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Imperial Tobacco

How big tobacco has survived death and taxes

The world’s five major tobacco companies are thriving, profitable and increasing sales, despite many predictions of the industry’s decline

A casual observer could be forgiven for believing that the tobacco industry – for so long a fixture as permanent as its two main by-products, death and taxes – is itself on its last legs.

In the US, health officials have predicted that smoking rates in America could drop to as low as 5% by 2050, well within the lifetime of someone born today.

Last year, shareholders of UK-based Imperial Tobacco approved a decision to change the company’s century-old name to Imperial Brands, hinting at a move away from traditional cigarettes.

Even globe-straddling colossus Philip Morris International (PMI), owner of brands including Marlboro, has set its stall out for a “smoke-free” future, where nicotine addicts get their fix from vaping and other non-tobacco products.

Yet, for all of these predictions, one thing has remained unchanged: Big Tobacco is thriving, profitable and increasing its sales.

Excluding China, where the market is monopolised by the state, five major companies dominate the global tobacco trade – Philip Morris International (PMI), British American Tobacco, Japan Tobacco, Imperial Brands and Altria (the former US assets of PMI).

Between them in 2016, they shipped 2.27tn cigarettes, more than 300 for every man, woman and child on the planet, racking up combined sales of $150bn (£115bn). Their combined profits reached $35bn (£27bn), allowing investors in those companies to receive dividends of $19bn (£14.5bn).

Of these giants, one of the most powerful is British American Tobacco (BAT), the London-based firm that can trace its history back to 1902.

Run from Globe House, its headquarters next to the Thames river, BAT sells its brands in 200 countries and is market leader in 55 of them.

Far from looking to a future beyond tobacco, BAT is doing perfectly well as it stands.

At its annual meeting in March, chairman Richard Burrows toasted a “vintage year”, as profits rose to £5.2bn ($6.7bn) allowing the company’s shareholders to take a dividend worth an additional 10%.

The rewards were so great because BAT’s sales show no signs of the industry’s much-vaunted decline. The company sold 665bn cigarettes in 2016, nearly 100 for every human on earth and 2bn more than it sold the year before.

Cigarette sales among its so-called Global Drive Brands – Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans – jumped 7% to 346bn.

In the section of its accounts that details non-cigarette sales, which the company terms “next generation products”, there is nothing to see.

The numbers are so small that they are considered immaterial to its financial results and do not need to be disclosed under stock market rules.

Yet the company’s traditional business continues to generate big headlines and bigger numbers. By the end of the year, BAT is likely to have completed a landmark $49bn deal to buy the 57.8% of US tobacco giant Reynolds American that it does not already own. A simultaneous shareholder vote next Wednesday by both firms is expected to agree the deal at Reynolds HQ in Winston-Salem, North Carolina, and BAT in London.

If US tobacco sales really are set to fall off a cliff, that would be a monumental strategic misstep.

But while the percentage of Americans who smoke is on the wane, the US remains a market with huge potential.

That’s because the population is rising, meaning that even as smoking rates decline in percentage terms, the actual number of smokers is relatively static at about 45 million people.

US cigarettes are also relatively cheap compared with prices in the UK, leaving some scope for the company to raise prices without losing customers.

Reynolds and BAT will also look to the future by pooling research on smokeless products, hoping to capture that growing market, though that won’t be the big money-spinner any time soon.

And then there is the developing world, where the rate at which governments and public opinion are turning against tobacco differ dramatically from wealthier economies.


A ‘defensive’ stock

BAT increased its revenues in every region bar Asia-Pacific last year, with the developing world doing more than its share of the heavy lifting.

Among the “key markets” listed in its annual report are Indonesia and Egypt – and for good reason.

The World Health Organisation projects smoking rates in Indonesia to increase by 2025, with the number of smokers growing from 73m to 97m based on current trends.

Egypt is another key market where smoking rates are projected to grow, with up to 21m Egyptians forecast to be smokers by 2025, compared to 14m in 2015.

One only has to look at BAT’s roster of investors for evidence of the confidence that well-informed institutions with deep pockets have in the future of cigarettes, even if that future is less bright in the West.


It’s a list that features nearly every major investment company in the world, testament to the safe bet that tobacco giants such as BAT offer to investors.

Top of the share register is BlackRock, the all-powerful asset manager that has a stake in nearly every major listed company in the world, managing investors’ funds of approximately $5.4tn, more than the economy of Japan.

Some way further down the list is Woodford Investment Management, run by Neil Woodford, a figure held in awe in London for his uncanny ability to make money.

He famously invests a huge chunk of his portfolio in tobacco, explaining that he is not paid to make moral judgments but to make money for clients.

Tobacco is attractive to investors – including councils in the UK – because it is seen as a “defensive” stock, in other words a good place to invest money that you are not prepared to lose.

The shares rarely decline in value even when times are tough and also deliver a steady income from annual dividends.

The huge rewards on offer for investors mean that those who manage the great behemoths of tobacco are also handsomely rewarded.

BAT chief executive Nicandro Durante is no exception. He was handed a package of cash and shares worth $10m (£7.6m) last year, taking his earnings over six years to a cool $44m (£34m).

When fellow directors are included, the 14-strong BAT boardroom enjoyed a combined $18m (£14m) payday in 2016.

There are other perks. Durante gets free tax advice from the company, a personal driver and security for his homes, in London and Brazil.

Both executives and non-executives also have access to a walk-in GP clinic near BAT’s headquarters at Globe House in London, enjoying the benefits of a National Health Service that has been estimated to spend up to $6.5bn (£5bn) a year on smoking-related illnesses.

BAT’s board earn their corn as much for their network of connections as they do for their hard work.

Burrows is a former governor of Bank of Ireland, while senior independent director Kieran Poynter is a managing partner of Big Four accountancy PricewaterhouseCoopers and previously advised the UK’s Treasury.

Its non-executive directors boast a string of similar appointments at multinational companies. Savio Kwan, for instance, was chief operating officer of China’s largest internet business, Alibaba.


Ann Godbehere ran the finances of Northern Rock after its bailout and also serves on the boards of mining giant Rio Tinto, Swiss bank UBS and insurer Prudential.

Nor does the company’s network of influence end there.

While it does not donate money directly to British political parties, it does funnel cash to influential right-leaning thinktank the Institute of Economic Affairs.

BAT gives the IEA around $52,000 (£40,000) a year, a sum equivalent to about 5% what the organisation pays its staff, some of whom appear frequently in the media to criticise tobacco control legislation such as plain packaging.

Chief among those staff is director-general Mark Littlewood, a former press spokesman for the Liberal Democrats and one-time adviser to David Cameron.

Littlewood has been a vocal critic of tobacco control legislation such as the ban on smoking in pubs, as well as plain packaging.

The IEA has also received funding from Philip Morris International and Japan Tobacco International.

The BAT bosses

Nicandro Durante – chief executive

Nicandro Durante joined Brazilian subsidiary Souza Cruz in 1981, and rose through the ranks over three decades until he was appointed chief executive in 2011.

He had impressed the company’s senior management during a two-year stint as regional director for Africa and the Middle East, key areas of future growth for tobacco companies facing up to declining smoking rates in more developed economies.

Born to Italian parents in 1956 in Sao Paulo, he played football for the city’s Corinthians team in his teens before going into business.

Married with two children, Durante stopped smoking cigarettes in favour of cigars, but has no qualms about tobacco, which he described as a “very ethical” industry in a 2012 interview with the Financial Times.

In 2015, he fielded allegations from a former employee in Kenya that BAT bribed officials for various purposes, including the undermining of tobacco control laws.

BAT denies any wrongdoing. A spokesperson said: “We will not tolerate improper conduct in our business anywhere in the world and take any allegations of misconduct extremely seriously. We are investigating, through external legal advisors, allegations of misconduct and are liaising with the Serious Fraud Office and other relevant authorities.”

In 2016, Durante was handed a package of cash and shares worth $10m (£7.6m), taking his earnings over the past six years to a cool ($44m) £34m.

Richard Burrows – chairman

Addressing BAT’s shareholders earlier in 2017, Burrows toasted a “vintage year”, in which the company shrugged off bribery allegations in late 2015 to record rising profits.

Some investors were less keen on Burrows when he was named chairman in 2009.

Burrows had resigned as governor of Bank of Ireland, leaving the lender in dire straits, with big losses and mounting debt threatening its very survival.

Tens of thousands of the bank’s mortgage customers were plunged into negative equity and the lender eventually needed a state bailout that enraged many Irish people.

As the bosses of rival lenders faced public opprobrium for their stewardship of the country’s banking sector, Burrows got out just in time, landing the chairmanship of BAT in 2010.

But BAT wasn’t concerned by his record in banking, looking instead to his 22 years with Irish Distillers, during which time he was credited with turning Jameson whiskey into an internationally-recognised brand.

The Dubliner, 71, is a non-smoker who is married with four children and enjoys sailing and rugby.

He is also chairman of investment company Craven House Capital, whose assets includes beachfront land in Brazil. He is a non-executive director of Rentokil and Carlsberg.

Kieran Poynter – senior independent director

After a near 40-year career with global accounting giant PwC, which put him among the ranks of the UK’s best-paid accountants, Kieran Poynter joined BAT’s board as senior independent director.

He brought with him valuable connections, having served as an adviser to former UK chancellor of the exchequer Alistair Darling.

Poynter, a Chelsea FC season ticket holder, is a former director of the salubrious Royal Automobile Club, the gentleman’s club on London’s Pall Mall.

He also sits on the board of F&C Asset Management and IAG, the parent company of British Airways.

Ben Stevens – finance director

Ben Stevens looks after BAT’s money, and has spoken about how the company is growing market share and looking for acquisitions in Asia and North Africa.

Part of his role is trying to convince governments not to raise excise duty on cigarettes too quickly, according to an interview he gave with

In the same interview, he referred to the need to have a “thick skin” because of the number of people “bashing tobacco companies”.

Stevens gave up smoking nearly 30 years ago, two years before joining the company. But said in 2013 that profits would come from “combustible tobacco” for the near future.

Big Tobacco is losing the fight to stop plain packaging of cigarettes

Dr Enrico Bonadio, a Senior Lecturer in the City Law School, says the tobacco industry’s bid to avoid plain packaging by relying on legal arguments around trade and intellectual property rights, is being systematically dismissed by courts around the world.

You may already have seen the tobacco packs currently sold in the UK: a dark, murky green colour with large graphic health-warning images and scary messages aimed at informing current and potential smokers about the devastating consequences of tobacco consumption. They have no colourful logos, with the brand name just displayed in small characters in a standard font.

These packs are now required by new regulations which entered into force in May 2016. There has been a one-year transitional period for the sell-through of old stock – and from May 20 2017 all tobacco products on sale in the UK must comply with the new rules.

The legislative move has been recommended to all countries by the World Health Organisation to reduce the attractiveness of smoking and eventually reduce consumption. Australia was the first country to introduce such strict packaging requirements in December 2012. France and, of course, the UK have since followed suit.

It follows significant research that shows these new standardised cigarette packs are much less appealing to consumers – and young people especially.
The industry’s legal defeats

No wonder tobacco companies have challenged the measure in the courts. They have argued that it is useless, too harsh – and is an infringement of their fundamental and intellectual property rights, especially trademarks. Yet, their claims are based on weak arguments and have been rejected by both the High Court of England and Wales and the Court of Appeal.

The tobacco industry has faced numerous courtroom defeats of late. Last year Uruguay won a landmark case against the Swiss giant Philip Morris International. The company had sued the Latin American state after it introduced two measures affecting tobacco packaging and trademarks. These were mandatory graphic health warnings covering 80% of cigarette packets (a measure very close to plain packaging) and the obligation for tobacco companies to adopt a single presentation for their brands, dropping for example the “gold” and “blue” descriptors, that could lead smokers to believe one variant was safer than another.

The fact that the courts sided with Uruguay would have been encouraging to other countries aiming to introduce controls on tobacco packaging. And even greater encouragement came recently from a World Trade Organisation ruling which deemed that the plain packaging requirements introduced by Australia as compliant with international trade and intellectual property rules – and are therefore a legitimate public health measure.

The decision has not been officially announced, but a confidential draft of the interim ruling was leaked to the media and the final decision is expected later this year. The Australian measure had been challenged at the WTO tribunal by Cuba, Dominican Republic, Indonesia and Honduras, countries whose economies strongly rely on the tobacco industry.

A domino effect

This is a blow to the industry. The short-term consequences of the WTO ruling – Imperial Tobacco’s shares fell more than 2% after the decision was leaked – reflects the longer-term danger that this ruling poses. It will likely convince other states to introduce plain packaging legislation without fear of violating international trade and intellectual property laws. It basically gives them a green light by removing the regulatory chilling effect that such legal action has produced on countries that wanted to follow Australia’s example.

After all, more and more countries seem interested in adopting standardised packaging. As well as France and the UK, Ireland and Norway will introduce packaging restrictions later in 2017, and Hungary in 2018. Many other states are debating similar measures, including New Zealand, Canada, Belgium, Slovenia, Belgium, Singapore and Thailand.

So, a legislative trend has started which aims to restrict the ability of tobacco manufacturers to make their products appealing to consumers by using eye-catching words, logos or ornamental features on the pack. And attempts by Big Tobacco to stop it by relying on legal arguments around trade and intellectual property rights are being systematically dismissed by courts around the world.

Ultimately, the industry needs to accept the fact that its ability to use fancy brands, especially on packaging, may be reduced by governments for public health reasons. Also that a company’s property rights are not absolute or untouchable. Not only does it not have enough legal basis – as has now been confirmed by several courts and tribunals – but it also disregards legitimate policies adopted by democratically elected governments.

Court upholds NT$5 million fine on British tobacco company

The Taipei High Administrative Court on Thursday upheld a NT$5 million (US$160,800) fine imposed by Taipei City government on a U.K.-based tobacco company.

Imperial Tobacco received the fine in 2015 for violating the Tobacco Hazards Prevention Act, after the company was found to have invited consumers to try out one of its cigarette products, as part of a marketing survey.

Imperial Tobacco filed a case with the Taipei High Administrative Court challenging the fine.

The court on Thursday ruled in favor of Taipei City government, after determining that Imperial Tobacco did indeed violate the provisions of the Tobacco Hazards Prevention Act.

The case can be appealed.

(By Liu Shih-yi and Y.F. Low)

Imperial stubs out plans for Supreme Court battle on tobacco packaging rules

Big Tobacco’s battle against the Government’s crackdown on cigarette packaging has taken a blow after a second company stubbed out plans to take its case to the Supreme Court.

The decision by Imperial, the ­maker of Gauloises and Lambert & Butler cigarettes, leaves just two of the big four tobacco companies still considering whether to take the Government to the Supreme Court over the rules, which came into force in May.

Since then, cigarette firms have been required to manufacture products in standardised “plain” khaki packaging sporting prominent health warnings. All tobacco products sold in the UK from next May must comply with the rules.

Imperial joins Philip Morris International in reluctantly accepting the tobacco branding crackdown after a failed court challenge in May lead to an unsuccessful legal appeal last month.

A spokesman for Imperial told the Sunday Telegraph: “We maintain our firmly held view that plain packaging is not an effective tobacco control policy but we have chosen not to seek permission to escalate our legal challenge in the UK to the Supreme Court.”

British American Tobacco and Japan Tobacco International (JTI) will reveal “any day now” whether they will continue to fight the rules which came into effect in April, an industry source said.

But Imperial’s decision to walk away from the fight despite relying on the UK for around 15pc of its total earnings raises questions over the commitment of BAT which earns less than 1pc of its takings from Britain.

JTI also has a 15pc exposure to the market and has been the most outspoken against the legislation which its UK boss Daniel Sciamma has branded “commercial vandalism” which “sets a dangerous precedent for other targeted industries”.

Imperial said it plans to focus on maintaining its market share in the face of rising legislation and will invest more heavily in its specialist brands such e-cigarettes and non-tobacco vaping products.

ACCC proposes to deny authorisation for tobacco companies

The Australian Competition and Consumer Commission has issued a draft determination proposing to deny authorisation to British American Tobacco, Imperial Tobacco, and Philip Morris (the tobacco companies) to jointly stop supply to retailers or wholesalers they believe are supplying illicit tobacco.

The ACCC considers that having the three dominant tobacco companies working together, sharing information, and making decisions about whether or not to supply particular retailers raises competition concerns.

“The ACCC is concerned about the potential for the sharing of information broadly, and that, for example, the proposed arrangements could be used to selectively target retailers that stock competing brands. This could result in detriment to businesses that may be wrongly or mistakenly subject to a joint decision of the applicants to cease supply, without any opportunity for independent review of that decision,” ACCC Chairman Rod Sims said.

These three tobacco companies are the major suppliers of legal tobacco products in Australia. They have proposed the arrangements to reduce the supply of illicit tobacco in Australia.

“While we agree that reducing illicit tobacco sales is in the public interest, we are not satisfied these proposed arrangements would reduce trade in illicit tobacco sufficiently to offset the likely detriments,” Mr Sims said.

The ACCC expects to release its final decision in February 2017.

Further information about the application for authorisation is available on the ACCC Authorisations Register.

Secret report shows Big Tobacco targeted city politicians in Sudbury and Sault

Algoma municipalities are being asked to stub out all motions proposed by tobacco companies or front groups that slip demands for a freeze on excise taxes into campaigns against contraband tobacco.

Leaked map shows 10 Ontario 'strategic municipalities' whose local politicians were targeted in 2012 by Imperial Tobacco Canada. Reasons for selecting these targets included their 'proximity to illicit tobacco' and 'likelihood of buy-in.'

Leaked map shows 10 Ontario ‘strategic municipalities’ whose local politicians were targeted in 2012 by Imperial Tobacco Canada. Reasons for selecting these targets included their ‘proximity to illicit tobacco’ and ‘likelihood of buy-in.’

Greater Sudbury has the dubious distinction of being named in a secret Big Tobacco document aimed, ostensibly, at fighting contraband smokes, but at the same time quietly lobbying to freeze the excise tax on legitimate tobacco products.

Algoma Board of Health, the governing body of Algoma Public Health, is warning area politicians about new evidence linking Imperial Tobacco Canada Ltd. to lobbying campaigns against contraband tobacco.

The health board voted this week to ask Algoma municipalities to reject all motions received from tobacco companies or front groups that spike campaigns against illicit smokes with demands for a tobacco excise tax freeze or limits on regulation of tobacco products.

Imperial Tobacco Canada Ltd. is a wholly-owned subsidiary of British American Tobacco Plc., one of the world’s five biggest tobacco companies with 55,000 employees in 44 factories in 41 countries.

In a recently leaked internal report prepared for its London-based parent, Imperial Tobacco Canada reveals that it’s been quietly involved for years in lobbying campaigns by convenience-store and anti-contraband groups.

The secret report describes Project M&M, a 2012 campaign intended to “mobilize local governments to pressure for big government action” against illicit tobacco, with demands for an excise tax freeze piggybacked on the main message.

Listed as partners in Project M&M are the Canadian Convenience Store Association, the National Coalition Against Contraband Tobacco, the Ontario Chamber of Commerce, Fédération des Chambres de Commerce du Québec and the Canadian Taxpayers Federation.

The leaked 32-page document includes a map identifying 10 “strategic municipalities” to be targeted in Ontario: Sault Ste. Marie, Sudbury, Windsor, Brantford, London, Mississauga, Niagara Falls, Whitby, Cornwall and Toronto.

These municipalities were selected, the report says, because of their:

  • proximity to illicit tobacco
  • seizure activity
  • internal sales data
  • political weight
  • likelihood of buy-in

The document also identifies 10 targeted municipalities in Quebec: Montreal, Gatineau, Chateauguay, Laval, St. Georges, Sherbrooke, Quebec City, Drummondville, Trois Rivieres and Saguenay.

An article published one month ago by the National Post pointed to other close ties between convenience-store organizations and the tobacco industry.

“In fact, there is other evidence of their close links to the industry, including at least three former tobacco-company executives who are now leaders in the Ontario, Quebec and national convenience-store associations,” the Post’s Tom Blackwell reported.

The leaked Imperial Tobacco report suggests that the “2012 lobbying campaign was no grassroots movement, and that the retail and contraband organizations have for years been used as surrogates by the cigarette giant to promote its own interests,” Blackwell wrote.

Sales of illicit cigarettes are considered a major problem in Ontario, where a bag of 200 illegal “rollies” sells for as little as $10 to $15, compared to more than $80 for legally taxed smokes bought at a corner store.

A 2013 study of collected cigarette butts conducted by NIRIC Group for the Ontario Convenience Store Association found that 17.7 per cent of butts picked up in Sault Ste. Marie were contraband, compared to 30.1 per cent in Kitchener, 28.5 per cent in Barrie, 24.5 per cent in Sudbury, 20.9 percent in Thunder Bay, 18.7 per cent in Toronto, 18.1 per cent in Guelph and 11 per cent in North Bay.

Tobacco firm Imperial Brands to step up spending plans

Imperial Brands (IMB.L), the world’s fourth-biggest tobacco company, is accelerating its cost-savings drive and pouring some of the benefits into marketing key brands as it faces the prospect of a greatly enlarged competitor.

The maker of Winston, Gauloises and other cigarettes said it plans to spend 750 million pounds over the next three years to make the business more streamlined and efficient. The effort should result in additional savings of 300 million pounds each year by 2020.

Imperial also said it would spend 300 million this year on growth opportunities in some of its top markets.

But spending more will dent its profit, taking 2017 earnings growth below its medium-term target of 4 to 8 percent. It should return to growth in that range from 2018, it said.

The increased investment comes as larger rival British American Tobacco (BATS.L) has proposed a $47 billion buyout of Reynolds American (RAI.N), which would make it the biggest international tobacco company and could spark further deals in an industry that is shrinking as more people quit smoking.

Imperial got a boost last year from its $7 billion purchase of some Reynolds brands. The move sharply increased its exposure to the lucrative U.S. market.

“We’re building a stronger high-quality business,” Chief Executive Alison Cooper said.

The weak British pound should benefit earnings by around 14 percent in the 2017 financial year, the UK-based company said, since the vast majority of its profits come from overseas.

The company said it remains committed to raising its dividend by at least 10 percent.

Imperial shares were down 2.9 percent at 0949 GMT.

For the just-ended financial year, Imperial reported higher adjusted sales and profit, helped by the acquisition of brands in the United States and a weaker British currency.

The company said net revenue of its tobacco business rose 9.7 percent to 7.17 billion pounds. Adjusted operating profit rose 10.4 percent to 3.5 billion pounds.

Part of the company’s simplification strategy involves reducing the number of brands it sells. It is aiming to have around 125 brands or less, down from 184 now.

(Reporting by Martinne Geller, Editing by Mark Potter and Louise Heavens)

Leaked Big Tobacco document suggests it used convenience-store, anti-contraband groups as lobbyists

Across Ontario and Quebec, city and town councils passed a wave of similar resolutions, urging provincial governments to crack down on the scourge of contraband tobacco.

It was no coincidence: the municipalities had all been lobbied by convenience-store and anti-contraband associations.

The same, seemingly independent groups have also called for a freeze on legal tobacco taxes, opposed bans on menthol cigarettes and, today, are fighting the federal government’s plan to require plain packaging for smoking products.

But a leaked Imperial Tobacco document suggests that 2012 lobbying campaign was no grassroots movement, and that the retail and contraband organizations have for years been used as surrogates by the cigarette giant to promote its own interests.

The internal PowerPoint presentation describes deploying the convenience-store groups and the National Coalition Against Contraband Tobacco — both at least partly funded by the tobacco industry — to promote fears about contraband, push for action against it and keep taxes down on legal ones.

The document focuses at length on what it calls Project M&M: “Mobilizing municipalities to pressure for Big Government action.”

It then refers to cases where the convenience-store associations or anti-contraband group garnered media coverage and convinced dozens of local councils to pass those resolutions.

One slide in the August 2012 presentation suggests Imperial’s tactics worked, noting there had been no increases in tobacco taxes since 2008.

“Our campaigns have delivered some success.”

The document — a presentation made to parent company British American Tobacco — was leaked to a public-health researcher by a company “whistleblower,” said Melodie Tilson of the Non-Smokers’ Rights Association.

“This presentation makes it really clear,” she said. “They are orchestrating various organizations and using them basically as their puppets to ensure governments don’t enact effective tobacco-control measures.”

Groups like the convenience stores mislead the public and elected officials when they fail to make clear their close ties to Big Tobacco — whose products are one of the biggest sources of chronic disease and death in Canada, said Tilson.

She and other anti-smoking advocates agree that contraband cigarettes — whose cheap prices may be encouraging more smoking — are an important issue.

But they note the groups have not only called for enforcement action against the illicit trade, but opposed tax increases, bans on flavoured cigarettes and even the move to hide tobacco “power walls” in stores.

In fact, there is other evidence of their close links to the industry, including at least three former tobacco-company executives who are now leaders in the Ontario, Quebec and national convenience-store associations.

It’s a bit peculiar that some are hanging their hats on this particular PowerPoint presentation, in that it addresses contraband … which I think all of us should be concerned about
The CEO of the Ontario group, David Bryans, for instance, worked at what is now JTI-MacDonald until 2002, at one time as director of domestic sales. He has led either the Ontario or Canadian convenience-store trade groups since 2003.

But the current president of the Canadian Convenience Stores Association, Satinder Chera, denied his group acts at the behest of the tobacco industry.

Cigarette companies are among 60 national firms who are part of the association, representing the stores’ major suppliers from soft-drink makers to oil companies, he said.

The association lobbies on a “slew” of issues, and makes no apologies for opposing contraband, said Chera.

“It’s a bit peculiar that some are hanging their hats on this particular PowerPoint presentation, in that it addresses contraband … which I think all of us should be concerned about.”

Still — like colleagues from his and the other groups at various legislative committee hearings — he refused to disclose what proportion of the association’s funding comes from the tobacco industry.

Jeffrey Guiler, an Imperial Tobacco spokesman, said in a statement that the company works with a variety of groups on a “multitude of issues,” including contraband.

“This criminal activity harms honest small-business owners. They care about their business and we work with their umbrella groups to advocate for their best interests.”

The National Coalition did not respond directly to the suggestion it is part of Imperial’s lobbying campaigns, but noted in a statement that its 18 member organizations have convinced governments to act against “this growing (contraband) threat.”

The Imperial Tobacco presentation lists the company, the convenience-store groups and contraband coalition side by side as conducting various campaigns for years to oppose illegal cigarettes and to “freeze taxes.”

Then it asks “how to keep the pressure on” and answers by describing the 2012 Project M&M campaign involving the same players, but leaning on Quebec politicians during an election year and on municipalities in two provinces.

Through such “front groups,” the tobacco company essentially co-opted politicians and other “innocents,” charged Cynthia Callard of Physicians for a Smoke-Free Canada.

“If I was a councillor in any of those municipalities that had passed a resolution in good faith,” she said, “I would feel used.”

Tobacco industry to benefit from new vaping proposals

Tobacco companies are taking over the e-cigarette industry. Does this mean they’re changing their spots?

Why are tobacco giants welcoming the Government proposal on electronic cigarettes? Because they stand to benefit.

For the past decade the tobacco industry have been buying up e-cigarette manufacturers and suppliers and investing heavily in developing these product lines.

The three dominant tobacco players in New Zealand – Imperial, British American Tobacco, and Philip Morris – all have e-cigarette subsidiaries under their parent companies.

The Government are proposing nicotine e-ciggy sales should be R18, have constraints on advertising and be banned in smokefree areas.

All going to plan, nicotine-vapours will be part of New Zealand’s health policy to help Kiwis quit smoking. The Government are just trying to figure out how it would work.

Perhaps this is the dawn of Big Tobacco being the ‘good guys’ for once – but experts are not so sure.

The Government wants to clarify the law surrounding electronic cigarettes, Peseta Sam Lotu-liga says.

Imperial Tobacco are “certainly wanting to assist” in “shaping good, solid and sound regulations”, says its corporate affairs manager Louise Evans McDonald.

“We are very supportive of adults having the right to choose a product,” she said.

Imperial bought e-cigarette brand Blu in 2014, after member company Fontem Ventures bought Dragonite in 2013 for $75m.

Associate Health Minister Peseta Sam Lotu-liga says the proposals on e-cigarettes are not about regulating who can supply them.

However, the corporation has never applied to Medsafe to have its products available to those that want to quit smoking. It’s been waiting on the Government to take a “lead steer” on regulations, Evans McDonald said.

At this stage, Imperial was just focused on selling tobacco in New Zealand. It made a 50 percent jump in profit from sales of $553m for the year ending September 2015.


It’s “unlikely” the tobacco industry are just wanting to be ethically responsible with their investments, says Otago University pubic health co-head Richard Edwards.

They’re really getting “a big slice” of the consumer pie by investing in a market that’s grown exponentially in the past few years, he said.

“It may mean it’s a way for them to get more influence over governments, and policy and so on, by appearing to be not so bad after all.”

Take a look at the track record of the industry’s court actions, he said, such as trying to prevent graphic health warnings in Uruguay, and losing the argument to prevent plain packaging in the UK.

“They’re still trying to prevent effective policies to reduce the harm caused by smoking. So that’s why I don’t think there’s any evidence that the tobacco industry has changed its spots.”


When asked if tobacco companies stand to benefit from the Government proposal, Associate Minister of Health Peseta Sam Lotu-Iiga responded: “It is not a proposal to regulate who is involved in the provision of e-cigarettes.”

The proposal would treat e-cigarettes in a “similar fashion” to tobacco regulations, “which tobacco companies already operate within”, he said.

He had not had discussions yet with the tobacco industry on the issue.

Philip Morris, known for the Marlboro and Chesterfield cigarette brands, welcomed the consultation announced by the Government, said New Zealand general manager Jason Erickson.

He pointed out that advances in vaping technology was “transforming the tobacco industry”.

Philip Morris International teamed up with Altria to market e-cigarettes in 2013, selling these exclusively outside the US. In 2014, it bought Nicocigs to enter the UK market.


In 2013, British American Tobacco was the first international company to launch an e-cigarette (called ‘Vype’) in the UK.

Its website says it will continue to invest “substantially” in the research, development and commercialisation of a pipeline of products. They also plan to launch Vype in other markets.

It also says it was the first company to have a nicotine product licensed as a “medicine” – their nicotine inhaler.

“If we are successful in developing and bringing to market a range of products that meet the needs of adult smokers seeking less risky alternatives to cigarettes, this will help to meet the objectives of a number of leading public health professionals.

“And of course it will also make commercial business sense to us and our shareholders.”

Statistics about vapers in New Zealand are hard to come by because the nicotine products are illegal to sell.

However, in the UK and US there are already a high rate of users. It’s estimated that 2.8million adults in the UK are vapers, according to Action on Smoking and Health, correlating with a decrease in smokers. However two thirds of vapers were still smokers.

American vapers are counted as high as 10 per cent of the US adults, according to a Reuters poll last year.

British American Tobacco was contacted for comment on the Government’s proposal, but have not responded in time for this article.

Stub you: How a tobacco giant is bypassing packaging rules

IMPERIAL Tobacco has deployed a new trick to circumvent plain packaging legislation and it’s caught the Federal Government flat footed.

Packs of 20 Peter Stuyvesant cigarettes – manufactured by Imperial – are being sold with a lift out soft pack inside the olive boxes mandated by the Rudd/Gillard Government in 2011.

The move means people are able to throw away the cardboard box carrying warnings of cancer, gangrene, blindness and heart disease and instead use a shiny silver pack to carry their smokes.

Imperial Tobacco is inserting soft packs inside its packets of Peter Stuyvesant cigarettes to get around the Federal Government's plain packaging legislation.

Imperial Tobacco is inserting soft packs inside its packets of Peter Stuyvesant cigarettes to get around the Federal Government’s plain packaging legislation.

A spokeswoman for Imperial denied the company was breaking the law before adding: “we are providing a fresher, premium product to consumers.”

The Federal Department of Health said it would investigate the issue – after it was raised by Australian Regional Media with Federal Health Minister Sussan Ley.

Ms Ley and the department declined to comment further because the investigation is ongoing.

The Plain Packaging Act states that: “If the pack contains lining – the lining of the pack must be made only of foil backed with paper,” which the soft packs in question are.

And while there is also a section precluding tobacco companies from having fold out panels on their packets there is nothing that specifically addresses this latest move by Imperial.

The regulations which accompany the Act also fail to do this.

The maximum penalty for manufacturers who breach the plain packaging legislation is $36,000.

This is not the first time Imperial has used extras with Peter Stuyvesant cigarettes to entice smokers.

A report by Quit Victoria in 2011 mentioned the brand’s previous behaviour.

“In February 2006, one month prior to the adoption of picture‐based warnings on tobacco packages, Peter Stuyvesant cigarettes were being sold in ‘trendy retro‐style tins’ which, unlike soft packets of cigarettes with on‐pack printed warnings, had health warning stickers that were easily peeled off,” the report stated.

“Retailers reported that the tins were very popular with younger smokers.”