The Seneca Nation said Monday it will review “potential problems” of one brand of Native American-manufactured cigarette that has become one of the biggest selling tobacco products in the state.
Seneca President Barry E. Snyder Sr. said an article in Sunday’s Buffalo News about the Seneca brand cigarettes “is a matter of grave concern” to the Seneca Nation. He cautioned that the Seneca Nation has no role whatsoever with the cigarette brand, which is owned by Arthur Montour, a former Seneca Tribal Council member. The cigarettes are produced on an Indian reservation in Ontario.
Snyder said the Senecas will start an immediate review “of the allegations involving the brand and its potential problems and gather that information as quickly as possible.”
He said the Tribal Council and the Import-Export Commission — which regulates tobacco products on the Seneca reservations — will be consulted to determine “further action.”
The Buffalo News reported on the growing business of Indian- made cigarettes, and featured the Seneca brand, which has surged in sales in the past couple of years both in New York and around the country. Its cheap prices—as low as $13 a carton on some Indian retail Web sites — are a third or below the amount charged by many premium brands.
Montour did not return repeated calls for comment for the Sunday story. A message to his office Monday was not returned.
The Seneca brand, like some other Indian-made cigarettes, does not appear to meet New York’s fire-safe standards that are part of a 2004 law to cut down on the number of smoking- related fires. It does not appear on the state’s approved list of fire-safe cigarettes. Officials in California also say their fire-safe laws are being violated by the brand.
In addition, scientists at Roswell Park Cancer Institute say they have found higher-than- usual levels of two chemical elements — strontium and barium—in some of the Indian cigarettes, including the Seneca brand. They could not say if the levels pose a risk higher than smoking itself, and said further testing was needed to determine if the elements are radioactive.
“The Seneca Nation is committed to doing what is right for our people, businesses and customers. Therefore, we also plan to reach out to national health experts at Roswell Park Cancer Institute to understand more fully the challenges this situation poses to our people and their independent retail outlets,” Snyder said in the written statement.
Snyder said there are two Seneca Nation-owned retail outlets that sell cigarettes on the reservations, and another 238 independent retailers that also are registered to sell tobacco products. As a result, he said, “there is a need for broad consultation and consensus.”
Altria Group Inc is raising the price of Marlboro and other cigarettes by 71 cents to 81 cents per pack and is lowering the cost of the high-end smokeless tobacco brands it recently acquired.
The cigarette price increases, which go into effect on March 9, are primarily related to the costs related to the upcoming increase in federal excise tax, a spokesman said.
In February, President Barack Obama signed a law expanding a health program to include 3.5 million uninsured children. The expansion is being paid for by raising the federal tax on cigarettes to $1 per pack from 39 cents per pack. Taxes on cigars and other tobacco products will also rise.
Philip Morris USA, the largest U.S. cigarette maker, said it told trade partners about the plan on Wednesday, the same day a U.S. House of Representatives panel passed legislation that would give the Food and Drug Administration new power to regulate cigarettes and other tobacco products.
The latest increase comes after Philip Morris raised prices by about 9 cents per pack in February.
The company, which is owned by Altria, is now raising prices by 71 cents per pack on brands including Marlboro, Parliament, Virginia Slims and Basic. Other brands, such as Benson & Hedges and Merit, will see an increase of almost 81 cents per pack.
“We view today’s announcement as broadly positive since it is likely to improve investor confidence about cigarette manufacturers’ ability to protect profits and margins this year despite an anticipated volume decline,” Goldman Sachs analyst Judy Hong wrote in a note to clients.
Altria’s John Middleton cigar business is raising prices by 41 cents per pack for a five-pack of cigars immediately.
Some smokeless tobacco users will see prices go down. Altria acquired UST Inc in early January as it tries to find new sources of revenue in the face of a shrinking U.S. cigarette market.
Altria, which wants its smokeless brands to be seen as a better value versus competitors, is lowering the list price on Skoal and Copenhagen by 62 cents per can and the price of Red Seal by 27 cents per can. However, the lower-priced Husky brand will get an increase of 20 cents per can. Altria is also discontinuing the Rooster brand.
Hong said the news could be viewed as a negative for Reynolds American Inc, since the price cut on Skoal and Copenhagen is larger than expected.
A spokesman for Reynolds, whose products include Camel cigarettes and Kodiak smokeless tobacco, could not be immediately reached for comment.
Lawmakers are trying again to give the Food and Drug Administration power to regulate tobacco, an effort backed by Altria Group Inc., the largest U.S. maker of cigarettes, and opposed by smaller rivals.
The FDA could place restrictions on tobacco marketing and manufacturing under the legislation that House Energy and Commerce Committee Chairman Henry Waxman plans to bring before his panel tomorrow, according to spokeswoman Karen Lightfoot. A similar measure passed the House last year, and then stalled in the Senate.
President Barack Obama, who says he has kicked a smoking habit, has supported such legislation, while former President George W. Bush opposed it. The measure rekindles a fight between Altria’s Philip Morris USA, which makes half of the cigarettes sold in the U.S., and Reynolds American Inc. and Lorillard Inc. The smaller manufacturers oppose restrictions they say would perpetuate Philip Morris’s position as the market leader.
“We continue to support tough but reasonable federal regulation of tobacco products,” Bill Phelps, an Altria spokesman in Richmond, Virginia, said yesterday in an e-mail. The company, which controls almost 51 percent of U.S. cigarette sales, led by its Marlboro brand, “would be supportive” of the Waxman bill that has circulated among House members.
The measure offered by Waxman, a California Democrat, would have “the effect of locking in market share,” Maura Payne, a Reynolds spokeswoman, said yesterday in a telephone interview. The Winston-Salem, North Carolina-based maker of Camel and Kool cigarettes had 28 percent of the market at the end of last year.
Reynolds, which started selling dissolvable tobacco tablets under the Camel name this year, is concerned the FDA wouldn’t do enough to encourage development of less-harmful tobacco products given the government’s focus on smoking prevention and cessation, Payne said.
“The bill does not establish a regulatory framework for recognizing harm reduction as a viable means of reducing tobacco- related deaths and diseases,” Payne said. That is “one of the most critical shortcomings.”
The measure “would allow the FDA to impose a de facto prohibition on a product used by approximately one fifth of all adults,” Lorillard said in an e-mailed statement. The company predicted the FDA “would ultimately move to ban the conventional cigarette product.”
Lorillard, which trails Altria and Reynolds in sales, said FDA regulation would provide “a competitive advantage” to its larger rivals.
The FDA is “already overworked by Congress” and is “already struggling to attend to its most fundamental responsibilities to keep the U.S. food and drug supply safe,” Lorillard said.
The FDA would regulate the marketing and manufacture on tobacco and establish new rules on marketing to young people, steps that would be funded through a fee on tobacco companies, under Waxman’s measure.
The bill would ban all tobacco advertising within 1,000 feet of schools and playgrounds; prohibit free giveaways of non- tobacco items with the purchase of a tobacco product and restrict tobacco vending machines to adult-only facilities.
Waxman would also require larger and more specific health cautions on cigarette packs, with the warnings covering 50 percent of the front and rear panels of the package.
The Federal Trade Commission currently regulates tobacco labels and marketing to ensure they aren’t misleading or deceptive, authority that Waxman’s legislation would shift to the FDA.
The bill would also give the FDA authority to require recordkeeping and tracking to fight cigarette smuggling and allow states and localities to regulate the time, place and manner of tobacco use.
Source: Bloomberg ®
The UK’s largest tobacco company has warned it will take legal action against the government if it introduces a law forcing the firm to package cigarettes in plain white cartons.
Branded packs are in effect the tobacco industry’s only remaining form of advertising in the UK and the smoking lobby has vowed to fight moves to phase them out. Senior executives in the leading tobacco firms fear other nations will follow the UK’s lead if it passes a law ensuring all cigarettes sold here are contained in plain white cartons.
The Observer has obtained a letter from Imperial Tobacco to the Department of Health and members of the Lords, in which the company says amendments tabled to the current health bill passing through parliament, outlawing branded packets, will do nothing to make smokers more aware of the health risks or reduce the appeal of smoking. Imperial, which makes Lambert & Butler, Embassy and Regal, says it believes that “plain packaging for tobacco products is unnecessary, unreasonable and unjustified”. And it gives the government notice that it will seek a judicial review of any legislation barring branded packs.
The letter states: “Imperial Tobacco is also concerned about the continued erosion and potential expropriation of our valuable intellectual property rights … Regulation that requires plain packaging will expropriate valuable corporate assets in which the company and its shareholders have invested for more than a century and risks placing the UK government in breach of a range of legal and treaty obligations that relate to intellectual property rights, international trade and EU law.”
The tobacco firms have always believed that moves to ban branded cigarette packets were unlikely, but they are now becoming seriously alarmed that the government will make it a reality.
“The health community is only beginning to understand what tobacco manufacturers have known for decades: the package matters more than the product, especially when you are pitching to children,” said Martin Dockrell of Action on Smoking and Health. “The industry learnt long ago that one cigarette tastes much like another, and it is only when you put the product in the packet that you position the brand as ‘sophisticated’ or ‘cool’.”
An article published by Australian researchers in the British Medical Journal suggests brand plays a significant role in promoting smoking. The researchers conclude: “Without brand imagery, packs simply become functional containers for cigarettes, rather than a medium for advertising. Reports from Canada and Australia have commented upon how generic packaging, which removes brand logos from packs, increases the prominence of health warnings.”
Imperial’s own research also confirms the importance of branding. In a presentation to investors in 2006, Imperial discussed the introduction of its “Celebration” range of Lambert & Butler packets. One of the company’s executives told the conference: “They were introduced as a four-month special edition, replacing the original pack until February 2005. The effect was very positive. Already the number 1 brand, our share grew by over 0.4% during this period – worth over £60m in additional turnover. Often in marketing, it is difficult to isolate the effects of individual parts of the mix. But in this case … the pack design was the only part of the mix that was changed.”
Philip Morris USA said today it will seek appellate review of a jury verdict awarding $8 million in total damages to the family of a former smoker.