Altria

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Altria, the largest U.S. Tobacco Company and maker of cigarettes Marlboro, says that customers are increasingly their discount brands and smokeless tobacco products in the face of rising prices and smoking bans.

On Friday, Altria has made two announcements that may mean a shift in long-term strategy. Michael Szymanczyk, 63-year-old chief executive of the company, said that he resign and be replaced by Martin Barrington, group vice-chairman.

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Separately, Altria said it has entered into an agreement with the Okono, branch Fertin Pharma, a Danish manufacturer of nicotine chewing gum, to develop a "noncombustible" tobacco products.

 “Altria continues to focus on developing reduced-risk products that appeal to adult tobacco users," Mr. Szymanczyk said.

The moves came as Altria announced a 9 per cent year-on-year decline in its fourth quarter net earnings to $837m, or 41 cents a share, as restructuring charges weighed on the results. Last October, the company announced a cost reduction programme intended to save $400m a year to help cope with declining cigarette sales volumes.

With sales of Marlboro cigarettes fell by 0.6 percent on an annualized basis in the fourth quarter, while Altria in other premium brands declined 7.2 percent. Meanwhile, the volume discount for their brands has jumped nearly 20 percent and smokeless products were up 9.7 percent.
Overall, revenues grew by 3.4 percent from a year ago to $ 6.1 billion in the fourth quarter.

"Despite the increased shares, the share of retail sales of Marlboro continues to decline," said Bonnie Herzog, an analyst at Wells Fargo.

Ms. Herzog said that the second-level tobacco brands fighting for supremacy, and taking market share from more expensive cigarettes premium. Shift, she says, is "fueled in part by a consumer dispute, which tends to decrease”.

Altria’s results come as the tobacco industry continues to face pressure from prohibitions of taxation and the threat of greater regulation on packaging and menthol products.

Although Mr. Szymanczyk recognized changes in the cigarette market, he said it was important to maintain Marlboro "modest momentum", so that the company supports the growth of profits. Altria, which recently made a package of amendments to some of its brands Marlboro, said that to announce brand-building plans in the next month.

Altria shares fell 1.57 per cent to $28.21 in midday trading on Friday.

E-cigarette users cry foul at proposed city ordinance which would ban 'vaping' in public places

E-cigarette users cry foul on the proposed law city, which would ban «vaping" in public places
Dwayne Green, 26-year-old smoker's cigarette, did not plan to quit smoking when he tried to e-cigarette. He simply wanted to replace the closed in cold weather.

Lisa Sharp, a 25-year-old smoker, buy electronic cigarette on a whim, to experiment with a "cool toy" that a friend once shared with her.

Richard Brewer, who puffed on 35 years of age, was more methodical, spending about 250 hours, reading the information, and online reviews before you buy an electronic cigarette.
For each, though, the result was quick and dramatic.

They abandoned the traditional cigarettes, and only began to "vaping" electronic cigarettes - battery-operated inhalers that make tobacco-free, nicotine-filled fluid in the mist of steam.

They are converts. And they are happy to remove long-ingrained and cancer-causing habit. But they are unhappy with the proposed resolution of the city, which would not allow them to "WAP" in public places.
Is their new habits, however, is better? The scientific evidence is not conclusive. However, clearly, they say "yes."

Just Mike Kline, owner of Indy vapor shop, Westside electronic cigarette store. He said that increased earnings by 20 percent every month since it opened a year ago. The average age of its customers is about 35 to 40. About 60 percent are women.

"From the first breath, I knew it would work, because I felt like smoking," said Cline, 60, who smoked for 40 years. "I had a terrible cough of smokers, and within six weeks he was gone. Now I have much more energy than I had in the past 10 years. I wish I knew about this many years ago."

Local «vapers", as they are called, are part of a rapidly growing - some call it explosive - the electronic cigarette trends.

Nationally, the number of Americans trying electronic cigarettes is four times from 2009 to 2010, according to the U.S. Centers for Disease Control and Prevention. In 2010, the study found that 1.2 percent of the adult population, about 3 million people who reported using them in the previous month. About 50 million cigarettes smoke. E-cigarette industry's annual sales estimated at more than $ 100 million.

Already one prominent researcher of tobacco, Michael Siegel of Boston University, found e-cigarettes are much safer than cigarettes, and the real show "great promise" in the fight against tobacco-related diseases and deaths.

But it is unusual handheld device, invented by a pharmacist in China in 2003 and introduced in the United States in 2006, detractors.
They include some of the local anti-smoking advocates, public policymakers and health professionals, and organizations like the American Heart Association, American Lung Association, American Cancer Association and the Campaign for Tobacco-Free Kids.

Their main objection: Science-based evidence to support e-cigarettes are effective and safe is not conclusive. Without it, many people want to e-cigarettes should be included in anti-smoking bans, that local and state governments pass.

E-cigarettes are not a part of the anti-smoking bill in the Indiana General Assembly. But the city-county Council to prohibit their use in public places in a decree before the final vote may already be on January 30.
"I personally believe that they are harmful to health. I believe that nicotine is the issue," said Angela Mansfield, the Democratic member of the board and co-author. "I feel it's important for us to try to be proactive and avoid potential problems."

This is the wrong approach, says Sharp, 40, a biochemist from near Lafayette, who works in Indianapolis. Sharp smoked since she was 15 years old, except when she was pregnant, but nine days after she tried to e-cigarettes in October, she threw it smokes.
"If they passed the ban, I would be very disappointed," said Sharpe.. "It has done so much for me. I want other people to quit smoking."

For Sharp, electronic cigarettes are a healthy alternative for her and those around her. "I do not breathe vapor. My lungs are not coated with resin and all the other nasty chemicals in cigarettes. Plus, I can not see that it does no harm to those around me."

Anti-Smoking Campaigns Work, So Don't Quit Now

Get ready for a barrage of ads that will come at you with a singularly mind-blowing message: Smoking is bad for you. Not just bad for you. Really bad for you.
It's a fact that should be obvious to any sentient being, yet within the next year or so, not one but two federal agencies, the Centers for Disease Control and the Food and Drug Administration, will be newly pounding the nation's airwaves with anti-smoking ads -- as if it were a sure thing that you needed them. To be a smoker in 2012 is not only to ignore the biological reality that the habit will knock years off your life but also shrug off the cultural stigmas -- the dwindling number of smoke-friendly public places, the dirty looks -- and the fact that heavily-taxed smokes are priced at a point only a one-per center could easily afford.
If we've seen a "demoralization of smoking," as the CDC describes it, do we need to drop hundreds of millions of dollars on a familiar message during cash-strapped times? If all those appeals to the brain, wallet and pride don't work, how will a bunch of ads?
As it turns out, anti-smoking ads actually do work. There's plenty of academic research proving it. And there's circumstantial, but no less compelling, evidence that in the absence of advertisements, smoking rates don't go down as quickly as they would without the nagging. And that entails its own costs.
Smoking's steady decline, which began in the 1960s after the Surgeon General's initial warning, has leveled off in recent years. Between 1998 and 2005, the adult smoking rate dropped 13%, but since 2005, any changes have been minimal. For the better part of six years, it has been at the 20% mark or just below. All-important youth-smoking rates declined 40% between 1997 and 2003, but between 2003 and 2009, that decline slowed to 21%. 
Meanwhile, during those years funding decreased dramatically for the main national anti-tobacco advertising player, Legacy, the foundation funded by the 1998 settlement between tobacco companies and the attorneys general of 46 states. According to Kantar, Legacy's media budget between 2007 and 2010 totaled about $100 million. That's the amount Legacy would spend in a single year in its early days. And, at the state level, average household exposure to anti-smoking ads peaked in 2006 and 2007 and has been coming down since, according to a study of Nielsen data by the University of Illinois-Chicago.
"There's no consistency at the state level," said Eric Asche, chief marketing officer at Legacy. "And the general trend has been to spend less, not more."
Connecting the slowing decline in smoking with the steeper drop in anti-tobacco ad spending is to draw a broad correlation. It's a mug's game to chart smoking-rate changes directly to the rise and fall of advertising budgets. Media spending is not the only factor in smoking prevention, and probably not even the most important. That distinction goes to taxes. There are other factors, especially smoke-free-air laws that effect bans in workplaces and other public places. With all the activity, it's difficult to isolate the effects of advertising.
But there's no doubt that the leveling off of the smoking rate has occurred at a time when many states, amid deep cuts to tobacco-prevention budgets, are spending next to nothing on ads and have been getting little air cover from the national level. This is bad news when you consider how effective those ads have been.
Research scientists have been studying the impact of anti-smoking ad campaigns for decades, even before the "Truth" campaign launched in 2000, when the job was mainly the province of individual states. 
Many have found what Sherry Emery, a health economist who has studied the impact of media campaigns at the state level, has. Ms. Emery said that analyses of youth and adult reaction "showed that higher levels of exposure to the state media campaigns were associated with less smoking and more anti-smoking attitudes and beliefs."
The Truth campaign, currently handled by Arnold, is the most important national anti-tobacco ad effort in recent years and has yielded positive results. A 2005 study in the American Journal of Public Health reported that about 22% of the decline in youth smoking between 1999 and 2002 was attributable to the Legacy foundation ads -- not bad when you consider that the ads weren't even running through the entire period. Since 2003, Legacy's funding has been just a fraction of what it started with, a function of the master-settlement agreement.
That's because the agreement required the Big Four tobacco companies that signed it to fund Legacy only through 2003 if their collective market share fell below 99.05%. (By 2001, that share was already below the threshold, at 96 %.) Settlement payments to states continue, but it's a sore spot with some that a small percentage of that revenue -- just under 2% of $25 billion in 2011 by the Campaign for Tobacco-Free Kids' count -- goes to fight tobacco use. As for the states, the dire economic conditions of recent years have led many to cut back their tobacco programs. The group estimates that total state spending has dropped 36% over the past four years.
Kentucky, a tobacco-growing state tied for the highest smoking rate, and with a tiny budget to fight it, is as particular as it can be about what ads it will run. Rather than use off-the-shelf ads for its just-launched $370,000 secondhand-smoke campaign, the state developed creative via Doe Anderson, Louisville. It's a big investment, as average expenditure on media campaigns is in the neighborhood of $100,000 (but can be much less).
"I think it's very hard at the national level for a government agency to make ads that both can stand out and be acceptable to everyone," said Gwenda Bond, assistant communications director at Kentucky's Cabinet for Health and Family Services. "It's sort of a Catch-22 in some ways. I think the states have a little more freedom and flexibility to go a little bit further field with their concept."
The good news is that there's evidence that various styles of advertising work, from the industry-as-manipulator ads of Truth to campaigns focusing on the nasty health effects of smoking. 
Ms. Emery is currently analyzing what kinds of ads work best. Preliminary results show that the answer is not what you might expect, and seem to have little to do with state-smoking laws or whether the state is a tobacco grower. Ms. Emery's hunch is that in "media markets that are dominated by one primary message, like a health-effects ad or secondhand-smoke ad, their overall campaign is a little less effective than media markets that have a diverse portfolio of messages."
OK, so you're not swayed by science. Then what about money? Do anti-smoking ads pay for themselves?
Return on investment is a knottier problem than whether the ads work with audiences on an emotional level, and it hasn't been studied as much. But there is one informative study.
Three years ago, the American Journal of Preventive Medicine published a cost-utility analysis of the Truth campaign between the years 2000 and 2002. The researchers found that campaign efforts costing $324 million averted about $1.9 billion in medical costs. That's a return of about 6 to 1 for one of the most intense -- in terms of reach and cost -- anti-smoking ad campaigns ever done.

Ballard clears the air on smoking issue

One thing became clear during an interview last week with Mayor Greg Ballard: He's tired of being asked about smoking bans.

It's understandable -- he's been answering persistent questions for more than two years.
Republican facing flak for threatening to veto the 2009 City-County Council proposals that would expand the ban on smoking Marion County, the majority of bars. Last year, the Democratic challenger Melina Kennedy criticized him on this issue.

And then, late last year, he endorsed the proposed compromise put forward by the former Chairman of Ryan Vaughn, who carried the liberation of the Ballard soul. But Democrats have been flooding the measure in the committee vote.

Now, with Democrats newly in the council majority, a bipartisan smoking ban proposal -- also mostly in line with Ballard's preferences -- is being introduced at Monday's meeting. . It will cover most of the bars, while the release of existing cigar bars and hookah, tobacco shops and private nonprofit clubs and fraternal organizations, whose members vote to keep smoking.

So, once again, the Indianapolis Star showered the mayor with questions about the smoking ban during a visit last week of his 25th floor office.
Here's one, but first some background: Ballard's advisers asking sponsors a new proposal to relax regulations on private clubs, so that those who keep smoking may continue to allow children in their buildings. As written, they could not, even if they are to host events such as weddings.
The Council sponsors noted that Ballard, in search of an exception for private clubs, never before revealed allows children as part of its requirements.

So why is he now? (Moreover, some Democrats in voting down the proposal last month, Vaughn cited as one reason for the late amendment that would allow children in the nonsmoking areas of the clubs).
Ballard, who said that he did not buy that the Democrats the true motive for the committee votes, conceded that he may not fully spelled out its intentions for private clubs.

"Maybe, but private is private, so far as I'm concerned," he said, and he does not want to dictate how these clubs operate. "Depending on what language we can look at it. I do not want to commit to anything. I just want to see what the language."
Incoming Democratic President Maggie Lewis told the Star last week that the club's relaxing position would "spoil everything."

Another question for Ballard: Board to vote on a new proposal by the end of January. If it passes, and he signs it, if he would accept the offer of the Lewis and declare a "pressing need" under state law, so that the smoking ban could come into effect in bars until February 5, Super Bowl?

Not too many chances, he said...

"I do not have Super Bowl time," Ballard said. "If people like that, if it was important to them, they had the opportunity in December to get it done" by passing a sentence Vaughn.
"We gave them 90 percent of what they wanted on a silver platter," he said. "We gave it to them, they said no. That's how I see it."

Tobacco all over the world: World Bank urges PH to hike tobacco, alcohol taxes...

Tobacco all over the world: World Bank urges PH to hike tobacco, alcohol taxes...: The World Bank has urged the Philippine government to increase the share of excise taxes on tobacco and alcohol to nearly 1.3 percent of ...

World Bank urges PH to hike tobacco, alcohol taxes.

The World Bank has urged the Philippine government to increase the share of excise taxes on tobacco and alcohol to nearly 1.3 percent of gross domestic product (GDP) in the next five years.
In a report, the World Bank said the move would not only increase its income share to the government coffers but the additional revenues can be used to improve health services and social protection.

“Likewise, the incremental revenue would enable the government to increase its human and physical investment to improve the country’s growth and development prospects,” the World Bank report said.
It added that this would also address the large negative externalities arising from smoking and drinking, and to discourage their consumption.

“Over the medium term, higher excise rates would induce the poorer households to reduce consumption compared to wealthier households, thus savings from reduced consumption (by the poorer households) can be channeled to food and human capital investment to enhance their welfare,” the World Bank said in its latest Philippine quarterly update.
The report recommends specific taxes over ad valorem, stating that specific taxes are automatically and frequently indexed to inflation.

“Ad valorem excises are more complex to administer since the value of the product has to be ascertained and is prone to transfer pricing abuse. This leaves more opportunities to challenge the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) assessments as opposed to specific excises, which simply require counting physical quantities,” it said.

For tobacco, the World Bank recommends a shift to a uniform excise tax rate for all cigarette brands. The Philippine government must raise excise tax rates to achieve an average excise to retail sales price (RSP) ratio of 50 percent in 2012 (and 60 percent by 2016), and index excise rates to nominal GDP.
 By indexing, the excise tax rates to nominal GDP growth will keep the excise burden from falling, avoid revenue erosion in the future, and provide funds to improve health services.

It further suggested that government must ensure all tobacco taxes are subject to specific tax rates, including cigars. The move will further improve administrative efforts to minimize leakages from smuggling due to the proposed higher tax region, it added.

The rationale behind the World Bank recommendations is that a shift to a uniform excise tax rate for all brands will remove production distortions, discourage consumption, and improve equity across brands.
“The current multi-tier price classification system has no clear policy rational and is unique internationally. It therefore should be abolished,” it added.

The report said that the Philippines must bring the excise rate closer to regional rates while increasing revenue.
Philippines reflect a 48.2 percent tax burden to retail sales price while Thailand slaps 73.2 percent to RSP; Indonesia with 51.8 percent to RSP; Pakistan with 69.3 percent; and China with 62.2 percent.
For alcohol, the Philippines reflects an excise to RSP of 26.1 percent for beer and 5.5 percent for wine. In Thailand, it is 55 percent for beer and 25 percent for wine; in Vietnam, 50 percent for beer and 25 percent for wine; in Cambodia, 30 percent for beer and 10 percent for wine.