those numbers represent a reduction of 0.4 per cent in the number of Australian adults smoking daily and a 1 per cent increase in the number of adults who had never smoked (suggesting more of those turning 18 do not smoke). The report’s authors said that “from a statistical perspective, none of these changes were different from zero”.

They conclude that “over the timeframe of the analysis, the data does not demonstrate that there has been a change in smoking prevalence following the introduction of plain packaging and larger health warnings…” The second report Mr Argent referred to was a study of the sale of illicit tobacco in Australia. It was conducted by accounting firm KPMG and commissioned by Imperial Tobacco, British American Tobacco and Philip Morris.

The report estimated that the overall level of tobacco consumption in Australia was 17.4 million kilograms in the year to June 2013, the same level as the year before. It said consumption of legal products fell from 15.3 million kilograms to 15.1, while consumption of illicit products increased correspondingly. The KPMG report did not evaluate the impact of the plain packaging reforms on consumption.

Imperial Tobacco, which produces cheap Davidoff cigarettes, recently argued against the introduction of plain packaging in Britain, stating “following the introduction of standardised packaging in Australia, smoking prevalence has not been affected”.

It cited the KPMG report’s finding that overall consumption had remained stable. However, Imperial Tobacco’s submission, dated January 10, urged the UK government to postpone deciding on plain packaging legislation because there was insufficient evidence about the impact of the Australian reforms. It noted that the latest national statistics from Australia covering smoking prevalence were for the end of 2012 and there had been no data or anecdotal evidence on youth smoking rates in Australia after 2011.

“We are not aware of any national statistics from Australia… covering the period since standardised packaging was mandated,” the submission said. “We consider this to be an essential requirement for a proper assessment of the policy’s impact.” The Australian Government was planning a review on the plain packaging measures in December 2014 “and we would expect other governments to wait until this review has been conducted before making any decisions,” it said.

 
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Posted by on January 28, 2014 in Tobacco News

 

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Imperial seeking group marketing director to replace Roberto Funari

The Imperial Tobacco Group, the maker of Davidoff cigarettes, has announced that its group marketing director, Roberto Funari, will leave the business on January 30.

Funari joined Imperial in 2010 and has been responsible for the strategic development of the group’s brand and product portfolio worldwide.

His successor is being recruited externally, a process that is said to be well underway.

“I’d like to thank Roberto for the contribution he’s made to the success of our sales growth strategy,” said chief executive, Alison Cooper.

“He leaves group marketing in a strong position and the team will continue their focus on building consumer insights and developing innovations to drive the long-term growth of our total tobacco brands.”

 
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Posted by on January 9, 2013 in Tobacco News

 

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Imperial Tobacco extinguishes fears with solid trading statement

Imperial Tobacco extinguishes fears with solid trading statement

Cigars were no doubt being lit in the boardroom of Imperial Tobacco this morning as a solid, if somewhat brief, trading statement allayed fears that the Davidoff cigarette maker might be suffering. Its shares have dropped nearly 7% in the last two months.

Sales were in line with the company’s expectations with revenues expected to be up 4% thanks to strong sales in Eastern Europe, Africa, Middle East and Asia-Pacific.

Imperial Tobacco Brands

Main cigarette brands of Imperial Tobacco

But weakness in Ukraine and Poland – along with trade sanctions against Syria – will see volumes fall 3%.

However, there was no mention of the display bans in the UK and proposed plain packaging, which the cigarette lobby have been shouting about for months.

Investec wrote:

We read Imperial’s (customarily brief) Q4 update as a solid result in a climate of low expectations in the market.

While Panmure Gordon said:

Imperial’s in line FY 2012 trading statement should come as a relief, given the degree of nervousness ahead of the statement. Revenue growth of c.4% for FY 2012 represents a decent acceleration from c.3% in the first nine months. Although the stick equivalent volume decline of 3% is slightly disappointing and indicates no improvement on the first nine month’s performance.

Oriel Securities added:

This is clearly positive given the size of the relative fall in the share price quarter to date [it has fallen 6.7% since the end of June]. The July-September quarter under performance leaves Imperial Tobacco’s valuation looking very attractive.

 
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Posted by on September 26, 2012 in Tobacco News

 

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Tobacco companies will battle branding ban through courts

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.

 
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Posted by on May 8, 2012 in Tobacco News

 

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Tobacco companies are biggest political spenders

The Australian Electoral Commission (AEC) has released financial disclosure returns that show the donations of more than $11,500 made to political parties and the political expenditure of donors.

Cigarette smoke
Cigarette and smoke

Large tobacco companies spent about $14 million as they fought against the Federal Government’s plain packaging laws.

British American Tobacco, Phillip Morris and Imperial Tobacco gave a total of $9 million to the Alliance of Australian Retailers, which led the campaign against the laws.

Imperial Tobacco also separately spent more than $4 million fighting the move with printed material and broadcast advertising and Philip Morris added to that with nearly $500,000.

The Coalition also received donations worth $184,000 from British American Tobacco and $79,000 from Philip Morris.

Mining companies and associated lobby groups were also big donors and big campaigners as they fought the Government’s tax on mining profits and the carbon pricing scheme.

The Minerals Council of Australia spent nearly $4 million fighting the tax, with most of that spent on broadcast advertising.

The Association of Mining and Exploration Companies spent another $2.2 million.

Clive Palmer’s Mineralogy gave the Coalition parties, at federal and state levels, nearly $500,000.

His Queensland Nickel gave another $500,000 to Queensland’s LNP.

 
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Posted by on February 2, 2012 in Tobacco News

 

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Tobacco Industry Vet Freudenthal Joins Imperial Tobacco Group

Tobacco Industry Vet Freudenthal Joins Imperial Tobacco Group

Kevin Freudenthal has been named president and CEO for Commonwealth – Altadis Inc. and region director for the Americas at Imperial Tobacco Group (ITG). He succeeds Graham Bolt, who retired from the company at the end of December.

Commonwealth-Altadis logo

Kevin Freudenthal has been named president and CEO for Commonwealth - Altadis Inc.

Freudenthal will take overall responsibility for Commonwealth – Altadis from Eric Workman, senior vice president of marketing, at the end of the month.

Freudenthal has 26 years of industry experience and has made a career out of leadership and innovation in marketing tobacco products, the company said, working with large teams, crafting business strategy and improving profitability.

Before joining ITG, he was vice president for category management for Altria Group, and before that, spent two decades in executive positions at U.S. Smokeless Tobacco Co., where he began his career as a territory representative.

“Kevin is one of the most seasoned and successful tobacco executives, and we look forward to him being onboard starting on January 30. He will lead our efforts to complete the integration for CA as well as our mission for growth in the U.S. market,” said Workman.

Freudenthal has been a member of the Tobacco Outlet Advisory Group, UST Retail Advisory Group, Texas Grocers & Convenience Association, California Grocers Association, National Association of Convenience Stores, and American Wholesales Marketers Association. He has also sponsored the CSP Executive Council and the Network of Executive Women.

Signature brands sold by Fort Lauderdale, Fla.-based Commonwealth – Altadis include USA Gold, Fortuna and Sonoma cigarettes, Phillies, Dutch Masters and Backwoods and White Cat cigars.

United Kingdom-based Imperial Tobacco Group has 51 manufacturing sites, around 38,000 employees and operates in more than 160 markets.

 
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Posted by on January 10, 2012 in Tobacco Articles

 

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