Big tobacco launches High Court challenge

British American Tobacco (BAT) has launched its promised High Court challenge to cigarette plain packaging legislation.
BAT argues the ban is invalid because the federal government is trying to acquire valuable intellectual property without compensation.
BAT lodged the writs launching its challenge in the High Court Sydney registry on Thursday.
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No date for the hearing of the case has been set but it’s likely to be no earlier than the second quarter of next year.
BAT spokesperson Scott McIntyre said it was a legal company selling a legal product.
“We have consistently said we will defend our valuable intellectual property on behalf of our shareholders as any other company would,” he said in a statement.
“If the same type of legislation was introduced for a beer brewing company or a fast food chain, then they’d be taking the Government to court and we’re no different.”
The move follows legal action launched by tobacco company Philip Morris Asia on November 21, which served a notice of arbitration with the United Nations Commission on International Trade Law, claiming the Commonwealth is essentially stealing its brands.
Under the federal government’s tobacco plain packaging legislation, all tobacco products will have to be sold in drab olive-brown packs from December 2012. Graphic health warnings will dominate the packages instead of brand names and logos.
Mr McIntyre said High Court proceedings would be conducted as a test case on the validity of the tobacco plain packaging law in relation to two BAT brands, Winfield and Dunhill.
If successful, the decision should apply to other property and brands sold by BAT.
“Obviously we’d rather not be in a situation where we’re forced to take the Government to court but unfortunately for taxpayers the Government has taken us down the legal path,” he said.
Health minister Nicola Roxon said big tobacco just couldn’t give up their addiction to legal action.
“They have fought governments tooth and nail around the world for decades to stop tobacco control,” she said in a statement.
“Let there be no mistake, big tobacco is fighting against the government for one very simple reason – because it knows, as we do, that plain packaging will work.
“While it is fighting to protect its profits, we are fighting to protect lives.”

Big Tobacco Out Billions, but Still Kicking After Settlement

More than a decade after Big Tobacco apparently knuckled under to a coalition of 46 state attorneys-general, how is the industry faring?
Like most such questions, that depends on who you ask.
Ask Michael Cummings, PhD, of Roswell Park Cancer Institute in Buffalo, N.Y. and he replies: “My impression is that the tobacco industry is on life support.”
Ask economist Kenneth Warner, PhD, of the University of Michigan in Ann Arbor, and he replies: “They’re doing fine.”
Other experts reached by MedPage Today had shades of opinion between those two poles.
Part of the reason for the differing views is that the effects of the 1998 Master Settlement Agreement on the corporate health of the tobacco industry are hard to quantify – and probably not what most people would have expected.
The agreement – universally referred to as the MSA – had two main planks.
It required the tobacco companies to fork over $206 billion to the states involved over a 25-year period. So far — half way through — they’ve paid out some $80 billion.
But it also shielded the companies from individual lawsuits that could have cost far more as well as from competition from smaller tobacco firms that didn’t sign the deal.
The MSA was signed in November 1998, against a background of legal action against the industry. The attorneys-general of 46 states, as well as the District of Columbia, Puerto Rico, and the Virgin Islands, entered into the agreement with the four largest manufacturers of cigarettes in the U.S. — Philip Morris USA, R.J. Reynolds, Brown & Williamson, and Lorillard.
Florida, Minnesota, Texas, and Mississippi had already reached individual agreements with the industry.
Smoking Down, Income Up
The effect of the agreements was, predictably, an increase in cigarette prices. Many smokers greeted the increase by butting out, but it was what economist Warner calls a “little blip” in consumption.
Indeed, CDC data show that cigarette consumption, which had already been falling slowly for a decade, took a sudden 6% drop from 1997 to 1998 and fell again by another 7% over the following year.
The number of cigarettes sold in the U.S. dropped from 480 billion in 1997 to 465 billion the next year and 435 billion in 1999, eventually reaching 380 billion in 2006. The numbers have since stabilized, with the CDC reporting in September that just under one in five working Americans still smokes.
“The total consumption of cigarettes has massively declined since the MSA,” Cheryl Healton, DrPH, of the Washington-based American Legacy Foundation told MedPage Today. The foundation is one of the spin-offs of the settlement; it gets cash to pursue the public health end of the smoking issue.
But at the same time industry revenue has been going up.
For example, in a 2006 study published in Tobacco Control, Healton and colleagues examined the effect of the agreement on teenage smoking. They found that in 1997, high school seniors smoked 890 million packs of cigarettes, generating $737 million in revenue.
By 2002, high school seniors smoked only 541 million packs – but revenue from their smoking had increased to nearly $1.2 billion.
When you take all smokers into consideration, over the long haul the domestic tobacco industry has done very well indeed.
According to an industry analyst who did not want to be named, operating income from domestic cigarette sales (which excludes other forms of tobacco) has grown from $7.195 billion in 1996 to about $9.269 billion last year, even though the cigarette sales dropped more than 40% over that time.
That’s about a compound annual income growth rate of 2%, he noted.
States Looked to Cash In
If anyone was expecting the MSA to help control smoking and eventually shut down the industry, they were dreaming in Technicolor, according to Warner.
“It was not set up to be a tobacco-control settlement at all,” he said. “It was set up to get money to the states – and it worked.”
Still, if the states had used the money to support anti-smoking campaigns, the industry might have been hurt, according to Vince Willmore, communications vice-president of the Campaign for Tobacco-Free Kids.
The states involved said they would use the settlement cash to combat smoking, but they “have largely broken that promise,” he said.
Indeed, Healton said, “you can count on the fingers of one hand the number of states that spend what the CDC says needs to be spent on tobacco control.”
She contrasts her foundation’s yearly budget of about $70 million a year, with the $12.6 billion spent on tobacco marketing annually.
The industry is “trying very hard to keep as many paying customers as they can,” she said.
For instance, she said, they fight back violently against most attempts to influence the public against smoking. The most recent example is a lawsuit filed in August against the FDA by R.J. Reynolds, Lorillard, Commonwealth Brands, Liggett Group, and Santa Fe Natural Tobacco.
The five firms want to prevent the FDA from requiring graphic warning labels on cigarette packs. The U.S. market leader, Altria (owner of Philip Morris), did not join the suit.
Firms Face Bonanza Abroad
But if the big U.S. firms face a stagnant U.S. market that they must fight to protect, the rest of the world offers fertile ground for the tobacco industry – and a potential medical disaster of gargantuan proportions.
The World Health Organization estimates that half of current smokers will die prematurely of tobacco-related illness. Until recently, the developing world was relatively sheltered from that by poverty – when it’s a choice between cigarettes or food, most people opt to buy food.
But that is changing, according to Warner. Now more people can afford to smoke and international trade agreements make it hard to regulate the big international companies.
If the developing world embraces the allure of the cigarette with the same fervor the richer nations did 65 or 70 years ago – and especially if women take up the habit – the result would be hundreds of millions of deaths.
WHO estimates there were 100 million smoking-related deaths in the 20th century. “If we don’t do anything different,” Warner said, “that will be a billion in the 21st century.
The world’s largest tobacco company, interestingly, is China National Tobacco, a state-owned monopoly. It’s followed by some familiar names — Philip Morris International (spun off by Altria in 2007), British American Tobacco (which holds more than 40% of Reynolds), Altria, and Imperial Tobacco.
They have a huge potential market, but the catch for the world’s industry is that the Master Settlement Agreement mandated the release of reams and reams of documents and studies that made the dangers of tobacco crystal clear – and developing countries and their citizens are perfectly aware of those facts.
“The world is not ignorant of the health effects of smoking,” said Roswell Park’s Cummings.
That’s why African nations are spearheading WHO’s Framework Convention on Tobacco Control, according to Cummings. The convention, now ratified by and binding on more than 170 countries, but not the U.S., aims at a universal set of standards that will limit the use of tobacco.
Giving the tobacco industry free rein, he said, means “short-term gain and a lot of long-term pain” for those nations, and their leaders know it.
In the developed world, he said, cigarette use has been falling – Australia’s smokers, for instance, now make up only 15% of the population “and the U.S. is heading in that direction” despite the recent stagnation.
And in the developing world, the ranks of smokers are not expanding as quickly as had been feared, Cummings noted. Thai men, for instance, are quitting and Thai women are not taking up the habit, and similar shifts are being seen in other countries.
Even the giant China National Tobacco, with about 40% of the world market, is pulling in its horns a bit – closing plants and reducing the number of its brands.
But the developing world remains a “battleground” for the tobacco industry, Cumming said, and even if the industry needs life support, it’s too early to call a time of death and wheel the gurney away.
By Michael Smith, MedPage Today

Japan Tobacco: Nicotine, Yes; Radioactivity, No

Japan’s smokers can breathe easy, more or less: whatever else is in their cigarettes, there’s no radiation, according to Japan japan cigarettesTobacco Inc.
The world’s third-largest tobacco company by sales volume said Tuesday that in order to “allay consumer concern” about the possibility of radiation contamination in cigarettes, it has been conducting tests since mid-August on the domestic cured leaf tobacco harvest to seek out traces of radioactive material in the wake of the country’s worst-ever nuclear incident at Fukushima Daiichi.
It ran tests on samples from all 35 municipalities where this year’s harvest was grown, prior to purchasing the leaves, and the company, known here as JT, said none of the results exceeded its own standard of 500 Bq/kilogram for radioactive cesium-133 and cesium-137 and 2,000 Bq/kg of radioactive iodine. JT adopted the same benchmark as the level set by the Food Sanitation Law for vegetables in the absence of comparable provisions established for leaf tobacco.
The samples originated from Ibaraki, Tochigi, Chiba and Shizuoka prefectures, some of which are among locations where the government banned shipments of certain food items after elevated levels of radioactive materials were detected. Above-normal levels of radioactive iodine-131 were found in spinach grown in Ibaraki and Tochigi prefectures as well as in the leafy garland chrysanthemum from Chiba prefecture. Most recently, the government temporarily restricted shipments of cows from Tochigi prefecture and other regions neighboring the unsteady Fukushima Daiichi nuclear power plant when radioactive cesium was detected in the livestock in July.
Trace amounts of combined radioactive cesium-134 and 137 were detected in 27 of the 35 samples, JT said. The highest amount measured 217 Bq/kg in a sample from Kashima, Ibaraki prefecture. Levels of radioactive Iodine-131 weren’t high enough to be detected in any of the samples.
For added customer reassurance, JT says it has several more safety checks in place before the cigarettes reach customers’ mouths. The company plans to re-examine the tobacco at three more junctures – testing it before it is processed, before use in finished products and one last monitoring check before shipments are sent off to the market.
Of course, one factor that may have had a positive influence on JT’s tests is that tobacco cultivated in Fukushima prefecture, home of the troubled nuclear plant, will not be available, unlike last year when Fukushima ranked 7th among the country’s tobacco growing prefectures.
By Yoree Koh

Department of Health in UK targeted by Gallaher and Philip Morris

The tobacco industry is targeting the Department of Health to extract information about meetings between government officials and researchers who are investigating the public-health implications of new smoking policies.
One leading tobacco company has asked for – and been given access to – the minutes of a confidential meeting between health department officials, cancer experts and foreign government officials – to the surprise of those who attended the private discussions.
The Freedom of Information requests are part of a global campaign by tobacco companies to fight any further legal restrictions on cigarette sales and promotion, particularly the introduction of plain cigarette packets devoid of company logos and branding.
Yesterday, The Independent revealed that the world’s biggest tobacco company, Philip Morris International, has demanded access to confidential interviews with British children about their smoking attitudes and behaviour, collected as part of a research project at Stirling University funded by the charity Cancer Research UK. It used the Scottish Freedom of Information (FOI) Act to request the information.
Jean King, Cancer Research UK’s director of tobacco control, said: “We would question the tobacco industry’s motivation for trying to access this information. Are they concerned about the health of young people and seeking to clarify the impact of tobacco marketing on the rates of youth smoking?”
Earlier this year, Philip Morris also submitted FOI requests to the Department of Health in order to access government documents related to “tobacco regulation”, according to Anne Edwards, director of external communications at Philip Morris International, the makers of Marlboro cigarettes.
The Department of Health has been subject to a series of FOI requests from tobacco companies, including one from Gallaher, which is part of Japan Tobacco International, the world’s third-largest cigarette company and which makes top-selling brands such as Silk Cut, Camel and Benson & Hedges.
Although tobacco companies can use FOI legislation to access government documents, the tobacco industry itself is not subject to the legislation. Critics of the industry point to the difficulty of extracting information from tobacco companies, which frequently refuse to open their own files unless forced to do so by a court order.
“Unlike official information held by government agencies, information held by private companies such as ours is often of a commercial nature and therefore cannot be released for competitive reasons,” Ms Edwards said.
In its FOI request, Gallaher wanted all information that the health department kept that could be viewed as evidence in favour of introducing plain-packaging legislation. It also wanted all correspondence between the department and outside organisations, such as the campaign group Action on Smoking and Health (ASH), the UK Centre for Tobacco Control Studies – a consortium of nine UK universities – and the scientific research charities Cancer Research UK and the British Heart Foundation.
The Department of Health tried to block giving out the minutes of a June 2009 meeting between its officials, cancer experts and overseas government representatives to discuss the possibility of introducing plain, logo-free cigarette packets that would contain only a warning and the brand name written in a plain typeface.
However, the Information Commissioner ruled that the minutes should be released to Gallaher, despite the fact that the meeting was held under the “Chatham House rule”, which states that the identify or affiliation of the speakers should not be revealed.
Deborah Arnott, the chief executive of ASH, who attended the meeting, said: “We are concerned that this is a one-way street and that the tobacco industry is not in return being either transparent or honest. The industry wants access to government documents and academic research for one purpose only: to help it fight regulation – regulation which is essential to reduce the numbers smoking and dying from their addiction.”
Japan Tobacco International, which owns Gallaher, said it was not possible in the time allowed to list all other FOI requests it has made to government departments, but, in the case of its health department request, the company wanted to understand what materials were being relied upon as evidence for tobacco-control legislation.
The company accepted that Freedom of Information did not apply to its own documents. “Of course, we are not a public authority for the purposes of the FOI Act, although we are subject to various regulatory reporting requirements,” said Jeremy Blackburn, head of communications at Japan Tobacco International UK.
Imperial Tobacco, the makers of the UK’s best-selling brand Lambert & Butler, said that its vending business Sinclair Collis, a wholly-owned subsidiary, has also made an FOI request to the Department of Health because of concerns over a ban on the sale of cigarettes from vending machines.
“Sinclair Collis made the FOI request because of concerns it had about the lack of evidence for a ban and the lack of clarity surrounding the Government’s decision-making process,” said Simon Evans, a spokesman for Imperial Tobacco.
Lobby group has a change of personnel
The tobacco firms are overhauling the organisation set up to lobby for their interests, after failing to overturn the anti-smoking policies of the Labour government. Five of the seven people employed by the Tobacco Manufacturers’ Association, including its head, Christopher Ogden, are leaving. Mr Ogden, who has worked for the TMA since 1997 and has been chief executive since 2007, steps down next month.
The TMA was set up by the three firms that dominate the smokers’ market: British-American Tobacco, Gallaher and Imperial Tobacco. It has had a frustrating year lobbying unsuccessfully for the easing of restrictions on advertising and marketing imposed since 2003 or the ban on smoking in public places introduced in 2007. A ban on cigarette vending machines, passed by MPs in October 2009, will also go ahead.
A spokesman for the TMA said that it is going through “organisational restructuring to take account of the changing nature of the regulatory climate in the UK”.
He added: “The aim of the new TMA will be to co-ordinate and represent its member companies’ interests and efforts, whilst reducing costs, removing areas of duplication and concentrating on core activities. Some positions in the TMA are being made redundant in the course of the restructure, but new roles have been created and the head count at the TMA will remain the same.”
A brief history of tobacco branding
* In the 20th century, the imagery of big tobacco permeated the public consciousness. Lucky Strike white packets, first sold in 1942, were designed by Raymond Loewy, the man behind the Coca-Cola logo, and are still remembered as milestone in modern design.
* Advertisers focused their efforts on the glamour of the cigarette, with celebrity endorsements and slogans that said, out loud, that successful people smoke.
* Men were urged to join the likes of Bing Crosby and Bob Hope in enjoying a Chesterfield, or John Wayne, who preferred Camels – or so a famous poster claimed in 1950. In 1954, another cowboy, the Marlboro Man, popularised the filter cigarette as a trophy of masculinity.
* The tobacco giants soon turned their attentions to women. In 1968 the Philip Morris group released “a cigarette for women only”, the Kiss, whose “you’ve come a long way, baby” publicity campaign made the cigarette a trophy of female emancipation.
* The culture of some sports became dependent upon tobacco-industry sponsorship. Embassy backed the big snooker and darts competitions and dished out free cigarettes to the players.
* In Formula 1, the entire look of cars and team uniforms was dictated by whichever tobacco brand was backing them. Before the 1960s, teams competed in their national colours. Team Lotus were the first, carrying the Gold Leaf logo at the 1968 Monaco Grand Prix. The rest of the sport soon followed. McLaren cars were red and white for Marlboro for 20 years; Jordan cars turned yellow when Benson & Hedges began sponsoring them in 1996. Ferrari carried the Marlboro logo until 2007.
* In the UK, health warnings first appeared on cigarette packets in 1971, on the advice of the Royal College of Physicians. A ban on TV advertising for cigarettes followed in 1986 and a 2002 law banned almost all forms of promotion, including sporting events.
* The cigarette packet itself has become a battleground between marketers and regulators. All packets have carried health warnings since 2003, with much of the pack devoted to the warning.

Altria Fires Up Dividend Hike, Riding Smokeless To $30 Stock Price

On Friday, Altria increased its dividend by 7.9% to $0.41 per common share, making it 45 times in the last 42 years that the company has hiked the dividend. With a set of new product launches in addition to its strong product mix and pricing power, the Altria Group is well positioned to grow in the smokeless tobacco segment.
Altria, previously named Philip Morris Companies Inc., is the parent company of Philip Morris U.S.A, John Middleton, Inc., United States Smokeless Tobacco, Inc., Philip Morris Capital Corporation and Chateau Ste. Michelle Wine Estates. It owns several leading cigarette and smokeless tobacco brands that include Marlboro, Copenhagen, Skoal and Black and Mild.
Altria competes with Reynolds American and Lorillard, two of its biggest competitors in the U.S.
We have a near $29.60 price estimate for Altria Group, Inc., which is about 15% ahead of the current market price.
Smokeless tobacco: The only growing tobacco segment
Smokeless tobacco is the only segment that has been growing for the company in the past several quarters. Altria’s smokeless segment’s revenues grew by 14% in 2010 and is expected to grow by 9% this year. The cigarettes segment, which currently contributes over 70% of tobacco sales in the U.S., is continuously seeing volume declines due to growing health consciousness among consumers, a ban on public smoking as well as high excise taxation on tobacco products and other legislative controls.
Smokeless products, however have come up as an alternative to cigarettes. Not only can they be consumed in places where smoking is banned but are perceived by users as less harmful than traditional cigarettes. In addition they are taxed less than cigarettes (less than 10% compared to more than 40% for cigarettes) for being perceived as products that help people quit smoking.
Major smokeless tobacco products include snuff and snus. Snus is a Swedish snuff similar to American snuff. The U.S. is a major market for smokeless tobacco products and is expected to grow at 7% between 2011-12.
Altria well positioned for growth
Altria acquired the world’s largest smokeless tobacco manufacturer, US Smokeless Tobacco Company as part of its 2009 UST acquisition. This helped significantly strengthen Altria’s market share with leading brands like Copenhagen, Skoal and Red Seal. These brands occupy a market share exceeding 40% in terms of sales volume and 55% in terms of revenues.
The smokeless tobacco division contributes approximately 15% to Altria’s stock value. In 2010, Altria’s smokeless tobacco segment grew in terms of market share and generated a 30% growth in operating income, led by its leading premium offerings of Copenhagen and Skoal. After building the Copenhagen brand over the past few quarters and gradually growing its market share, the firm has now launched more than 15 new smokeless products in 2011, which include Skoal X-tra and Skoal Snus.

Big tobacco to take Australia packaging fight to higher court

CANBERRA – Cigarette giant British American Tobacco (BAT) (BATS.L) plans to appeal an Australian court ruling that handed the tobacco industry a setback in its campaign against the world’s first ban on branded cigarette packaging.
The Australian government is legislating to enforce plain packaging for cigarettes in a bid to reduce smoking, angering the industry which has described the reform as a misguided attack on their brands and intellectual property rights.
After the plan was first announced, BAT asked the Federal Court to force the government to release its secret legal advice on the plan, suspecting Canberra’s own lawyers had warned it long ago that such a move would infringe on property rights.
The industry hopes such advice would strengthen its case for a legal challenge against the validity of the proposed law, which is expected to be approved by parliament this year.
“We are definitely looking to appeal and will try to get to the High Court as soon as possible,” Scott McIntyre, a spokesman for BAT’s Australian arm, told Reuters.
“We are thinking that if they are not prepared to release it, maybe it’s because it demonstrates that the plain packaging laws are flawed.”
Another tribunal last week rejected a similar request for government legal documents by U.S.-based Philip Morris (PM.N).
Health Minister Nicola Roxon said on Wednesday the government was determined to implement the plain-packaging reform, which is due to take effect next year and give Australia the world’s most restrictive anti-smoking laws.
“I don’t really think it’s helping them but ultimately they’ve been clear that they will fight this tooth and nail and we’ve been just as clear that we won’t let them bully us into stopping this,” Roxon said.
The lower house of parliament, where the government has a one-seat majority with the backing of Green and independent MPs, began considering the laws on Wednesday.
The conservative opposition wants some changes to allow some very modest form of branding on cigarette packets, but it too is broadly in favour of the reform.
New Zealand, Canada, the European Union and Britain are considering similar laws and governments in those countries are closely watching to see if Australia succeeds.
Analysts say plain packaging could also spread to emerging markets such as Brazil, Russia and Indonesia.
Australia’s total tobacco market revenue grew to about $10 billion (6 billion pounds) in 2009, though smoking generally has been in decline.
Smoking is the largest preventable cause of disease and death in the country.
By Rob Taylor

Marlboro Is Still The Man At Altria

Altria Group recently announced its Q2 earnings that were marked with solid operating margins and retail share performance of the

marlboro brand

company’s premium tobacco brands especially Its strong pricing power and product mix continue to be the key sources of value creation. Altria, previously named Philip Morris Companies Inc., is the parent company of Philip Morris U.S.A, John Middleton, Inc., United States Smokeless Tobacco, Inc., Philip Morris Capital Corporation and Chateau Ste. Michelle Wine Estates. It owns several leading cigarette and smokeless tobacco brands that include Marlboro, Copenhagen, Skoal and Black and Mild. Altria competes with Reynolds American and Lorillard, two of its biggest competitors in the U.S.
We have a $27 price estimate for Altria Group, Inc., which is just slightly ahead of the market price.
Although Altria’s earnings declined 60% due to one-time charges, the tobacco business performed well and delivered strong operating margins led by higher pricing and retail market share growth.

Marlboro, Copenhagen Support Growth

Higher pricing helped Altria boost its operating margins, partially offset by lower shipment volumes. The cigarettes division that contributes almost three-fourths of Altria’s stock value continued to lead the solid operating company income growth of 6% year-over-year (yoy), 3% on an adjusted basis.. The performance was led by the company’s flagship brand Marlboro, which saw sequential growth in its retail market share benefited by the recent new product launches and strengthening menthol business.
The smokeless tobacco division followed suit with strong OCI growth of 12% (yoy) led by its leading premium offerings of Copenhagen and Skoal both of which saw continued growth in their retail market shares. Better pricing helped expand OCI margins by 3.8 percentage points (pp). Copenhagen saw volume growth over the quarter with recent product introductions and strength of its core natural business.
Cigars Income Declines, Premium Wines Sell Well
In the cigars segment, Middleton continued to invest in new products, promotion and brand building to defend Black and Mild’s market position amid significant competition from imported, low-priced machine-made large cigars. While Black and Mild’s retail market share grew 1%, increased promotional investments led to a 16% decline in OCI.
In the wine segment, Ste. Michelle delivered strong financial results as it continued to improve its mix with more higher margin premium products. As a result, net revenues grew at 8-9% while OCI increased double digits in the second quarter and first half of 2011.
By Trefis

BAT Dumps Bulgarian Cigarette Maker

British American Tobacco, the only top-notch investor among the companies, which were expected to bid for Bulgaria’s majority bulgar tobaccostake in cigarette maker Bulgartabac, has withdrawn from the tender, officials said.
The company has sent an official letter, terminating its participation in the procedure due to “commercial and strategic reasons”, the privatization agency announced on Monday.
The news comes a week after Austria-based CB Family Office Service abandoned the sale, leaving Austria-registered BT Invest, behind which stands Russia’s second-biggest bank VTB, the only bidder for Bulgarian tobacco monopoly.
The move also confirms rumors, which said British American Tobacco bought documents for the tender just with the aim of collecting information and had no plans to bid.
Six years ago BAT was picked Bulgartabac buyer, but the procedure was terminated following pressure from the ethnic Turkish Movement for Rights and Freedoms, an ally of the government at that time, while the then Economy Minister Lidia Shuleva resigned.
Since then the market share of the holding shrank to about 37% due to strong competition by foreign brands.
British American Tobacco and Austria-registered BT Invest were the only two companies, which bought information memoranda before the deadline expired on July 25.
CB Family Office Service, the other Austria-based company, which was expected to submit a binding offer, did not purchase an information memorandum. Reports that the company had operational problems with the bank transfer of the money needed (BGN 20. 000) and may still take part in the tender have proved false.
Under the rules of the procedure the companies have to place a deposit and submit binding bids no later than August 29, while the winner should be selected in September.
Now that only one bidder has remained, it is not clear how the privatization agency is going to proceed.
Last month the head of Bulgaria’s Corporate Commercial Bank, which is believed to finance the media group of mogul Irena Krasteva, has denied he is interested in the privatization of the country’s state tobacco giant Bulgartabac Holding.
Tsvetan Vassilev is rumored to be linked to one of the two bidders for the state-owned cigarette-making giant, registered in Austria – CB Family Office Service or BT Invest.
Corporate Commercial Bank currently holds a 8.11% in Bulgartabac. The bank, which is believed to finance the media group of mogul Irena Krasteva, holds nearly half of the money of strategic state-owned companies.
A majority stake – 79,83% – in Bulgaria’s state cigarette producer Bulgartabac Holding, whose management has been harshly criticized in recent years, was put on sale on April 26 after years of procrastination.
The long-delayed procedure was officially given the go-ahead by the agency for privatization and post-privatization control through an announcement in the State Gazette on May 10.
The consultant for the Bulgartabac sale, Citigroup Global Markets Ltd, was picked by the Bulgarian government in February 2010.
Two of the less profitable plants of Bulgartabac holding – in the cities of Plovdiv and Stara Zagora – were sold in 2009 through the Sofia Stock Exchange – for BGN 31 M and BGN 18 M respectively.
The holding currently owns the two larger and more consolidated factories in Sofia and Blagoevgrad as well as a number of commercial brands.

A New Hampshire Giveaway to Big Tobacco

When the New Hampshire Legislature cut the state’s cigarette tax by 10 cents a pack, effective July 1, it was touted as a way to boost the state’s economy by reducing cigarette prices and attracting smokers from neighboring states.
It’s outrageous enough that a state would encourage sales of a deadly and addictive product — one that kills 1,700 New Hampshire residents and costs the state $564 million in health care bills each year.
Now it turns out that the promised cigarette price cut is a total mirage. As reported by The Portsmouth Herald, tobacco companies immediately hiked prices, pocketing the increased revenue instead of passing it on to consumers.
As Mike Rollo of the American Cancer Society told the paper, “They basically gave a bailout to the tobacco companies.  They certainly didn’t help the consumer or the small-business owner.”
The tax cut will cost New Hampshire millions in revenue at a time when the state is making deep cuts to funding for hospitals, the state university system and other vital programs.
So who’s behind the Big Tobacco giveaway? New Hampshire newspapers point the finger at House Speaker William O’Brien, who insisted that any budget agreement include the cigarette tax cut.
“The millions of dollars in tax revenue that could have helped the state during these troubled times was literally given to the tobacco companies by O’Brien and his minions,” The Portsmouth Herald stated in an editorial.
O’Brien had plenty of help from tobacco companies. “In all my years up here, I’ve never seen an industry twist and push our Legislature the way the tobacco industry pushed,” Sen. Jack Barnes said in a speech on the Senate floor.
New Hampshire’s experience is a lesson for legislators and voters across the country.  When tobacco companies and their allies advocate for cigarette tax cuts, the ultimate winner will be Big Tobacco, not consumers.
The right policy is to increase the cigarette tax — a proven way to reduce smoking, especially among kids, and raise much-needed revenue at the same time.  It’s a health win, a revenue win and also a political win because polls show voters overwhelming support increasing the cigarette tax.

Marketing American Spirit Cigarettes As "Eco Friendly"

WASHINGTON, DC — The Reynolds American tobacco company is once again deceiving consumers by running magazine ads that describe its Natural American Spirit cigarettes as “eco friendly.” This is yet another attempt by a tobacco company to downplay how deadly and addictive cigarettes truly are, this time by marketing a cigarette brand as environmentally friendly. Consumers should not be deceived: There is nothing healthy or environmentally responsible about Natural American Spirit cigarettes or any cigarettes.
The new “eco friendly” ads are running in women-oriented magazines such as Elle, Lucky and Marie Claire, continuing the tobacco industry’s long history of targeting women with advertising implying a less harmful cigarette. Natural American Spirit cigarettes are manufactured by a Reynolds subsidiary, Santa Fe Natural Tobacco Company. We call on Reynolds American and the Santa Fe Natural Tobacco Company to immediately end this deceptive ad campaign.
Natural American Spirit cigarettes are just as deadly as other cigarettes and contribute to the more than 400,000 deaths caused by smoking in the United States each year. Cigarettes also harm the environment. Cigarette smoke spews more than 7,000 chemicals into the environment, including hundreds that are toxic and at least 69 that cause cancer. According to calculations from researchers in this field and published in an issue of Tobacco Control funded by Legacy earlier this year, at least 5.6 trillion cigarettes are discarded into the environment worldwide annually. Cigarette filters and butts are the most common form of litter and are the most common debris item collected from beaches and inland waterways during Ocean Conservancy’s annual International Coastal Cleanup, with nearly two million cigarettes and cigarette butts picked up during the 2010 cleanup. Cigarette butts contain heavy metals that can leach into waterways, posing a threat to aquatic life.
Santa Fe Natural Tobacco Company has faced legal action by several government agencies over advertising implying that Natural American Spirit cigarettes are less harmful. Prior to the current “eco friendly” campaign, Santa Fe has run ad campaigns claiming that its cigarettes contain “no additives” and are made with organic tobacco. In 2000, the Federal Trade Commission filed a deceptive advertising complaint and reached a settlement that required Santa Fe to add a disclaimer to its packages and advertising stating, “No additives in our tobacco does NOT mean a safer cigarette.” In 2010, attorneys general from 33 states and the District of Columbia, led by California, reached an agreement requiring Santa Fe to add a disclaimer stating, “Organic tobacco does NOT mean a safer cigarette.”