Australian could be exorcised from outdoor eating and drinking venues

Australia is apparently eager to become home of the strictest anti-smoking rules across the globe. The local health officials keep proposing regulations and restrictions like various bans and tax increases to crack down the tobacco consumption throughout the nonsmokercountry.
In conformity with the new legislation introduced by Australian Capital Territory (where the Capital City Canberra and the largest city Sydney are located), lighting up will be banned in any outdoor public eating or drinking facility.
The legislation will oblige smokers to puff at least within two meters (6.5 feet) away from the public venues, otherwise they will be fined.
The bill – similar to the legislations passed in Queensland and Tasmania is intended for guaranteeing tobacco-free workplaces for restaurant and bar personnel, the ACT Health Minister’s spokesman admitted.
However, Katy Gallagher, the ACT Public Health Minister said that although it is clear that those businesses would be hurt, the legislation should be approved. According to the proposal, any outside section of a venue where meals or beverages are served should be totally smoke-free, without any exemptions, with bars, restaurants, cafes, and pubs – not the private cigar clubs – subjected to hefty fines for noncompliance.
The Health Minister admitted she was sure that the bill would be opposed by the business owners; however, remained confident that no-one should be exposed to environmental tobacco smoke while at work. She said that it is not fair that all the workplaces in the country have become smoke-free and only restaurants personnel is still exposed to smoke because the government provided a loophole for the owners.
Responding to the question concerning the violation of smokers’ rights, she declared that the proposed bill has been a rather «balancing act”, as the similar measures in other Australian states are successfully working, because if the smokers want to smoke despite all the efforts, it is their own decision, but they should do it in such a manner, that nobody else would be hurt by the smoke, she said.
She added that the local government also is considering such measures as banning puffing in cars in presence of adolescents and at outdoor teenage events.
However, the business owners complain that in reality the ban would outlaw outdoor venues they have designated to accommodate smokers when the smoking sections were prohibited under the Indoor Smoking Act and hurt their businesses significantly.
They point out at lack of evidence proving that outdoor smoking is also hazardous for non-smokers.
But the health minister remained definite about the necessity of the ban, saying that the ban would help reducing the hazardous consequences of secondhand smoke.
If approved by the government, the ban would enter into effect in December 2010.

Smoking ban to go before county voters

St. Louis County voters will render their verdict on a controversial smoking ban ballot measure on Tuesday, in an election that is expected to have very low turnout.
Known as Proposition N, the measure would ban smoking in most public indoor places in the county, effective January 2011. Bars that earn less than 25 percent of their sales from food, casino floors, smoking lounges at the St. Louis airport, and private clubs would be exempt.
The ban’s passage would also trigger a smoking ban in St. Louis that city aldermen passed on Oct. 23.
While the local community has been strongly divided, Washington University community members appear to favor the ban for public health reasons.
Senior James Mosbacher, a St. Louis-area resident, said he supports banning smoking in restaurants and will vote for the measure because it exempts bars.
“Part of the population that I think has made cities like Chicago so successful is young people,” Mosbacher said. “For businesses that conduct their sales not entirely on alcohol, I think that smoking is a drawback for those people to patronize these places.”
Martha Bhattacharya, postdoctoral fellow in developmental biology, has become perhaps the University community’s strongest advocate of the smoking ban, serving as treasurer of the pro-proposition campaign, County Citizens for Cleaner Air. Bhattacharya said she has encouraged some students she knows to vote.
In a recent op-ed submission to Student Life, Bhattacharya pushed students to turn out for the election, writing, “Last year, many of you registered to vote in St. Louis County in order to make a difference in the choice of our president. Please don’t let your civic responsibility stop there.”
When interviewed, some students who live in St. Louis County said they are not sure if they will vote, or they plan not to vote at all.
Sophomore Amy Plovnick said she supports the ban but has not decided if she will vote.
“This is really the only big issue people would be voting about,” Plovnick said. “I think it’s an important issue, but I don’t know if it’s that important to get me to go, but I’m going to try to vote.”
Turnout is expected to be very low throughout the county, largely because it is an off-year election with no high-level races on the ballot.
“We don’t have a Clinton or a Bush or even an Obama, much less a Senate race or House of Representatives race,” said Dave Robertson, a political scientist at the University of Missouri-St. Louis. “The people who will turn out are people who feel unusually strongly about the issue, for the most part.”
It’s not clear whether low turnout would sway the vote. Representatives of both sides have said they are working to mobilize voters.
The referendum originated over the summer in the St. Louis County Council as a bill, which was sponsored by Councilwoman Barbara Fraser, D-University City. Fraser has said the ban would not be perfect due to the exemptions but would still improve air quality without harming businesses.
Business and bar owners opposed to the ballot measure have argued that the ban would infringe upon their property rights.
Bill Hannegan of the anti-ban group Keep St. Louis Free has touted air filtration as an alternative to a smoking ban and said many bar owners are “worried sick” about the ban because it would drive customers to nearby counties.
Cicero’s Restaurant, which recently went smoke-free only in its dining area, will have to go completely smoke-free if the proposition passes. Bobby Francis, front-of-house manager of the popular destination for students on the Delmar Loop, said a ban would be “problematic” for bar customers who smoke, but did not know how it would affect business.
Ban supporters have said peer-reviewed studies show that air filtration is ineffective and that smoking bans do not negatively affect business.
Supporters have also said the ban on the ballot, though not comprehensive, would be a step in the right direction.
“There are a lot of bans that have started as local ordinances, and most of the local ordinances are not 100 percent comprehensive,” Bhattacharya said in an interview. “We have to start with something maybe a little less than perfect, but something that will substantially help the health of the county.”
Due to the trigger provision in the city’s smoking ban, county voters effectively will be determining the fates of both jurisdictions’ proposals.
In a debate on Monday in Clayton, Fraser said the trigger effect invalidates opponents’ argument that the proposition’s passage would create an uneven playing field between county and city businesses. She added that nearby counties “are looking seriously at this legislation, and that the domino effect will take place.”
Hannegan responded that the ban would cause non-exempt businesses to lose money to those that would be exempt.
“That’s not a level playing field,” Hannegan said.
Some public health groups, including the American Cancer Society and the American Lung Association, have taken no stance on the proposition because they say it has too many exemptions.
Tuesday’s election will end a heated countywide battle that started in August, when the County Council debated multiple bill versions. The initial bill, which had no exemptions, was rejected, but a later bill version with the exemptions passed the council by a 4-3 vote on Aug. 25 and was later signed by County Executive Charlie Dooley.
At the Aug. 4 council meeting, Medical Public Policy Specialist Robert Blaine delivered a statement on behalf of the University urging the council to put a ban on the November ballot that was “as broad and as comprehensive as possible.” The statement came five months after the University announced a tobacco ban on its campuses, effective July 2010.
Despite the final bill’s exemptions, Blaine later said the University still supported putting the ban on the ballot, but he did not endorse the measure itself.

By Puneet Kollipara
October 30, 2009 Studlife

LORILLARD, INC Reports Operating Results

LORILLARD is the third largest manufacturer of cigarettes in the United States. Lorillard is the oldest continuously operating tobacco company in the U.S. Newport Lorillard’s flagship brand is a menthol-flavored premium cigarette brand and the top selling menthol and second largest selling cigarette in the U.S. In addition to Newport the Lorillard product line has five additional brand families marketed under the Kent? True? Maverick? Old Gold? and Max? brand names. These six brands include 44 different product offerings which vary in price taste flavor length and packaging. Lorillard’s manufactures all of its products at its Greensboro North Carolina facility and maintains its headquarters there. Lorillard, Inc has a market cap of $12.85 billion; its shares were traded at around $77.8 with a P/E ratio of 13.7 and P/S ratio of 3.1. The dividend yield of Lorillard, Inc stocks is 5.2%.
Highlight of Business Operations:
Net sales. Net sales increased by $294 million, or 26.1%, from $1.125 billion for the three months ended September 30, 2008 to $1.419 billion for the three months ended September 30, 2009. Net sales increased $291 million due to the increase in federal excise taxes effective April 1, 2009 and $94 million due to higher average unit prices reflecting price increases in December 2008 and February and March 2009, partially offset by $69 million due to lower unit sales volume and $22 million of higher sales incentives. Federal excise taxes are included in net sales and increased $30.83 per thousand units, or $0.62 per pack of 20 cigarettes, to $50.33 per thousand units, or $1.01 per pack of 20 cigarettes, effective April 1, 2009.
Cost of sales. Cost of sales increased by $276 million, or 42.1%, from $655 million for the three months ended September 30, 2008 to $931 million for the three months ended September 30, 2009. The increase in cost of sales is primarily due to the increase in federal excise taxes, higher raw material costs (primarily tobacco and wrapping materials) and higher pension expense, partially offset by lower unit sales volume, the absence of free product promotions and lower expenses related to the State Settlement Agreements. We recorded charges for our obligations under the State Settlement Agreements of $294 million and $304 million for the three months ended September 30, 2009 and 2008, respectively, a decrease of $10 million. The $10 million decrease is due to the impact of lower unit sales ($19 million), partially offset by impact of the inflation adjustment ($8 million) and other adjustments ($1 million).
Net sales. Net sales increased by $739 million, or 23.7%, from $3.116 billion for the nine months ended September 30, 2008 to $3.855 billion for the nine months ended September 30, 2009. Net sales increased $595 million due to the increase in federal excise taxes effective April 1, 2009 and $317 million due to higher average unit prices reflecting price increases in May and December 2008 and February and March 2009, partially offset by $134 million due to lower unit sales volume and $38 million of higher sales incentives. Federal excise taxes are included in net sales and increased $30.83 per thousand units, or $0.62 per pack of 20 units, to $50.33 per thousand cigarettes, or $1.01 per pack of 20 cigarettes, effective April 1, 2009.
Cost of sales. Cost of sales increased by $591 million, or 32.1%, from $1.839 billion for the nine months ended September 30, 2008 to $2.430 billion for the nine months ended September 30, 2009. The increase in cost of sales is primarily due to the increase in federal excise taxes, higher raw material costs (primarily tobacco and wrapping materials) and higher pension expense, partially offset by lower unit sales volume, the absence of free product promotions and lower expenses related to the State Settlement Agreements. We recorded charges for our obligations under the State Settlement Agreements of $848 million and $854 million for the nine months ended September 30, 2009 and 2008, respectively, a decrease of $6 million. The $6 million decrease is due to the impact of lower unit sales ($33 million), partially offset by impact of the inflation adjustment ($23 million) and other adjustments ($4 million).
Selling, general and administrative. Selling, general and administrative expenses increased $6 million, or 2.2%, from $276 million for the nine months ended September 30, 2008 to $282 million for the nine months ended September 30, 2009. The increase was primarily due to an increase in legal expenses of $17 million due to the continuing defense costs associated with the Engle progeny cases and higher pension expense of $10 million, partially offset by the absence of an $18 million charge in the first nine months of 2008 related to the Separation.
Cash flow from financing activities. Our cash flow from operations has exceeded our working capital and capital expenditure requirements during the first nine months of 2009. We paid cash dividends of $291 million on January 24, 2008 and $200 million on April 28, 2008 to Loews Corporation, our sole shareholder prior to the Separation on June 10, 2008, and cash dividends to our shareholders of $155 million on March 12, 2009, $155 million on June 12, 2009 and $163 million on September 11, 2009. During the third quarter of 2009, the Company completed the $250 million share repurchase program announced on May 21, 2009 by repurchasing approximately 1.5 million shares of its common stock at a cost of $105 million and repurchased approximately 3.4 million shares of its common stock under a $750 million share repurchase program announced on July 27, 2009 at a cost of $252 million.

Oct. 29, 2009 Gurufocus

Smokin' new business

What is the outcome of combining molasses and fruit flavors in a bowl? It isn’t a dessert in the case of a new downtown Grand Forks business.
Dreas Hookah Lounge, the state’s first such business, is planning to welcome its first customers at 416 DeMers Ave. in the next twohookah weeks. Manager Andy Brunette explained that a hookah is a tobacco-smoking device with a glass base filled with water or juice, with an attached metal stem, a hose and a ceramic bowl.
A burning charcoal rests on foil covering the bowl, which is filled with strip-leaf tobacco combined with molasses. This acts as a heating element to vaporize, not burn, the tobacco known as shisha, releasing the natural nicotine and the sugar from molasses.
It isn’t the same tobacco found in cigarettes or cigars, Brunette said — it has a lower nicotine concentration, contains no chemical additives and usually comes in fruit flavors such as strawberry or papaya.
The vapor is first filtered through the base’s water before going through an inhaling hose. “It’s a very smooth smoke,” he said, because of this water filtration.
It still has health risks — it is a tobacco product, after all, and research into its effects suggests it could lead to increased risks of gum disease and other health problems. “It’s basically for people 18 and older to come in and make that choice as an adult,” he said.
Hookah etiquette
The use of hookahs dates to the 16th century in India. It has since gained popularity in the Middle East and is gaining fans in North America.
Hookah etiquette tends to relate to Middle Eastern culture. For example, the hookah itself should not be higher than eye level. “They just felt that nothing should be above you except for God,” he explained.
Another rule is to only use the right hand to hold the hose because the left hand is considered unclean, he said. Brunette didn’t have an explanation for another rule — when finished with one’s turn, it is recommended to set the hose down on the table and allow the next smoker to pick it up rather than directly passing it off.
“It’s just been done throughout the ages that way,” he said.
But patrons can relax — Brunette will provide informational sheets at each table but said he won’t be enforcing these rules. “So, if you would want to read it and say, ‘Oh, let’s follow this the way it’s supposed to be,’ you can,” he said.
Smokers won’t have to worry about loading the hookah either, a somewhat complicated process for a beginner. “I’ll bring it out smoking and ready for you,” he said.
There will be modern elements, such as couches and high bar tables to sit around, but there will also be a section with a more Middle Eastern influence.
“It’s just nothing but pillows on the ground and a base for the hookah,” he said. Brunette figured his lounge could hold 9 or 10 groups of as many as four people at a time.
Business plan
Brunette said he first tried a hookah years ago at a friend’s lounge in Sheboygan, Wis. “I just fell in love with it basically,” he said. “It was a very sweet taste.”
He has become a connoisseur of sorts, smoking a hookah one or two times each day. But the decision to open his own lounge has been a two-year process, he said.
The 22-year-old Cleveland, Wis., native came to Grand Forks to get aviation training at UND, eventually leaving the program. He put his lounge idea on the back burner until he attended a tobacco retailer trade show in Las Vegas, which made him think these businesses tend to do well in college towns.
“I was just like, ‘Well, I live in a college town, and there’s nothing out there,’” he said. “Being out here since I was 18, there’s nothing to do if you’re an 18- to 21-year-old. You can only go to the movies so many times.”
The lounge’s main clientele will likely be college students, he said, and there will probably be many curious customers at first because of the novelty factor. But he hopes to attract repeat customers who appreciate the new business.
Brunette said he didn’t want to serve alcohol because getting a liquor license is expensive, and doing so would classify it as a bar, which could be problematic if North Dakota eventually bans smoking in bars.
Besides serving hookahs loaded with combinations of 45 flavors of shisha, he will also sell hookahs, accessories and tobacco. Brunette plans on serving light snacks and drinks such as juice, energy drinks and brewed coffee and tea.
It will cost $12 to $16 for each loaded hookah, which is enough to handle one to four people and last for 45 minutes or longer.
Brunette said he hopes the lounge will become successful and be a good fit for the downtown area because that’s where the nightlife happens. His store will be open from 5:30 p.m. to 1 a.m. Tuesday through Saturday.
“I want it to be viewed as something fun to do if you can’t go to the bars,” he said.
Reach Johnson at (701) 780-1105; (800) 477-6572, ext. 105; or send e-mail to rjohnson@gfherald.com.
By: Ryan Johnson, Grand Forks Herald

Senate Committee To Vote on Remote Sales of Tobacco Legislation

The Senate Judiciary Committee is scheduled to vote on November 5 on legislation that would crackdown on the illegal sale of tobacco products via the Internet and mail order. NACS has been leading a business coalition of retailers and distributors to rally around this legislation.
The Prevent All Cigarette Trafficking (PACT) Act (S. 1147) closes a number of gaps in current federal law regulating “remote” or “delivery” sales of cigarettes and smokeless tobacco products. The PACT Act, which represents an important opportunity to further protect the legitimate channels of distribution for cigarettes and smokeless tobacco, has broad support and strikes a balance between the needs of law enforcement and the legitimate interests of retailers and distributors.
The legislation:
* Requires payment of state and local excise taxes on remote tobacco sales.
* Regulates delivery methods, including age‐verification and shipping requirements.
* Makes cigarettes and smokeless tobacco non-mailable to consumers through the U.S. Postal Service
* Gives the Bureau of Alcohol, Tobacco, Firearms and Explosives authority to inspect records and inventories of remote sellers.
On May 21, the House of Representatives overwhelmingly passed its version of the PACT Act by a vote of 397-11. NACS supports the legislation because existing federal law is inadequate to effectively deal with the problems created by remote sales. NACS is believes that this action by the Senate Judiciary Committee will spur the full Senate to take up this important legislation before the end of the year.
Staff Contact: Chris Tampio, ctampio@nacsonline.com, (703) 518-4283
House Health Bill Still Unacceptable to Business Owners
Led by Speaker Nancy Pelosi (D-CA), House Democrats yesterday confidently unveiled their “blended” health care bill. The $894 billion overhaul bill was released after many closed door negotiating sessions within the Democratic caucus. The compromise in the bill is a public option that negotiates provider rates with the U.S. Health and Human Services Secretary as opposed to basing the rates on Medicare. This compromise tempered some of the moderate Democrats and didn’t anger the liberal left too much. It may be a move that helps Speaker Pelosi garner the critical 218 votes needed to pass the bill out of the House. No Republican support has been gained.
Most relevant to retailers, the bill still requires that employers provide coverage or pay a tax as a percentage of payroll varying from 2% to 8% — no significant changes were made to this provision. The bill also contains an individual surtax on those who choose not to obtain coverage. The individual surtax originally applied to those with adjusted gross incomes of $280,000 (individual) and $350,000 (joint). In the revised bill the income threshold is increased to $500,000 individual and $1 million joint. This still does not do much for those small business owners who report their company income on their individual tax return.
As of now, the House could vote on the bill by the end of next week or, at the latest, before Congress recesses for Veterans Day on November 11. There will still be a lot of vote counting and bargaining and Democrats still have to face issues on abortion and immigration within their own caucus. The Senate is crafting its own bill and Majority Leader Harry Reid (D-NV) has promised a public option that allows states to opt out. The Senate timeline is uncertain at this time.
Staff Contact: Julie Fields, jfields@nacsonline.com, (703) 518-4251
Appropriations Bill Funds LUST, Climate Change Research
House and Senate conferees this week finalized legislation funding the Environmental Protection Agency. Of particular interest to retailers, this bill provides $113.1 million for the Leaking Storage Tank Trust Program (LUST) for FY2010. In addition, the legislation provides an additional $2.5 million for LUST from the State and Tribal Assistance Grants (STAG) program.
NACS has worked consistently to increase the LUST funding levels. In March of this year, President Obama signed into law a measure establishing the funding levels for the federal government through September 30, 2009, which appropriated $115 million for LUST. In addition, a one-time appropriation of $200 million specifically for LUST clean-up activities was included in the economic stimulus legislation passed in February 2009. The overall FY2010 is slightly higher than the FY2009 level and is significantly higher than the typical appropriations prior to FY2006, which averaged $72 million annually.
Also included in this appropriations bill was $385 million to address climate change, $21 million to implement the 36 billion gallon renewable fuels standard, $51 million for the Energy Star program to educate consumers about the energy efficiency of appliances, and $10 million for communities to cut greenhouse gas emissions. To further climate change mitigation activities, the bill includes another $55 million to monitor climate change effects on national parks, wildlife refuges and other public lands and $32 million for the Forest Service to conduct climate change related research.
Staff Contact: Chris Tampio, ctampio@nacsonline.com, (703) 518-4283
Senate Climate Bill Slams Petroleum Industry
Senate Environment and Public Works Committee Chairman Barbara Boxer (D-CA) released on October 23 a revised climate change bill that will serve as the basis for her committee’s consideration and vote in the coming weeks. Of particular interest to NACS has been the previously undisclosed allocation of emissions allowances. This concerns the emissions permitted by each industry in the new regulatory regime. The petroleum industry is being held accountable for the emissions from each vehicle on the road and consequently represents 44% of all greenhouse gas emissions. The House-passed legislation allocates only 2.25% of allowable emissions to the petroleum industry. Unfortunately, Boxer’s legislation follows the same pattern and allocates only 2.25% of allowable emissions.
The effect of such policy will be to dramatically increase the cost of petroleum production, likely result in the reduction in overall production as refiners seek any avenue to meet their emissions targets, and could result in the closure of domestic refineries which will be relocated in countries without such onerous requirements. For retailers and their customers, each of these possible outcomes will put upward pressure on prices.
NACS has urged Congress not to pick winners and losers in its regulatory scheme and not to burden retailers, consumers and the national economy by forcing prices at the pump higher. Clearly, Congress is not listening. Of course, Congress will be the first to squeal if prices do indeed increase as a result of their proposals — but they will seek to blame market participants rather than look in the mirror.
NACS will continue to work with its colleagues in the petroleum industry in opposition to such lop-sided, anti-consumer proposals.
Staff Contact: John Eichberger, jeichberger@nacsonline.com, (703) 518-4247
New FMLA Benefits for Military
This week President Obama signed into law the National Defense Authorization Act which includes an expansion of the recently-enacted exigency and caregiver leave provisions for military families under the Family and Medical Leave Act of 1993 (FMLA).
In January 2008, Congress amended the FMLA to provide up to 12 weeks of leave for urgent needs related to a reservist family member’s (spouse, son, daughter or parent) call to active service. This new law expands the exigency leave benefits to include family members of active duty service members. Under prior law, only family members of National Guard and Reservists are eligible for “exigency leave.
Prior to enactment, the law provided up to 26 weeks of unpaid leave to an employee to care for a family member (spouse, son, daughter, parent, or next of kin) who is injured while serving on active military duty. This new law expands the caregiver leave provision to include veterans who are undergoing medical treatment, recuperation or therapy for serious injury or illness that occurred any time during the five years preceding the date of treatment.
These previsions are effective as of October 28, 2009.
Staff Contact: Chris Tampio, ctampio@nacsonline.com, (703) 518-4283
NACS Urges Extension and Expansion of Small Business Loan Programs
This week NACS joined the Small Business Access to Credit Coalition on a letter (PDF) urging Congress to unfreeze the credit markets for small businesses. The letter specifically advocated for an extension of the Small Business Administration’s loan guaranty provisions through FY2010. These provisions were established in the stimulus bill passed earlier this year and have made a significant difference in the market. The SBA estimates an additional $479 million is needed to fully fund the extension.
In addition, the coalition advocated for an increase in the maximum loan size and maximum guaranteed portion of SBA loans. The current House bill increases the loans from $2 million to $3 million, but the Senate bill and the Administration support an increase to $5 million.
Staff Contact: Chris Tampio, ctampio@nacsonline.com, (703) 518-4283
Oct 30, 2009

Big Tobacco Shifts Strategies

OAK BROOK, Ill. — In the past three months, the major tobacco companies have altered their promotional strategies, pulling back from umbrella programs and rechanneling efforts to specific brand promotions.
Based on an exclusive survey conducted by CSP Daily News and UBS Tobacco Analyst Nik Modi, nearly 80% of c-store chains said manufacturers have overhauled their total promotions, while only one of five said marketing promotions essentially have remained steady.
Among key comments from retailer respondents to the survey:
* “From Altria I have notice more regionalized promotion deals. From R.J. Reynolds, they have cut back on their monthly discounts. Lorillard has given extra dollars off to the state of Wisconsin,” responded one retailer.
* “[Philip Morris] is changing to $1- and $2-off pack deals from the grouped deals with required maximum retails,” said an East Coast operator. “Fewer deals than consumer demand. With the loss of the Basic buy-down, now that product is building up in back rooms as the customers choose another less-expensive style.”
* “RJR has gone ‘all in’ with Pall Mall, and seems to be backing away from other brands in its portfolio,” said a Pennsylvania-based merchant. “Altria has promoted specific pack styles within the brand family, e.g. Marlboro Medium, Marlboro 72s. Altria has also singled out Skoal Edge for promotional activity.”
A Midwestern retailer pointed to greater efforts by some of the major players to drive volume by state.
“Philip Morris is working harder on by-state discounting to raise volume,” the retailer stated. “Lorillard has gone extra-deep discount in Pennsylvania and Ohio to drive up volume; first time I’ve seen them go extra deep in several years. RJR continues to fine tune its discounting by state on Camel and Pall Mall and eliminating discounting on Doral, Salem and Kool in some states.”
nocotineThe change in marketing strategies should not be misconstrued as a pullback by big tobacco, rather the contrary. “The major tobacco companies are becoming more sophisticated in how they promote their brands,” Modi said. “The one-size-fits-all model is inefficient. The ability to generate positive net pricing is very important for tobacco companies to hit their external profit goals to Wall Street.”
The survey is the second in an exclusive partnership between CSP and Modi concerning tobacco trends in the convenience-store channel. It was conducted in early October and includes nearly three dozen convenience chains representing more than 10,000 stores in the United States and featuring some of the industry’s largest companies.
The study coincides with another Modi conducted, this one with the National Association of Tobacco Outlets, of the tobacco-shop sector. In that survey, 64% of tobacco outlets surveyed said manufacturers have cut promotional programs, while 36% said promotions have increased.

By Mitch Morrison
October 30, 2009

Tobacco groups ask Obama to challenge Canadian ban

WASHINGTON – Philip Morris International joined with U.S. tobacco industry groups on Thursday to ask President Barack Obama’s administration to challenge Canada’s new law banning flavored cigarettes and small cigars.
Their request comes even as the administration takes its own steps to ban candy, clove and other flavored cigarettes.
“Canada’s ban on blended cigarettes violates its WTO (World Trade Organization) obligations and could impose serious economic hardship on U.S. growers of burley tobacco,” Roger Quarles, president of the Burley Tobacco Growers Cooperative Association, said in a statement.
“We are asking USTR (U.S. Trade Representative) to review our arguments and to take a strong stand for U.S. burley growers and American jobs,” he said.
Philip Morris, which markets its tobacco products in approximately 160 countries, joined the burley growers and several other tobacco associations in asking USTR to press Canada on the issue at a WTO meeting on “technical” trade barriers next week in Geneva.
Canada’s new law banning the manufacture, importation and sale of most flavored cigarettes and small cigars went into effect earlier this month.
Anti-smoking groups said the fruit-flavored cigarettes were marketed like candy to lure young smokers, but the industry complained the law was too broad and would unfairly restrict importation of U.S.-grown burley tobacco.
Aiming to pressure the Obama administration to take up the issue, Republican Senator Jim Bunning from the tobacco-growing state of Kentucky has blocked the six-month-old nomination of Miriam Sapiro as deputy U.S. trade representative.
A spokeswoman for USTR was not immediately available on Thursday to comment on the issue.
The U.S. tobacco groups said they support the goal of banning candy-flavored cigarettes. But they said Canada could have done that without discriminating against American blend cigarettes by following the model recently set by the United States, France and Australia.
The Obama administration has given no indication publicly that it would press Canada on the issue.
Obama, who has said he began smoking as a teenager and struggled as an adult to give it up, signed a law in June giving the U.S. government broad regulatory power for the first time over cigarettes and other tobacco products.
Last month, the U.S. Food and Drug Administration used the new authority to implement a ban on candy, clove and other flavored cigarettes. Neither the U.S. or the Canadian ban includes menthol-flavored cigarettes.
Clove cigarettes come mainly from Indonesia, where they originated in the late 1800s.

By Doug Palmer; Will Dunham, Oct 29, 2009

NEDA gives green light on cigarette stamp tax

The National Economic and Development Authority (NEDA) has just given the green light to the Bureau of Internal Revenue (BIR) to pursue negotiations with Swiss firm SICPA Product Security S.A. on the latter’s unsolicited proposal to introduce a fool-proof tax stamps technology on cigarettes and alcohol.
NEDA’s Investment Coordination Committee-Cabinet Committee (ICC-CC) said the SICPA proposal could “enhance excise tax cigarettescollection for all locally-manufactured cigarettes sold in the domestic market and to reduce illicit trade in the country using an integrated technology solution.”
The committee said the BIR must undertake the negotiations in accordance with Built-Operate-Transfer Law.
The committee “advised” the BIR to subject SICPA’s proposal to a Swiss challenge.
“The BIR is then expected to notify the (NEDA) ICC of the result of its negotiation with the unsolicited proponent of the proposal, towards undertaking the Swiss challenge,” it said.
In a Swiss challenge, other proponents are invited to offer better proposals. The original proponent, however, has the right to match the challenger’s terms.
NEDA’s opinion on the SICPA proposal was sought last March after the Department of Finance (DOF) opted to freeze action on the unsolicited proposal.
“Kapag pumasa, BIR will implement the project with the unsolicited proposal. If not, BIR has options, BIR will offer it for a Swiss challenge or bid out the project,” a DOF official said.
The DOF official said the DOF wants the project to be implemented soon to improve its tax revenues.
A law mandating government to use fool-proof tax stamps on cigarette and liquor products has not been enforced for 12 years.
Finance undersecretary Gil Beltran earlier said the unsolicited nature of the SICPA’s proposal does not exempt the BIR from submitting the program to a bidding process.
Beltran also pointed out that SICPA is not the only foreign company that could offer such technology.
The BIR had endorsed SICPA Product Security SA’s unsolicited proposal to undertake a P10.12 billion tamper-proof tracking and inventory system for affixing excise stamps into cigarette products as they leave the manufacturing plants.
The Swiss firm made representations that its proprietary tracking and inventory system for cigarette products is tamper-proof and would benefit the government.
SICPA was later found, however, to have an operating capital the equivalent of only P56.4 million when the entire project should cost government P10.12 billion over a seven-year period.
It was also pointed out that SICPA’s financial statements submitted for evaluation of financial capacity do not comply with Philippine financial reporting standards.
SICPA said its proposal would guarantee additional revenues for government of at least P13.31 billion.
But SICPA’s state-the-art services could mean an expense of $193 million in fees to be charged from tobacco and liquor companies.
The fee is to be collected by the BIR from producers of tobacco and alcohol products for remittance to SICPA.
The foreign company expects to collect from the government another P2 billion in professional fees to be taken from the budget.
SICPA submitted its unsolicited proposal as early as Jan. 2, 2008. However, the BIR informed the DOF of the alleged acceptance of the proposal only on Oct. 14, 2008.
A local umbrella group of cigarette manufacturers and importers said the tax stamp technology being dangled by SICPA was “outdated,” “costly” and “unsecure.”
It said the system could wipe out its smaller members because of the huge cost of adopting it.
The Philippine Tobacco Institute (PTI) said the SICPA system is also vulnerable to counterfeiters which could duplicate or “mimic” even the most sophisticated paper stamps.
“In today’s world, paper stamps or stickers are an outdated, costly and not very secure technology,” PTI president Rodolfo Salanga told the House committee on ways and means during a previous hearing.
Salanga said SICPA has unhappy clients in Malaysia, Turkey and Brazil for failing to deliver on its promise of increasing customs revenues as attested by their affiliates.

BY DENNIS GADIL

Legal Aid Groups Reap Tobacco Settlement Windfall

Christmas has come early for California’s legal aid organizations.
This month, $40 million is going out to more than 100 nonprofits and charities across the state from money left over in a class action settlement with makers of chewing tobacco.
The money — in some cases hundreds of thousands of dollars — will help local legal groups avoid cutting services and jobs as they struggle through the recession.
A check for $800,000 arrived at the San Francisco office of California Rural Legal Assistance about a week ago. Jose Padilla, its executive director, said CRLA was bracing for a shortage of about half a million dollars next year in its $13 million program, thanks to uncertainty about federal and state funding. The cy pres money will save the organization from having to cut pay by 7 percent through furloughs, or laying off six to eight of its 60 lawyers. “This is a godsend,” Padilla said.
The Asian Law Caucus ran at a surplus last year, but this year fundraising for its $2 million budget is below expectations, said Executive Director Mina Liu. The $400,000 it received Tuesday “will change the conversation” at its board meeting in November. Liu said that, had the money not come in, the legal aid organization would have been discussing cutting services in some harder-to-reach parts of California, including several hundred underserved clients in the Central Valley. The money gives her confidence to go ahead with the two hires, including an attorney, to deal with increased demand for housing and elder law services. “A lot of the issue is cash flow, as opposed to where we are in terms of income and expenses,” Liu said. “Cy pres boosts the cash reserves so that we know we can be a little bit more aggressive in terms of program development.”
The Legal Aid Foundation of Los Angeles ended last year in a deficit, according to Executive Director Silvia Argueta. After cuts in travel and training and a hiring freeze, the organization is close to its $15 million budget this year. Argueta said the $700,000 in cy pres money received last week will allow the nonprofit to consider hiring a lawyer for housing work and an intake screener for domestic violence complaints. “We were going to reduce some services, including foreclosure counseling,” Argueta said. “Some of our grants are ending for that work.”
The Bar Association of San Francisco’s Volunteer Legal Services Program received its check for $500,000 last week. The organization is planning furloughs that will cost staff between 5 and 10 percent of their salaries in 2010. “Thanks to this money, we will be able to forestall anything more drastic than that,” VLSP Executive Director Tiela Chalmers said.
As uplifting as the cash injection is, many nonprofits say the pain is not nearly over. Chalmers said VLSP won’t do away with its planned furloughs because she believes 2011 will be an even tougher year than 2010. “Private foundations tend to give their money based on a rolling average of the last three or four years,” she said. “The more bad quarters we have under our belt, the worse it’s going to look for them, so the less money they will have to give away.” On the government side, Chalmers said, she isn’t counting on stimulus money to continue to keep aid organizations afloat and the state budget looks to be a mess for years. “We’ll all be reaching out to individual donors, because that’s a much more diversified source of funding.”
For S.F.’s AIDS Legal Referral Panel, the cy pres check of $400,000 represents half its annual budget. Executive Director Bill Hirsh said the extra money will help cover deficits, including $120,000 this year, and cushion its reserve fund.
The windfall comes from a 2002 antitrust and unfair competition case filed against U.S. Tobacco, the maker of Skoal and other brands of chewing tobacco. Under the terms of a $96 million settlement approved last year, money that went unclaimed by consumers would be distributed to various charities.
Saveri & Saveri’s Richard Saveri, who served as plaintiffs’ co-liaison counsel, said he worked with defense lawyers at Latham & Watkins to determine which charities would receive the funds, based upon submissions of their work and their needs.
Judge Richard Kramer approved distribution of the funds last month. He previously awarded the plaintiffs’ lawyers $32 million in fees.
The cy pres doctrine — which translates roughly to “as near as possible” — is sometimes controversial. It’s designed to keep defendants from recouping money set aside but not claimed.
Paul Karlsgodt, a Denver partner at Baker & Hostetler who writes a blog about class actions, says the approach is problematic in the context of a settlement, where the defendant has been accused of misconduct but not found liable. “The purpose of the civil justice system is to remedy actual harms,” Karlsgodt said, “not to simply punish wrongdoers.”
But for the nonprofits and legal aid organizations receiving a check, it is a much-needed shot in the arm.
Bay Area Legal Aid’s Ramon Arias says a $600,000 check arrived, but he isn’t rushing to spend it. “A mistake a lot of legal aid programs sometimes make is to use one-time money to support ongoing expenses,” he said. Right now, Arias says he’s more focused on the annual donor campaign. “It is the support that is far more important. I’m hoping our supporters know that.”

Petra Pasternak
October 28, 2009 Lay

Lebanon 'must move' to ban smoking

BEIRUT: Lebanon must move urgently toward a comprehensive ban on smoking in public places, tobacco advertising and event sponsorship, and add warning labels to tobacco products in order to avoid thousands of preventable tobacco-related deaths annually, health experts said Wednesday. Speaking at a tobacco control workshop for journalists organized by the Health Ministry’s National Tobacco Control Program, health officials said around 3,500 people in Lebanon die each year from diseases associated with smoking or exposure to second-hand smoke. The figures suggest, more people in Lebanon die from tobacco than tuberculosis, pneumonia, HIV/AIDS and car accidents combined.
Lebanon “should implement the same measures being taken in other countries as soon as possible,” said Health Minister Mohammad Jawad Khalifeh, referring to the total smoking ban already in place in dozens of countries across the world.
He said a comprehensive smoking ban in public places, coupled with strict regulation of the tobacco industry and health warning labels on tobacco products were proving effective in reducing the number of smokers and tobacco-related deaths.
“Smoking bans are actually popular, and even more so after they are enforced,” added workshop leader Karen Gutierrez, director of the US-based organization Global Dialogue for Effective Stop Smoking Campaigns. She said that contrary to popular belief, smoking bans did not harm the bar or restaurant business. “All countries, regardless of income level, can implement bans.”
The numbers of smokers here is significantly higher than the regional average: 45 percent of males and 34 percent of females are said to be regular users, according to Health Ministry statistics. Taxes on tobacco products are low, and advertising targeting young consumers is widespread.
Some 75 percent of children are subject to second-hand smoke exposure, increasing their chances of suffering from asthma, chronic bronchitis, eye and ear infections, potentially fatal lung and respiratory illnesses, and cot death.
Lebanon’s lax approach to tobacco control is straining its health sector, Khalifeh said: “We spend $900 million [annually] to treat heart and lung diseases caused by tobacco exposure.”
Even eating out can be a deadly experience, said Dr. Georges Saade, the Health Ministry’s Tobacco Control Program’s coordinator. A survey of 30 pubs and restaurants in Lebanon found the levels of tobacco smoke pollution to be dramatically higher than World Health Organization (WHO) recommendations of less than 15 micrograms cubed per day.
Some 60 percent of the establishments tested registered an average 309 micrograms per meter. Anything above 251 micrograms is listed by WHO as being a “health warning of emergency conditions.” In places where narghileh pipes were smoked, pollution was so high the meter stopped working altogether, Saade said.
Lebanon signed the World Health Organization’s (WHO) Framework Convention on Tobacco Control in 2005, and although it was ratified automatically, Beirut has done little to enforce it. In fact, Lebanon risks failing to meet the convention’s obligations: Article 11, which states that within three years of adopting the convention, countries must implement effective health warning labels on tobacco products, has not been put into effect. Nor has Article 8, which obligates Lebanon to “strive to provide universal protection” within five years.
Although a draft law to ban smoking in public places was submitted to Parliament in 2006, Lebanon’s precarious political situation prevented it from being passed, said MP Dr. Atif Majdalani, who heads the Parliament’s Health Committee. He said the ban should be a “top priority” now that a cabinet formation appeared imminent.
Tobacco control legislation is growing in the Middle East, with Syria, Turkey, Iraq, Egypt, Jordan, the UAE, Qatar, Bahrain and Israel all enforcing partial or complete public smoking bans in recent years. But Khalifeh said that a “realistic” ban in Lebanon had to be introduced slowly in order to build popular support.
The workshop came as Beirut’s most bustling bar and restaurant district, Gemmayzeh, hosted its second no-smoking night this year. Some 36 establishments participated in the event, organized by the Beirut, Beirut Metropolitan and Sahel Metn Rotaract Club.

By Dalila Mahdawi
October 29, 2009 Dailystar