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Posts Tagged ‘tobacco market’

Tobacco Marketing in Japan

Monday, March 16th, 2015

japan cigarettes
Peace and Hope are the most popular Japanese cigarette brands. Billboards and journal advertisements depict stunning models. Cigarettes are constantly offered for free to customers at pubs and nightclubs. Most of the advertising is targeted towards women and the younger generation.

Cigarette advertising is allowed between 10:54pm and 5:00am, Monday through Friday, on TV however, the tobacco industry voluntarily “limits” cigarette advertisements. For instance, in 1998, Japanese cigarette manufacturers arranged to remove cigarette ads off television, radio, films and the Internet and cease offering free cigarettes on the streets nevertheless they intended to recompense by showing even more advertisements in magazines and newspapers.

In May 2010, Japan Tobacco started advertising smokeless cigarettes that utilize tobacco cartridges. The product that is known as Zero Style Mint, costs about 300. A package of four refill cartridges is available for ¥400.

You can find more than 520,000 cigarette vending machines in Japan. According to government rules, the machines automatically halt giving cigarettes between 11:00pm and 5:00am. The purpose of these rules is not clear. People can easily purchase cigarettes at convenience stores that sell cigarettes 24 hours a day.
However starting 2013, all smokers who wanted to purchase cigarettes from a vending machine needed a “taspo” so called age-verification card. Created in order to help stop underage smoking, the cards could be acquired by sending a pictures and a copy of document proving age, for example a driver’s license, to the Tobacco Institute of Japan. Numerous cigarette users have not taken the trouble to sign up for the new cards and instead purchase their cigarettes at supermarkets.

Fujitake Company creates vending machines that are able to identify those under 18 using a camera and modern facial recognition system according to bone structure, wrinkles and the way the skin looks. Thus, those who want to purchase cigarettes must look at the facial recognition camera and press a button. In several seconds, the machine establishes whether the person is 20 years old or older or not. In case the machine is not able to make a clear determination, the user has to place driver’s license and scan birthday date.

Tobacco Growers Profit Dropped, Low Tobacco Prices

Wednesday, November 14th, 2012

cheap al fakher tobaccoTobacco growers in Lombok, West Nusa Tenggara (NTB), declared that low demand and a dropping sales price for Virginia-variety Al Fakher tobacco are threatening their livelihoods. The farmers, who are expecting big losses for this year’s harvest, are asking the provincial administration to intervene in the tobacco market. This year’s harvest has brought little but trouble to Lombok’s independent tobacco farmers. The sale price of Virginia tobacco recently ranges between Rp 3,000 (US 31 cents) and Rp 5,000 per kilogram, decreased dramatically from between Rp 30,000 (US$3.30) and Rp 35,000 a kilogram in 2011.

“Last year, we could sell of tobacco for Rp 3 million per kilogram, but the price has decreased to Rp 3,500 per kilogram,” Lalu Musdar, a farmer from Janapria, Central Lombok, argued. “The tobacco companies are manipulating the costs as they wish. We wish the governor to urge them to purchase tobacco from us at a fair price.”

Musdar, who had planted Virginia tobacco on more than 1.3 hectares of his farm in Janapria, explained he would suffer big losses of up to Rp 70 million if he fails to sell his harvest.

Operational costs for growing tobacco this year have increased as sale prices have dropped. Musdar declared that he rented 1.3 hectares for to cultivate the tobacco for Rp 8 million, while his other costs have also raised.

The price of fertilizer, for example, has increased from Rp 200,000 to Rp 300,000 per quintal. Musdar reported that he paid for 8 quintals to raise his tobacco crop.

Labor wages have also risen sharply, from Rp 15,000 last year to Rp 35,000 this year.

“If the price of tobacco is Rp 30,000 per kilogram, we might gain a less profit, but the price has dropped. For our production expenses, we borrowed from the cooperative and loan sharks at a high interest rate,” Musdar added.

Tobacco growing is centered on three regencies on Lombok Island: Central, East and West Lombok. More than 16,373 hectares were dedicated to tobacco cultivation for 2012.

The farmers set a production target of 32,464 tons, which they had planned to sell to 21 partner tobacco companies.

However, five firms backed out of purchasing from the farmers, while several others reduced the size of their procurement citing a declined in cigarette production. Another tobacco farmer, Fatahillah, urged the provincial administration to avoid the operational licenses of companies that failed to increase their prices for tobacco crop.

Tobacco Market Innovation, Reynolds American Smoke-Free Products

Tuesday, November 13th, 2012

discount beratt cigaretteReynolds American Inc. reported that its main focus on innovation and the development of new tobacco products will help the company stay involving in the face of decreasing smoking rates. Reynolds American President and CEO Daan Delen explained that during Investors Day presentations Monday morning that the company is focusing over the long-term on arising smoke-free products such as snus and its new e-cigarette Vuse that offer larger margins and greater potential for growth.

“Everything we’re working on from an innovation standpoint has a higher margin than cigs,” Delen argued. “I think we’re very well positioned in an evolving tobacco market.”

Authorities with the Winston-Salem-based tobacco company (NYSE: RAI) said volumes have risen this year in smoke-free categories such as moist snuff and snus, particularly among younger demographics, while cigarette amounts continue to drop.

But Delen emphasized that cigarettes are still the essential focus and business for the tobacco industry. He offered an internal mantra of “80/90/90,” which reflects that 80 per cent of the company’s resources are still in the combustible tobacco space, 90 per cent of its organizational resources focus on that area, and 90 per cent of its investigation and development budget is centered on combustibles.

“That is the main category that is still going to deliver a lot of growth in the future,” Delen declared, noting that the U.S. cigarette market continues to offer approximately a $14 billion “profit pool,” about 85 per cent of which comes from cigs.

But Reynolds American’s strategy on “transforming tobacco” is  evident, as Delen spent substantial time talking about other categories besides cigarettes in advertising the company’s efforts toward new innovation.

Economy Encouraged by Smoke-Free Law, Saudi Arabia News

Monday, October 22nd, 2012

cheap camel cigsSmoking bans in restaurants have affected economic-related issues in a positive way, though some owners think this will negatively influence their businesses. A recent study indicated that the size of the Kingdom’s tobacco products market was estimated at SR 14 billion and the volume of every day expenditure on cigs SR 30 million. The investigation also noted that the Kingdom’s smokers ranked fourth globally, with each of them smoking 2,130 cigs every year, which is one of the highest smoking rates in the world.

At present, approximately 3,500 restaurants and coffee stores have been ordered by the Ministry of Interior to turn into tobacco-free restaurants or to shut down. However, investigators in the hospitality sector declared that the smoking ban would have a very important impact on restaurant owners’ customers.

“Restaurants will lose big amounts of money with such decisions. A noticeable restaurateur in Jeddah argued that Arab News that the restaurant’s daily profit of SR 10,000 is likely to be declined to SR 500 per day with the implementation of the new  smoke-free law. Adel Makki, a member of hospitality committee at the Jeddah Chamber of Commerce and Industry, corroborated this.

When a businessman decides to open a restaurant, he joints into the project after conducting an investigation that takes into consideration the smoking cigarettes element as a main source of income, which is why he invests more than SR 10 million in such start-ups.

Altria Leader in Tobacco Sales, Cigarettes Market

Tuesday, October 16th, 2012

cheap hilton cigaretteAltria Group, Inc. (NYSE:MO) turned off its international operations in 2008, which now trades as a separate tobacco company, Philip Morris International Inc. (NYSE:PM). Altria fixes on the U.S. market, while Philip Morris is focused on international tobacco markets. Although Altria is considered the more firm company, with less growth occasions, it has identified various opportunities within the U.S. that extend beyond tobacco. This includes its approximately 30% stake in the fiction company, SAB Miller.

Although the cigarette maker as a whole is expected to see mid-single drop over the next few years, Altria is expected to see a income hike of 5% in 2012. This is driven by a diverse product mix and initiatives for restructuring manufacturing, where they expect to save $400 million by the end of 2013.

Altria is the U.S. leader in tobacco sales market share at 50%, with Reynolds American, Inc. (NYSE:RAI) coming in at second approximately 30%. Reynolds is expected to have a down year, with incomes down 1% from 2011. The company is planning to keep revenues relatively in line due growth in its top smoking brands Camel and American Spirits, but other lower margin brands continue to struggle. Part of what gives Altria an advantage over Reynolds, is that Reynolds’ top brands are susceptible to trade down.

The third big player in the U.S. cigarette company is Lorillard Inc. (NYSE:LO), with almost 10% of the tobacco market. Lorillard saw cigarettes sales up 10% in 2011 and expects sales up 4% in 2012 on tobacco market share gains thanks to the company’s top brand Newport. However, if the FDA’s ban of menthol ever came to fruition, it would be bad to Lorillard.

Imperial Tobacco Stagnant Cigarettes Sales

Thursday, September 20th, 2012

cheapest esse cigaretteImperial Tobacco Group PLC Thursday declared that it expects its tobacco products revenue to increase this year, as tobacco companies continue to depend on arising tobacco markets growth and price increases to compensate stagnant consumer demand. The world’s fourth-largest tobacco company by cigarettes sales, manufacturer of Davidoff and JPS brands, reported that it sees revenue increase approximately 4 per cents at current currency rates.

But total stick volumes, which combine cigarettes and fine-cut tobacco, are expected to decline by up to 3%, hit by weakness in Ukraine and Poland and a trade ban in Syria, it added in a notice.

Global tobacco companies have been raising prices regularly all over the world for to protect their margins as demand decreases. Imperial, Philip Morris International Inc. PM +0.14% , British American Tobacco PLC and Japan Tobacco Inc. account for approximately three quarters of the total tobacco market excluding China, where state-controlled China National Tobacco Co. has a virtual control.

Even though tobacco product is relatively resistant to economic afflictions, the giants are increasingly turning to Asia, Africa, Eastern Europe and the Middle East for growth opportunities, as declines and government severe measures force consumers in the West to cut back on spending or switch to cheaper cigarette products and roll-your-own tobacco products.

Imperial, in particular, has a high exposure to Europe, which accounts for more than half its income, with the U.K. and Germany its biggest tobacco markets. Last year, its trading was hit by a price war in the beleaguered Spanish economy.

Imperial had a hard start after first-quarter revenue and volumes were affected by the tobacco trade ban in Syria, a price raise in the U.S. and stocking issues in Ukraine. The company’s first-half net profit, reported in May, was also hit by higher taxation and one-off finance items, although revenue increased. In July, the tobacco company reported that it had momentum as nine-month revenue rose and volume decline moderated.

Illegal Cigarettes Sale in Greece, Tobacco Market

Monday, September 3rd, 2012

cheap hilton cigaretteThe sale of illegal cigarettes in Greece has increased very much, estimated at some 3.5 billion euros every year for 2010 and 2011, an quantity which corresponds to almost 15 per cent of the legal tobacco market, according to Spyros Flengas, the head of the Association of Hellenic Tobacco Industries. In a bid to combat the phenomenon that prevents the state of millions of euros in tax income and tobacco companies of an important amount of income, the Papastratos cigarette maker has offered to deliver special seminars for police officers that investigate contraband cigarettes, as well as furnish special equipment that can detect unlawful products, as part of an contract with the Public Order Ministry.

Flengas declared that the World Health Organization’s protocol wished to eliminate of the illegal smoking products trade, to be finished by the end of 2012, provides for the company to establish a global tracking and tracing system for its all tobacco products within three years from the signing of the agreement. The marking of the smoking products will have to expose the authenticity of the tobacco product, its production date, the machine that has produced it and the identity of its first recipient.

Prior to the onset of the financial crisis in Greece the illicit cigarette market accounted for just 3 per cent of sales, given that legally sold products were comparatively cheap. But economic state developments have led to tobacco consumers turning increasingly to contraband products while the legal tobacco market decreased at an alarming pace.

The domestic tobacco company estimates that the legal market has heat in the two years from January 2010 to December 2011 by a total of 25 per cent, while the first couple of months of 2012 saw an additional decrease of almost 10 per cent, despite a significant decline in the price of expensive legal tobacco products, averaging approximately 12.5 per cent, that applied for the first time in December 2011. State incomes from cigarettes taxation quantity to 3.6 billion euros in 2011.

Tobacco company authorities are telling Kathimerini that contraband cigarette has continued of control and is threatening the very viability of  cigarette makers.