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Branded tobacco packaging rule riles BAT

The company warns a proposed ban on branded tobacco packaging poses a threat to British American Tobacco’s only cigarette plant in SA

British American Tobacco (BAT) says it may close SA’s only cigarette plant if plans to ban branded tobacco packaging are implemented.

BAT operates its eighth-largest factory in the world at Heidelberg, south of Johannesburg. The proposed new rules would threaten the financial viability of the operation, Joe Heshu, BAT’s head of external affairs in Southern Africa, said on Monday.

Plain packaging threatened the closure of the factory and “poses a threat to the viability of the legal tobacco industry in SA”, Heshu said. The move would make it harder to distinguish the cigarettes from black-market cigarettes and “the illegal market will benefit from having a cheaper product”, he said.

SA is cracking down on industries and products viewed as harmful to consumers, including through a planned tax on sugar-sweetened beverages, which Finance Minister Pravin Gordhan said in February would be implemented later in 2017.

SA had drafted a bill mandating plain cigarette packaging, which was expected to be made available for public comment soon, Elize Joubert, CEO of the Cancer Association of SA, said on Friday.


“You don’t want to build jobs based on people who are sick,” said Joe Maila, a spokesman for the Department of Health. He declined to provide a time frame for the new rules.

Plain packaging of tobacco products, which has been championed globally by the World Health Organisation, requires standardised designs on cigarette packs.

BAT had cut 750 jobs in SA in two years as it grappled with an increase in illegal cigarettes, it said. The Heidelberg plant employs 1,100 people.

According to the Tobacco Institute of Southern Africa, the supply, distribution and sale of smuggled or counterfeit tobacco products have cost the government more than R21bn since 2010 in lost tax revenue.


Forthcoming European Conference on Fighting Organised Crime and Terrorism 2017 Letter

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PMI, BAT units fined KRW 300 billion for hoarding

The Korean affiliate of Philip Morris International (PMI) and a British American Tobacco (BAT) subsidiary were fined a combined KRW 300 billion (EUR 239 million) for hoarding, the Yonhap news agency said.

The companies were accused of building up inventories in advance of a 2015 hike in excise duties. Sale of the hoarded cigarettes after January, 2015, allowed the companies to avoid tax on the profits, according to Yonhap. PM Korea was fined KRW 218 billion and BAT Korea KRW 89 billion, Yonhap reported. The ruling has been appealed, the news agency said.

Future of BAT’s Planned Nicotine Inhaler in Question

British American Tobacco ends the supplier deal for its long-delayed Voke inhaler

British American Tobacco PLC terminated the supplier agreement for its long-delayed Voke nicotine inhaler, which the tobacco giant had promoted as setting it apart in the growing market for cigarette alternatives.

BAT in 2014 received a medicinal license for Voke from the U.K.’s Medicines and Healthcare Products Regulatory Agency, marking the first time a product from a major tobacco company had been licensed by a Western government.

Voke isn’t an electronic cigarette—it doesn’t heat liquid, use a battery or create vapor—meaning BAT expected it to be unaffected by regulations targeting such devices.

The product, meant to be sold as a cigarette-sized stick in a box containing 20 nicotine refills, was billed as a safer alternative to cigarettes—in the same way as nicotine gum or patches—and one that could be prescribed by doctors.

BAT, which licensed distribution, manufacturing and marketing rights to Voke from closely held patent developer Kind Consumer Ltd., had said it expected the product to be launched in the U.K. by the end of 2015. The London-based tobacco giant has delayed the launch several times, however.

On Tuesday, drug-delivery-device maker Consort Medical PLC said BAT was terminating its entire supply deal for Voke, effective immediately, which was a contractual right if the product hadn’t been commercially launched by the end of 2016.

The companies remain in “constructive dialogue” about the future of Voke, Consort said. A BAT spokeswoman declined to comment on whether the deal’s termination meant Voke was being permanently shelved. Kind Consumer also declined to comment.

In an interview in December, Kingsley Wheaton, BAT’s head of next-generation products, described Voke as “a very complex and challenging product to miniaturize at speed” and said the company was “still working through the many manufacturing challenges of Voke.”

Analysts hadn’t expected Voke to be a significant revenue driver for BAT, but they had seen the product as diversifying the Dunhill and Lucky Strike owner’s offerings within the market for cigarette alternatives.

Consort’s shares were down 3.3% in recent London trading, while BAT’s were down less than 0.1%. Consort said the termination didn’t materially affect its performance expectations for the fiscal year ending in April.

— Denise Roland contributed to this article.

BAT Representative Letter on Graphic Health Warnings

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Representative of BAT on Proposal to Change Graphic Health Warnings

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British American Tobacco says a minimum excise tax in the Autumn Statement would only fuel the black market

UK smokers face a triple whammy in 2017 ahead of Philip Hammond’s Autumn Statement, a British American Tobacco spokesperson said.

With a duty escalator expected and more limitations to come from the EU’s tobacco products directive, BAT said the minimum excise tax proposed by former chancellor George Osborne should be dropped.

The minimum excise tax is effectively a floor price that would hike the price of value-for-money brands in an effort to encourage smokers to quit rather than switch to cheaper brands.

Will Hill is a spokesperson for BAT who said the company, which has a stake in low cost options, would urge the government not to introduce the proposed tax.

Research for the tobacco company by KPMG also showed the tax could increase activity in illicit trading. The study said British smokers who buy low cost brands are more likely to fall into the black market than to quit smoking.

If set at the wrong level, the research shows the tax could cost the Treasury £1.2bn between 2017 and 2020.

The Treasury lost more than £31bn in tax revenue between 2010 and 2015 due to high taxes on alcohol and tobacco, a report by the TaxPayers’ Alliance said.

The company also said the minimum excise tax would run counter to Theresa May’s assurances of a government that works for the many and not just the privileged few.

British American Tobacco to invest EUR 1 billion in Romania over five years

British American Tobacco is to invest EUR 1 billion in the Romanian economy through its three companies over the next five years. The Ploiesti-based factory is projected to become the second in Europe in terms of importance, at group level, the company announced on Tuesday.

Apart from the Ploiesti factory, which was established in 1997, British American Tobacco operates two other companies, namely the distribution company at a national level and the services center that provides the operations of British American Tobacco in Europe.

“Romania is an investment-friendly environment, with well-trained people and the highest economic growth in the European Union in 2016, a growth to which we are proud we can contribute. Therefore, we want to continue the positive impact we have on the local economy through our long-term commitment, including the securing of over 2,000 jobs across the country, and creating others in the coming years, ” said Gemma Webb, CEO British American Tobacco, in the presence of representatives of government and local authorities attending the event.

The Ploiesti factory will receive investment starting next year in the production of Neopods, a product currently made in the United Kingdom. Francisco Toso, the Director General of the British American Tobacco factory in Ploiesti said: “Currently, we are increasing the capacity of the Ploiesti factory built from scratch in 1997. At the same time, we will start to produce in Romania the Neopods capsules, for the glo Ifuse device, one of the most technologically advanced products.”

Georgeta Gheorghe



In November 2013, the South African Revenue Services (SARS) announced that it wanted 15 local tobacco manufacturers and importers to be prosecuted for tax evasion and illicit trade. At stake was R12 billion (US$858.9 million) in unpaid taxes.

About 18 months later, the acting commissioner of SARS, Ivan Pillay, and 55 other top SARS officials, found themselves unemployed— the result of an aggressive campaign against SARS.

The plot involved the Sunday Times newspaper, which published false stories about an apparent “rogue” unit in SARS that supposedly spied on President Jacob Zuma and that set up a brothel aimed at infiltrating the ruling African National Congress Party. The paper subsequently apologised for printing the stories.

But in the wake of the articles, Pillay and the SARS head of enforcement, Johan Van Loggerenberg, were suspended and, after reaching a settlement with SARS, resigned..

A key player in the downfall of Van Loggerenberg is Pretoria attorney Belinda Walter. Walters and Van Loggerenberg first met during investigations of the illicit trade in tobacco and subsequently had a brief romantic liaison. It was after the break-up of their relationship that claims emerged that SARS was running a ‘rogue’ unit first emerged.

Ms Walter was allegedly a doubleagent.

She was an informant to the government’s State Security Agency (SSA) and also to British American Tobacco (BAT), to whom she gave confidential information on smaller rival manufacturers.

In order to infiltrate the rival companies, Ms Walters proposed creating an association, the Fair Trade Independent Tobacco Association (Fita), to represent these companies. The first Fita meeting was held late in 2012, at Walter’s offices, and she was elected chair.

In a court application, a rival has accused BAT of “corporate espionage” and working with government agencies to try to put it out of business.

BAT allegedly spent about $3.6 million a year to bribe politicians, gangsters and government officials in South Africa. The company is accused of money laundering, corruption, spying and the use of state resources to target competitors— all in the name of ‘fighting’ the illicit trade in tobacco.

BAT’s money gave it a seat on the official Illicit Tobacco Task Team, which includes representatives from the Hawks (a state agency tasked with fighting priority crimes), the SSA, South African Police, National Prosecuting Authority and the Tobacco Institute of South Africa.

This structure gives BAT access to state intelligence and the ability to influence who the state targets among BAT’s direct competitors.

A warning from the South Africa experience is that co-operating with the tobacco industry is harmful to democracy. It will use its influence to direct the powers, actions and resources of the state for the benefit of the industry.

Yussuf Saloojee
National Council Against Smoking
South Africa

E-cigarette vapour does not induce DNA mutations linked to tobacco smoke exposures

E-cigarette vapour does not induce DNA mutations commonly observed with tobacco smoke exposures in lab-based tests.

Scientists at British American Tobacco used a method called the Ames test to compare the mutagenic potential of cigarette smoke with that of vapour from Vype ePen, a commercially available e-cigarette. DNA mutations result in genetic instability, which may be involved in the development of cancer.

The Ames test is widely used method that uses bacteria to test whether a given chemical or drug causes mutations in the bacteria’s DNA. The standard test involves five bacterial strains. In this study, two of these bacteria were used Salmonella typhimurium strains TA98 and TA100, both of which are effective at screening 90-95% of potential mutagens. TA98 and TA100 have been used widely to assess tobacco smoke, but never for the assessment of freshly generated e-cigarette aerosols, until now.

Traditionally, the particulate matter in smoke is assessed, but this is only a small fraction of the tobacco smoke. To more accurately reflect real-life exposure, whole smoke was also tested. In all, the researchers tested both the particulate matter and whole aerosol of smoke from a reference cigarette 3R4F and vapour from Vype ePen.

To do this, they trapped particulate matter from smoke or vapour on a filter pad and then washed the pad with a solvent to produce a stock solution that could be diluted into various concentrations. They then exposed the test bacteria to the same concentrations of either smoke or vapour extract. They also exposed test bacteria to freshly generated smoke or e-cigarette vapour.

Exposure to smoke was seen to cause mutations in both bacterial strains in a dose-dependent manner – the higher the dose, the higher the mutation rate. Whole smoke took just 24 minutes to cause mutations. E-cigarette vapour extracts, gave no response, and whole vapour did not cause the bacteria to mutate, even after three hours of continuous exposure, which was comparable to the results obtained from air and untreated controls.

‘These findings suggest that Vype ePen vapour does not induce the mutations observed on exposure to smoke,’ said Dr James Murphy, Head of Reduced Risk Substantiation at British American Tobacco. ‘This study adds data to support the growing evidence base that e-cigarettes have the potential to be significantly less harmful compared to cigarette smoke, though more research is needed’ he said.

Many in the public health community believe e-cigarettes offer great potential for reducing the public health impact of smoking. Public Health England, an executive body of the UK Department of Health, recently published a report saying that e-cigarettes are 95% safer than cigarettes. The Royal College of Physicians have said that the public can be reassured that e-cigarettes are much safer then smoking and that they should be widely promoted as an alternative to cigarettes, but called for more research to be done on the potential long term effects of using e-cigarettes.

R&D at British American Tobacco