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Cigarette Giants Presented 3Q Results

Tuesday, December 11th, 2012

Cigarette GiantsAltria, Reynolds American and Lorillard all together presented 3Q profits this week, offering perspective on how the giant cigarette companies performed and what these performances may demonstrate for the financial quarter of 2012. “With all cigarette companies having presented, the main topics… emerged from 3Q,” Andrew Kieley, industry expert declared at the press conference under the name “Tobacco Wrap For Q3”. Such trends include the estimated: Cigarette volume decreased by 3% to 3.5%, with Altria’s volume up by 1.5%, Lorillard’s declined 2%, and Reynolds’ dropping 6.5%. To oppose low volumes, Mr. Kieley declared that cigarette pricing increased a bit: Lorillard les the charge, with pricing higher by 5.5%, followed by Reynolds – 3% and Altria – 1.5%. So how these estimates could affect cigarettes in the 4Q? “Promotion is quite competitive into the 4Q, and is affecting the stocks, however we do not believe that there would be a war. Manufacturers are for share, mostly in menthol, but are trying to stay rational,” stated Mr. Kieley.

Mr. Kieley also added that Lorillard is the most deliberate of the rest cigarette giants, with a need to decrease Newport’s gap, and he also underlined that Reynolds is paying greater attention on Pall Mall brand. “Altria is the leader among its competitors and it didn’t change its position. Management repeated profit-focus that this is a kind of unique year, and it is slowly easing promotion. We estimate a round of pricing in November to December, but it will be example to follow in the promotions within the 4Q.” And while tobacco companies are trying to maintain volume from other plummeting using their products, approximately two cigarette leaders are facing smokeless competition increase he segment: Mr. Kieley announced that volume raised by 6.55 for Reynolds and 5.6% for Altria, which plans to introduce another smokeless product in 4Q with Skoal Readycut.

With falling cigarette volumes, such innovative products is a essential factor to profitability in the overall tobacco category, a sphere Altria has realized to dominate, although Mr. Kieley supposes that the company may meet rather growing competition. “So, till now innovation remains with Altria, and Reynolds is trying to overtake it. Lorillard is still under pressure of FDA, however it decided to introduce e-cigarettes in order to stand the difficult situation,” Mr. Kieley said.

Big Tobacco Dependence on Tobacco Taxes

Tuesday, October 23rd, 2012

order kent cigaretteThe battle against smoking tobacco would be closer to victory if our provincial governments ended their dependence on tobacco taxes and lawsuits against Big Tobacco. Last month Prince Edward Island filed suit against tobacco industries to recover health care costs going back to 1953, making it just the latest in a long list of Canadian provinces to do so. P.E.I. knows its chances for a big revenge are good. The tobacco industry looks like a cash-cow to provincial governments desperate for additional income.

Yet P.E.I.’s lawsuit is without value. It feeds off the popular view that Canadians have been helpless victims of tobacco businesses which have tricked them about the dangers of tobacco smoking. But the whole idea of holding the tobacco company uniquely responsible for the health consequences of smoking cig is a gross act of history.

Big Tobacco has had a lot of enablers, including our own provincial governments.

As anyone who was alive in the 1960s and ’70s will confirm, it has long been common knowledge that there were significant health risks from tobacco smoking. As early as 1964 the U.S. Surgeon-General linked smoking cigarettes and lung cancer.

This was followed by a succession of similar smoking warnings from numerous national and international public health organizations. In 1968, terminally ill actor William Talman from the Perry Mason TV show filmed a extended broadcast commercial in which he censured his lung cancer on a three-package-a-day habit.

By the 1980s there was no excuse for anyone to be ignorant of the smoking facts. Cigarette packs carried labels warning of the health risks of smoking habit. Advertising by tobacco industries in magazines, TV, and radio was illegal. Airlines prohibited smoking tobacco on flights.

As evidence that the message was sinking in, Canadian smoking rates dropped. As of 1987, 44 percent of inhabitants who had started smoking tobacco had quit.

Tobacco’s Petone Factory Offers Jobs

Monday, April 2nd, 2012

tax free winston cigaretteBig Tobacco is getting even bigger in Lower Hutt as Imperial Tobacco’s Petone factory gears up to send 4 billion cigarettes a year to Australia. The long-established factory in Richmond St will be quadrupling its exports across the ditch and introducing 50 new jobs, with a two-year, $45-million upgrade nearing completion. Six new production lines feature German machinery capable of spitting out 8000 tax free Winston cigarettes each minute – nearly half a million per hour. Manufacturing staff numbers are increasing from 70 to 120.

Most of Imperial’s cigarettes for Australia are made in Sydney by British American Tobacco, but that agreement runs out in June, with Petone set to benefit. Packets of up to 40 cigarettes in brands including JPS, Horizon and Davidoff will be manufactured in Lower Hutt and exported to Australia.

Factory manager Michael McInnarney, who has worked there for more than a decade, said staff had worked hard to convince the British parent company that it was worthy of a major investment, which could have otherwise gone to somewhere in Asia.

“A variety of other sites were looked at, but it was decided logistically and for transport costs that it made very good sense to have it in New Zealand,” Mr McInnarney said.

“And to be blunt, a lot of staff here have been working their arses off to get ourselves to the point where we are seen by the group as capable of taking on the additional production.”

The number of cigarettes smoked in New Zealand each year has fallen from more than 6 billion in the early 1980s, to just over 2 billion in 2011, according to Statistics NZ figures.

Regulation has progressively increased taxes as well as restricting sales and advertising.

Smoke out Donations to Parties

Thursday, October 20th, 2011

best quality plai cigarettesHong Kong may be contravening an international treaty if political parties receive donations from “Big Tobacco,” a concern group warns. In a letter to Chief Executive Donald Tsang Yam- kuen, Clean the Air calls for a political party donation law amid reports that media tycoon Jimmy Lai Chee-ying has given millions to democrats.

There are no laws in Hong Kong to make parties disclose donations and funding sources, but Clear the Air chairman James Middleton says in the letter that such legislation exists in the United States, Britain, Japan, Australia, Singapore and others.

Also drawing on overseas examples, Middleton says pro-business political parties are more likely to be backed by giants of the tobacco industry – though that point is not made in the letter.

The letter to Tsang says reports of a non-member funding the Democratic and the Civic parties highlight a need for “urgent legislation on mandatory and transparent publication of all political party donations in Hong Kong and prevention of funding of our political parties by overseas entities.”

Tobacco firms have backed parties elsewhere, it is pointed out, and if it happens here the SAR is in contravention of the World Health Organization Treaty Framework Convention on Tobacco Control.

A provision states that governments who have signed the treaty should have “effective measures to prohibit contributions from the tobacco industry or any entity working to further its interests to political parties, candidates or campaigns, or to require full disclosure of such contributions.”

The public should be able to see who may be influencing party policies and actions, goes the Clear the Air argument.

For it is always the case that there is no free lunch as “donors do not keep on donating to causes that do not benefit their own ends.”

Further, the letter states, “the public demands the right to know what their legislators are doing and whether their actions are contrary to electors’ interests and instead more beneficial to the Legco members and their donors only.”

Hong Kong-based anti-smoking advocate Judith Mackay said: “Hidden political donations strike at the heart of democracy itself.

“People seem so concerned about political influence in Hong Kong from north of the border, but they should be equally – if not more – concerned about the influence of vested commercial interests.

“If Hong Kong wants to proceed to democracy, then as a minimum first step it must be transparent about these influences.”

Tobacco and Honesty

Wednesday, August 24th, 2011

best focus cigaretteRegarding “Tobacco companies sue the federal government over graphic warning labels, say they’re unfair”: It is hypocritical to an extreme for the tobacco industry to attack the FDA’s proposed graphic warning labels on the grounds that they are “unfair.”

What is truly “unfair” is the way Big Tobacco has deceived the public for decades about the dangers of smoking.

Tobacco executives have testified before Congress that they “believe nicotine is not addictive” even while internal memos acknowledged that nicotine is extremely addictive and that tobacco companies are really in the “nicotine delivery business.”

Some Focus cigarettes are designed with tiny holes to fool machines testing the amount of nicotine and various carcinogens smokers inhale, while others are made with genetically modified tobacco to increase smokers’ dependency, making it harder for them to quit.

Tobacco companies have disingenuously boasted that “more doctors smoke” a particular brand, used cartoon characters to appeal to kids, and distributed free samples to addict children too young to legally purchase cigarettes.

Even the “We Card” program, ostensibly designed to deter underage smoking, is really an advertising campaign in disguise: prominently displayed stickers prompt smokers to buy cigarettes while conveying to children the enticing message that smoking is an adult rite of passage.

Why all this subterfuge? Because smoking causes debilitating diseases including lung cancer, heart disease, stroke and emphysema, and kills nearly half a million Americans each year. Big Tobacco’s victims include 50,000 nonsmokers each year who are exposed to tobacco in their homes and work environments and prematurely die as a result.

Tragically, the new warning labels still won’t deter most smokers. But by reminding people of the very real dangers of smoking, these labels may help clear the air concerning what Big Tobacco is really all about.

Tobacco Advertising Unpopular

Monday, August 22nd, 2011

buy winston cigarettesCigarette companies are making the case that their advertising may be unpopular, but it’s constitutionally-protected speech. Five of the big-name brands have filed a lawsuit against the Food and Drug Administration, claiming the 2009 legislation that allows the agency to require graphic warning labels on packs of Winston smokes tramples their First Amendment rights.

Their attorney, Floyd Abrams, maintains it violates the right to free speech to require these makers of a lawful product to essentially urge the public not to buy it. The size of the government warning labels, with images such as a man blowing smoke through a gaping hole in his neck, unfairly chokes out the company’s own message, he argues.

Maybe so. But that doesn’t mean it’s a free speech violation.

A commercial product like cigarettes, after all, doesn’t fall into the same constitutional category as someone with an unpopular religion or belief. Accordingly, it’s not guaranteed as much protection under the First Amendment.
Commercial products and their speech are already regulated differently. With noncommercial speech, the government isn’t allowed to inquire whether it’s true or false: regulation must be content-neutral. But that’s not true for advertising. The government can ban ads that are false, or other types of commercial speech. Regulations on insider trading, for instance, forbid even casual remarks that might lead to abuse.

In the case of cigarettes, the government’s interest in protecting public health is substantial. And tobacco companies’ own advertising is clearly misleading, aimed at making people forget this product is lethal. With all the false imaging of youth and vitality that tobacco companies use to mask the danger of cigarettes and get people hooked, they should be thankful the government hasn’t banned their advertising campaign entirely, as Norway did.

Big tobacco doesn’t have a right to convey whatever messages it chooses. The First Amendment was intended to protect free expression by unpopular minorities — not the right of a powerful industry to sell a deadly, addictive product.

Murdoch’s Links to Big Tobacco

Friday, August 12th, 2011

discount doina cigarettesRupert Murdoch’s phone-hacking problems have been all over the news in recent days, but it wasn’t too long ago his media properties were providing a supportive environment for Big Tobacco that went largely unreported. Murdoch’s connection to Philip Morris Co. was revealed through secret industry documents made public as a result of the landmark 1998 U.S. tobacco industry settlement.

The 1981 publication of a Japanese study suggesting that non-smoking wives of smoking husbands were more likely than wives of non-smokers to get lung cancer shocked the industry. Big Tobacco realized that secondhand smoke would be the greatest threat it had encountered, more potentially damaging than earlier studies linking Doina cigarettes smoking with lung cancer, heart disease and other illnesses.

When the victim is the smoker, the industry was able to argue-successfully-that harm caused by smoking was regrettable, but is, after all, a result of personal choice. The individual knows the risks when she smokes. If a person gets cancer even though he doesn’t smoke, but is simply in the presence of smokers, then that is a different matter. Smoking leaps from individual choice to major public policy issue.

The industry “calculated bans in work places, aircraft, restaurants and other venues would result in a dramatic plunge in the number of cigarettes smoked,” the South China Morning Post reported after an investigation of industry tactics in Southeast Asia. “People would have less time to puff. And that would lead to billions of dollars in lost revenue.”

To stave off this catastrophe, the industry used every available channel of persuasion and propaganda to cast doubt on the link between second-hand smoke and disease. The channels included supportive media like Murdoch’s News Corp.

A 1985 draft speech for Philip Morris’s CEO for a marketing meeting noted that the media company was already onside. “We plan to build similar relationships to those we now have with Murdoch’s News Limited with other newspaper proprietors,” the memo said. “Murdoch’s papers rarely publish anti-smoking articles these days.”
A second document for the same meeting created two days later asked the question: “how can we change the public’s view towards smoking?”

After outlining various strategies to turn back the tide, the memo makes the point that we are not using our very considerable clout with the media. A number of media proprietors that I have spoken to are sympathetic to our position — Rupert Murdoch and Malcolm Forbes are two good examples. The media like the money they make from our advertisements and they are an ally that we can and should exploit.

In most societies in the world today public opinion is formed, to a significant extent, by the news media and I believe we should make a concerted effort in our principal markets to influence the media to write articles or editorials positive to the industry position on various aspects of the smoking controversy.

Philip Morris and News Corp. drew together during the 1970s, driven by ideology, money and a hatred of government, except for those of Margaret Thatcher and Ronald Reagan.

In 1975, the companies worked with Australia’s Liberal Party to overthrow the Whitlam Labor government, which had a policy of restricting tobacco advertising. In 1989, Murdoch was invited to join the Philip Morris board, where he remained for a dozen years. And Murdoch invited a succession of company executives to sit on his board. One observer called it “a cozy relationship all around.” It was a coup for Philip Morris, giving the company access to broadcast and print editorial pages and a platform from which to disseminate its view of the benefits of smoking.

Hamish Maxwell, who had worked for Philip Morris since the first studies linking smoking and cancer were publicized in the early 50s, was appointed to the News Corp board three years after Murdoch joined the Philip Morris board. Maxwell helped develop PM’s international tobacco business, which, as director of marketing, he shaped into a major growth engine.

Maxwell left the News Corp. board in 1998, and the following year another senior Philip Morris executive joined it. Like Murdoch, Geoffrey Bible was an Australian. Like Maxwell, Bible was a long-time PM employee. When Bible retired he was treated to an “obsequious valedictory” in Murdoch’s Weekend Australian. No thought was given to the estimated 20.7 million people who would die from the company’s products by 2050.

Instead, Weekend Australian correspondent Rodney Dalton effused, Bible’s thoughts would be struggling with what he should do: ski in Switzerland where he owned a chalet, swim in Bermuda where he owned a house, or head to the golf course for another lesson? Bible’s friend Murdoch said in the article that Bible had “the single toughest and worst job in America.” But Bible, who was still on the News Corp. board, was “honourable,” Murdoch insisted.

And when Bible left News Corp. in 2004, he was replaced by Peter Barnes, another Australian and former president of Philip Morris Asia. Like Maxwell and Bible, Barnes’ expertise was consumer marketing. “Peter was a senior executive in virtually all of the key markets in which News Corp. operates,” Murdoch said in praising the appointment. Barnes was still on the board in 2011.

Philip Morris senior ranks were crowded with Australians who were friends or relatives of Murdoch. Bill Murray was a close friend of Murdoch’s and, as PR monitor SourceWatch claimed, “chief architect of the company’s dirty tricks and science-corruption campaigns.” Murray was instrumental in promoting Bryan Simpson, who happened to be Murdoch’s nephew by marriage. Simpson later was picked to head Infotab, the international tobacco institute.
The intimate relationship between the companies paid dividends for many years. In 2000, an individual named Steven Milloy became “science columnist” for News Corp.

Milloy had no science background, but wrote columns attacking scientific studies that found links between second-hand smoke and lung cancer.

The first piece attacked a study which found that women living with smokers had higher levels of chemicals associated with the risk of lung cancer, accusing it of being nothing more than spin. He also attacked the landmark 1993 Environmental Protection Agency study that linked health risks and second-hand smoke.

In a second column Milloy dismissed 20 years of research on the effects of exposure to second-hand smoke: “Secondhand smoke is annoying to many non-smokers. That is the essence of the controversy and where the debate should lie — the rights of smokers to smoke in public places versus the rights of non-smokers to be free of tobacco smoke.”

Milloy didn’t reveal that he was on the Philip Morris payroll when he wrote the columns, under contract to monitor tobacco studies. But science reporter Paul Thacker exposed the connection in The New Republic. Milloy received $92,500 for fees and expenses from PM in each of 2000 and 2001 when he wrote his FoxNews.com columns. Fox News didn’t seem to care about the conflict of interest when it found out.

The Murdoch empire continues to support the industry’s claim that the link between second-hand smoke and disease remains unproven. Murdoch’s New York Post, with a long history of industry support, is the attack dog of choice. In the late 1970s, the Post was likely the only newspaper to run “almost daily, cigarette ads in color on its back page … and in its main news section.”

When New York City brought in a ban on smoking in bars in 2001, the Post fulminated that the “Nicotine Nazis” were basing the ban on the “Big Lie.” When Mayor Michael Bloomberg proposed extending the ban to all bars and restaurants, he was accused of being an elitist zealot, spouting nonsense and engaging in a puritanical righteous crusade. “Next he’ll ban smoldering incense at St. Paul’s Cathedral,” the paper snorted.

As recently as 2010, the Post was still raging on about a proposal to extend smoking bans to all parks, beaches and pedestrian plazas in the city. “This ban is not so much about public health as it is another heavy-handed behavior modification scheme cooked up by a fellow who is incapable of minding his own business,” a September 19, 2010 editorial ranted.

As the phone-hacking scandal leaps the Atlantic and settles on Fox News, further connections between the Murdoch empire and Big Tobacco are coming to light.

Former Fox News executive Dan Cooper claims that Fox News chief Roger Ailes had him design a “brain room” deep in the bowels of 1211 Avenue of the Americas, the Fox News head office, to house a counter-intelligence and black ops office in which hacking phone records would be “easy pie.” Ailes brought in Scott Ehrlich to run the brain room, Cooper alleges.

Before Ailes set up Fox News for Murdoch in the mid-90s, he ran his own political consulting firm and Ehrlich was a top lieutenant. Ailes helped put Republican candidates into office, most notably Richard Nixon, Ronald Reagan and George H.W. Bush.

He also had a string of corporate clients, including the Tobacco Institute, Philip Morris and RJ Reynolds.
Surgeon General Everett Koop’s 1986 report, “The health consequences of involuntary smoking,” decisively portrayed second-hand smoke not just as an annoyance but as a quantifiable health risk. It was estimated that passive smoking contributed to 50,000 deaths a year in the U.S.

The next year Congress banned smoking on all domestic flights under two hours and extended it to all domestic flights two years later. The Environmental Protection Agency was working towards placing passive smoke on its list of major carcinogens.

In response, the Tobacco Institute launched a massive “Enough is Enough” campaign, playing on many people’s concerns that government was reaching too far into their lives.

Roger Ailes and Scott Ehrlich were members of a tobacco industry group tasked with beating back the tide of regulation. Their job was to go after the Clinton administration’s health care reform, which was to be funded in part by a dollar-a-pack tax on cigarettes. Big Tobacco paid Ailes to produce ads highlighting the plight of “real people” affected by higher taxes.

In one confidential memo to Philip Morris, Ehrlich proposed an “underground attack” option following a major Hillary Clinton speech. It would be costly, he wrote, but would be “designed to hit hard at the key [Representatives and Senators] through their soft underbelly, while attempting to stay under the radar of the national news media.”

Three years later, Ailes was working for Murdoch, creating what Rolling Stone calls “the most profitable propaganda machine in history.” And Ehrlich, fresh from his dirty tricks for Big Tobacco, was allegedly running Murdoch’s brain room.

Murdoch will have no problem shuttering his British newspapers, which contribute only three percent of News Corp.’s $32 billion in revenue. But Fox News is another matter altogether, responsible for nearly a fifth of the corporation’s $5 billion in profit.

With FBI and Department of Justice investigations under way, further Fox News revelations will likely follow. Big Tobacco’s murderous rampage is on the wane, at least in North America. Will Murdoch go down too?