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Tobacco companies fighting over claims on smoking’s effects

Smoking Youth

America’s biggest tobacco companies asked a federal appeals court Monday to set aside a series of court-ordered advertisements saying they lied about the dangers of smoking. The companies told a three-judge panel of the U.S. Court of Appeals in Washington that they’re ready and willing to pass along factual public health information about cigarettes online buy, but said they won’t go along with being forced to underwrite an ad campaign that would have the companies brand themselves as liars.

The statements imply “that we’re still engaged in aspects of wrongdoing … (and) that we do things that we don’t do,” Miguel Estrada, an attorney representing the tobacco companies, told the panel. In 2006, U.S. District Judge Gladys Kessler ordered the largest cigarette makers to publicly admit that they had lied for decades about the dangers of smoking. The ruling came after testimony from 162 witnesses, a nine-month bench trial and thousands of findings by the judge that defendants engaged in a massive campaign of fraud.

Kessler required the companies to publicly address smoking’s adverse health effects, nicotine manipulation and the health impact of secondhand smoke. The judge also required that the companies address the truth about “light” and “low tar” brands and the nature of cigarette addiction. The companies in the case include Altria Group Inc., owner of the biggest U.S. tobacco company, Philip Morris USA; No. 2 cigarette maker, R.J. Reynolds Tobacco Co., owned by Reynolds American Inc.; and No. 3 cigarette maker Lorillard Inc.

The preamble to the ads says a “federal court has ruled that Altria, R.J. Reynolds Tobacco, Lorillard and Philip Morris USA deliberately deceived the American public.”The companies said the statement is overbroad and misleading. But the government’s attorney, Melissa Patterson, told the court that the preamble ensures that the statements that follow are “seen as the real truth,” saying the companies have a history of using tactics that raise questions about public health warnings about the dangers of smoking.

The statements the companies are being ordered to publish are based on the fact that the “fraud is likely to continue,” added Howard Crystal, an attorney representing public health interveners in the case.

The ads would be in all cigarette packs sold for 12 weeks over the course of two years, in TV spots once per week for a year, in a separate newspaper ad by each company, on company websites indefinitely and at certain retail outlets. They stem from a civil case the government brought in 1999 under RICO, the Racketeer Influenced and Corrupt Organizations Act.

 
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Posted by on February 24, 2015 in Tobacco News

 

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Reynolds is a Good Employer

Reynolds Logo
Anybody who has ever worked for the company — either on a production line in Tobaccoville or in an office downtown — can tell you that Reynolds (the maker of Camel cigarettes http://cigarette-deals.com/camel-cheap-cigarettes) was (and is) a good employer that pays better than fair wages.

The company has also been generous to — and good for — Winston-Salem, dating to the days when it and heirs of old Richard Joshua himself helped convince Wake Forest College (and its medical school) to relocate.

That’s important to note in light of the news that Reynolds is donating the majority of its Whitaker Park manufacturing campus to a nonprofit established to find new uses and new tenants for the property that should have lasting benefits for years.

The particulars read like this: 120 acres of prime commercial industrial land and buildings with about 1.7 million square feet. “We believe that 10,000 to 15,000 new jobs can be created in the repurposed Whitaker Park area,” Mayor Allen Joines said after the announcement was made.

Of course, the gift wasn’t an act of pure altruism made simply from the goodness of Reynolds’ corporate heart.

It stands to reap tax benefits in two ways. First, Reynolds will remove from its books property valued by the county tax assessor at $52.3 million. (That number likely will be adjusted downward because the company is hanging onto part of one of the three parcels in the donation, and the tax value of the divided parcel hasn’t been calculated yet.)

Still, that will likely be more than $500,000 saved annually in local property taxes. That sounds like a lot but to a company the size of Reynolds, it’s pocket change.

The bigger impact will be realized over the next few years on its corporate tax bill as the property is signed over in stages, according to a tax lawyer. Because Whitaker Park is going to a 501(c)3 nonprofit, Reynolds should get to claim deductions for the market value of the land and the buildings. It also avoids paying capital gains taxes that it would have owed had the buildings and land been sold to a for-profit entity. Plus, the donation frees up the company to concentrate on its acquisition of Lorillard.

However you look at it, donating the land to a nonprofit set up to find new uses for large empty buildings is clever and the rare, proverbial win-win for the community and the company.

That won’t make headlines anywhere but here, though.

 
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Posted by on January 13, 2015 in Tobacco Facts

 

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Philip Morris Names Jacek Olczak CFO, Succeeding Hermann Waldemer

Tobacco firm Philip Morris International  on Monday said its Chief Financial Officer Hermann Waldemer has elected to take early retirement effective July 31. Waldemer will be succeeded by Jacek Olczak, with effect from August 1.

PMI Brands
Philip Morris International Brand portfolio

Olczak is currently President, European Union Region. He will be succeeded by Drago Azinovic, currently President, Philip Morris Japan.

Commenting on Waldemer’s retirement, Louis Camilleri, Chairman and CEO, said, “His crowning achievement is undoubtedly his invaluable contribution as CFO to our company’s tremendous performance since our spin off from Altria Group, Inc., in March 2008.”

Olczak has been in his present role since April 2009. Since joining the tobacco company in 1993, Jacek has held several increasingly senior positions in Finance, Sales and Operations, including General Manager Romania, Managing Director Poland and the Baltic States.

Azinovic joined the company in 2009 as Vice President Marketing and Sales for the Asia Region. In July 2011, he was appointed to his current position as President of the company’s affiliate in Japan.

PM closed on Friday at $89.13, down $0.83 or 0.92 percent, on 3.71 million shares.

 
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Posted by on May 8, 2012 in Tobacco News

 

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China’s Tobacco Monopoly Bigger by Profit Than HSBC

China National Tobacco Corp., the nation’s cigarette monopoly, may be larger by annual profit than HSBC Holdings Plc (HSBA) and Wal-Mart Stores Inc. (WMT), according to a rare release of the company’s financial data.

Cigarettes
Cigarettes

The state-owned tobacco company had net income of 117.7 billion yuan ($18.7 billion) in 2010 on sales of 770.4 billion yuan. Industrial Bank Co. released the figures in a statement late yesterday because China National Tobacco is buying a 5.2 billion yuan stake in the Shanghai-listed lender.

Authorities in China, home to a third of all the world’s smokers, have been criticized by groups including the World Health Organization for not doing enough to prevent tobacco use. Critics say the tax revenue the government derives from the industry — more than $95 billion last year — has hindered efforts to discourage smoking.

“It would be better if they could also disclose more information about the health impact of their products, which we lack in China,” Wan Xia, a Beijing-based researcher at the Chinese Academy of Medical Sciences who is studying the effects of smoking in the country, said in a telephone interview. She said the figures released by Industrial Bank are the first she’s seen for China National Tobacco’s profit.

About 1 million Chinese die from tobacco-related illnesses every year, according to the WHO.

HSBC reported $16.8 billion of profit for its most recent fiscal year and Wal-Mart posted $15.7 billion. Figures for 2011 weren’t given for China National Tobacco.

18th Biggest

Its 2010 figures would make China National Tobacco the world’s 18th largest company by profit, one spot ahead of American International Group and just behind JPMorgan Chase & Co., according to data compiled by Bloomberg. It would be the world’s 30th largest company by sales, just behind Allianz SE. (ALV)

China National Tobacco made more in profit in 2010 than the combined total for Philip Morris International Inc. (PM), British American Tobacco Plc (BATS), and Altria Group, Inc., the world’s three- biggest listed tobacco companies, according to the figures.

China, the world’s most-populous nation is home to more than 350 million smokers. Almost three in every five men smoke. The volume of cigarettes sold in China is expected to rise at an average 14 percent annually during the five years through 2015 to hit 1.8 trillion yuan in retail sales, researcher Euromonitor International said in a July report.

China has previously only disclosed annual sales and tax revenue figures for the tobacco industry and not specifically for China National Tobacco. The State Tobacco Monopoly Administration, which also runs China National Tobacco, said in January that the nation’s tobacco industry’s net income before taxes rose 22.5 percent to 753 billion yuan, according to a report by the official Xinhua News Agency.

 
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Posted by on March 9, 2012 in Tobacco News

 

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Philip Morris Names Threats to Cigarette Market

Philip Morris International Tobacco Company is more concerned about the influence on tobacco sales of Russia’s recent acceptance into the WTO than it is about the warning labels the company is required to put on its cigarette packs and about anti-tobacco campaigns.

Philip Morris Izhora, one of the company’s two full cigarette production plants in Russia, decreased production by 2 percent last year — to 70 billion cigarettes per year — while still managing to increase its share of the market by 0.8 percent to 26.2 percent.

Philip Morris Izhora
Philip Morris Izhora tobacco factory

“The number of cigarettes produced by the plants won’t go up soon, it is decreasing all over the world,” said Alexei Kim, director of corporate issues for Philip Morris International affiliated companies in Russia and Belarus.

“Russia has the second biggest tobacco market in the world and its market volume decreased by 2 percent last year, totaling 375 billion cigarettes.”

Reasons for the decrease are the growing struggle between tobacco companies and global anti-smoking campaigns.

Philip Morris International owns two of the strongest segments and most popular brands — Parliament and L&M. This explains why the decrease in tobacco production hasn’t influenced its share of the market. What might influence it in the future, are legal measures now being discussed in the State Duma.

One of the legal measures under discussion is the obligatory placement of graphic images on cigarette packs. The project’s authors base their argument on the experience of other countries such as Thailand.

“After six years of using photo testimonials to the harm of smoking on cigarette packs, the number of smokers in Thailand has decreased by 20 percent,” Rossiyskaya Gazeta newspaper quoted from the explanatory note to the bill Thursday.

Excise tax on cigarettes is also to increase at the beginning of this July.

“Philip Morris Izhora is one of the biggest taxpayers already; in 2011 alone we paid 45 billion rubles ($1.5 billion) in taxes and customs payments to all different types of budget and non-budget funds in Russia,” said Kim.

The Philip Morris Izhora plant produces cigarettes under more than 50 names of international brands such as Marlboro, Parliament and Virginia S. The plant’s cigarettes are distributed in Russia and former Soviet republics and also exported to other countries. The Izhora plant also exports other tobacco-related products such as filters.

“The product we offer is very ambiguous and we try our best to inform our adult consumers about what risks they are taking [when they use it],” said Maria Kulakhmetova, corporate communication and public relations manager at Philip Morris Sales and Marketing in Moscow.

“Our company was the first to put warning labels on cigarette packs. In 2003, we started putting leaflets about the dangers of smoking inside the packs. Also, everyone can read about the risks of smoking on our web site.”

“Concerning the graphic images and warning labels, they won’t influence demand,” said Kim.

“When the warning labels first came out, people were curious and asked questions, but then just started to ignore them. The risks we have identified are connected with Russia joining the WTO and its relationship with the countries in the Customs Union,” he added. “Nevertheless, we are confident in our own brands and their quality.”

 
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Posted by on February 22, 2012 in Tobacco News

 

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RAI shows off Natural American Spirit

R.J. Reynolds‘ domestic cigarette volumes for the 12 months to the end of December, at 72.9 billion, were 6.0 per cent down on those of the 12 months to the end of December 2010.

Excluding private label brands, volumes were down by 5.1 per cent to 72.6 billion.

Within Reynolds’ ‘growth brands’, Pall Mall volumes increased by 8.0 per cent to 21.7 billion, but Camel filter volumes fell by 1.8 per cent to 21.2 billion. Overall, growth brand volumes increased by 2.9 per cent to 42.9 billion.

Reynolds American
Reynolds American, Inc. Headquarters – Winston-Salem, NC.

Support brand volumes fell by 14.1 per cent to 26.9 billion and non-support brand volumes dropped by 31.7 per cent to 3.1 billion.

RAI’s domestic cigarette volumes during the three months to the end of December, at 17.5 billion, were down by 7.4 per cent on those of the three months to the end of December 2010, with total growth brand volumes down by 1.8 per cent to 10.5 billion, support brand volumes down by 13.2 per cent to 6.4 billion, and non-support brand volumes down by 25.4 per cent to 0.7 billion.

Reynolds’ market share during the 12 months to the end of December, at 27.4 per cent, was down by 0.7 of a percentage point; or down 0.3 of a percentage point to 27.3 per cent excluding private labels.

Reynolds’ share of the growth brand segment was increased by 1.3 percentage points to 16.4 per cent, while its share of the support brand segment fell by 1.3 percentage points to 9.9 per cent, and its share of the non-support brand segment fell by 0.6 of a percentage point to 1.1 per cent.

In announcing its full year and final quarter results, Reynolds American Inc, for the first time, highlighted Santa Fe volumes and retail share. Santa Fe’s Natural American Spirit recorded volumes during the 12 months to the end of December at 2.8 billion, up by 13.5 per cent on those of the 12 months to the end of December 2010, while the brand’s volumes during the final quarter of 2011, at 0.7 billion, were up by 13.8 per cent on those of the final quarter of 2010.

Natural American Spirit’s market share during the 12 months to the end of December 2011, at 1.0 per cent, was up by 0.2 of a percentage point.

Meanwhile, RAI’s American Snuff volumes during the 12 months to the end of December, at 404.7 million cans, were up by 7.3 per cent on those of the 12 months to the end of December 2010.

Grizzly volumes were up by 9.4 per cent to 355.8 million cans, Kodiak volumes were down 3.8 per cent to 45.7 million cans, and other brand volumes were down by 29.3 per cent to 3.2 million cans.

American Snuff’s market share during the 12 months to the end of December was up by 1.2 percentage points to 31.5 per cent, with Grizzly’s share up 1.6 percentage points to 27.7 per cent, Kodiak’s share down 0.3 of a percentage point to 3.6 per cent, and other brand’s share down 0.1 of a percentage point to 0.2 per cent.

RAI’s net sales for the 12 months to the end of December, at $8,541 million, were down by 0.1 per cent on those of the 12 months to the end of December 2010, while net sales for the three months to the end of December, at $2,083 million, were up by 0.1 per cent.

Full year and final quarter reported net incomes were up by 25.4 per cent to $1,406 million, and 16.0 per cent to $304 million respectively. And adjusted net income was up by 7.4 per cent to $1,647 million and by 12.9 per cent to $420 million respectively.

Reported net income per diluted share was up by 25.0 per cent to $2.40 and by 15.6 per cent to $0.52 respectively, while adjusted net income per diluted share was up by 6.8 per cent to $2.81 and by 12.5 per cent to $0.72.

Commenting on RAI’s results, president and CEO, Daniel M. Delen, said the tobacco company had finished the year with solid results despite the challenging economic and competitive environment.

“I’m pleased to report that RAI continued to make progress in the fourth quarter, increasing earnings and margins while further demonstrating our commitment to returning value to shareholders with the launch of a $2.5 billion share repurchase program,” he said. “RAI also increased its dividend again in the quarter, bringing the total dividend increase for 2011 to 14.3 per cent.

“We have elected to break out Santa Fe’s domestic operations as a reportable business segment, reflecting their strong growth over the past several years.

“With the company’s increasing contribution to RAI, we felt the time was right to give greater visibility to its outstanding performance.”

Looking to the future, Delen said that the company intended to sustain its operating companies’ key-brand momentum, invest in innovation and have the financial flexibility to take advantage of competitive opportunities.

“As a result, we believe it is prudent to once again review key activities and resources to ensure they are aligned with today’s economic and competitive landscape,” he said.

“A comprehensive analysis of programs, activities and organizational structures at RAI, RAI Services and most departments within R.J. Reynolds is currently under way. This review is expected to be completed by the end of the first quarter.”

 
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Posted by on February 10, 2012 in Tobacco News

 

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Grandson of major tobacco company founder speaks out against smoking

Patrick Reynolds is the grandson of the late RJ Reynolds, whose company produces cigarette brands Camel, Monarch and Winston. Reynolds says his father’s death from emphysema caused by years of smoking is why he’s trying to help others through The Foundation for a Smokefree America.

Patrick Reynolds
Patrick Reynolds is the grandson of the late RJ Reynolds, whose company produces tobacco products.

“I started smoking myself at 17 and quitting was one of the hardest things I ever did. I failed eleven times. Finally got in a program,” explains Reynolds.

He’s an unlikely advocate for avoiding cigarettes, but his father’s death when he was 15 had a profound effect on him.

Although Reynolds says it wasn’t until he became an adult that he fully understood the impact.

“I remember him gasping for breath. And they say that you find your calling where you’ve been hurt the most deeply,” he says. “As a Reynolds I have a great platform to make a difference on this issue and for over 20 years I’ve been fighting for smoking bans, laws limiting smoking in the workplace when they were controversial and now they’re not.”

Reynolds says with mounting evidence showing the dangerous effects of smoking, it’s time states use more money generated from cigarette sales for tobacco prevention and cessation. “South Carolina is only spending $5 million dollars a year and they’re taking in over $250 million a year in revenue,” he adds.

Reynolds would also like to see a greater effort to protect non-smokers, “There’s an overwhelming body of scientific proof that secondhand smoke causes lung cancer causes heart disease banning it and protecting non-smokers is just an idea whose time has arrived.”

He also answers criticism that attacks on the tobacco industry hurts farmers, “The tobacco companies moved most of the tobacco farming overseas. And they’ve been paying the slave wages to workers in third world poor nations even in China. And it brought the price of tobacco down to the point where a lot of tobacco farmers are now making the transition to fruit and vegetable production profitably they’re planting things now that nourish people and don’t poison people.”

His message is in line with the non-profit Smoke Free Horry. Pauline Levesque serves as youth coordinator for the group. She’s also a former smoker and is now working to educate the community and help other kick the habit, “The message and the hope is that people will take advantage of resources that are available to them the youth that they will not start smoking to be cool and they’ll maintain their health throughout their life.”

Reynolds makes a special effort to reach out to the youth because, “The tobacco companies know that if they don’t get you to start smoking before the age of 19 they’re not going to get you as a customer.”

You might be wondering if Reynolds is living off “tobacco money.” He says he’s sold all his shares with the company and adds what little he did inherit he’s spent towards his efforts for a tobacco-free America.

Reynolds is speaking tonight at 6pm at an event at Horry Georgetown Technical College in the Burroughs and Chapin Auditorium.

In all, 40 cities have smoking bans in place. Next Monday the City of North Myrtle Beach will have a first reading of a smoking ban.

 
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Posted by on January 19, 2012 in Tobacco News

 

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