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Nairobi’s smoking culture – in pictures

Jul 13th, 2017
by Editor.
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In east Africa, the tobacco industry, including British American Tobacco, has been putting pressure on local governments over some of the regulations attempting to curb smoking.

https://www.theguardian.com/world/gallery/2017/jul/12/on-the-tobacco-road-david-levene-in-kenya

BAT says it is not against all regulation, but from ‘time to time’ needs to challenge it. BAT Kenya is currently taking a legal case to the country’s supreme court over some regulations.

Every year, more than 6,000 Kenyans are killed by tobacco-linked diseases, part of what the WHO calls the ‘biggest public health threats the world has ever faced’.

Campaigners say the industry is developing its African market and sees new potential customers as populations and prosperity grow there.

David Levene spent some time documenting the country’s smoking culture in Nairobi, noticing the prevalence of cigarette brands in daily life. This collection is gathered from his walks through the city

Facts from Tobacco Atlas

Smoking in public areas in highly restricted in Kenya. These two men sit back in one of central Nairobi’s smoking zones, as designated by the country’s ministry of health. Photograph: David Levene for the Guardian

Smoking in public areas in highly restricted in Kenya. These two men sit back in one of central Nairobi’s smoking zones, as designated by the country’s ministry of health.
Photograph: David Levene for the Guardian

Meru, Kenya - Over the past 50 years, Africa has seen a significant increase in tobacco farming. Many farmers suffer from green tobacco sickness, which shares symptoms with nicotine addiction and withdrawal. It’s simply caused by being in consistent contact with the plant, as nicotine can be absorbed through the skin especially when wet. Tanzania, Kenya’s southern neighbor, earns $50 million per year from tobacco but spends $40 million for tobacco- related cancers alone. Photograph: David Levene for the Guardian

Meru, Kenya – Over the past 50 years, Africa has seen a significant increase in tobacco farming. Many farmers suffer from green tobacco sickness, which shares symptoms with nicotine addiction and withdrawal. It’s simply caused by being in consistent contact with the plant, as nicotine can be absorbed through the skin especially when wet. Tanzania, Kenya’s southern neighbor, earns $50 million per year from tobacco but spends $40 million for tobacco- related cancers alone.
Photograph: David Levene for the Guardian

Approximately 176 million adult women worldwide are daily smokers and 37 women die every week in Kenya due to tobacco related complications. Photograph: David Levene for the Guardian

Approximately 176 million adult women worldwide are daily smokers and 37 women die every week in Kenya due to tobacco related complications.
Photograph: David Levene for the Guardian

A vendor sells single sticks in central Nairobi’s Uhuru Park. Most Kenyan smokers prefer this to buying whole packs, given the cost.Manufacturers are not allowed to produce cigarettes in packs of less than 10, and they say they want customers to purchase full packs, and that they work with vendors to encourage them to sell them this way.The World Health Organization estimates that people in low-income countries can spend as much as 10% of household income on tobacco products.Uhuru Park is also a key spot for Nairobi’s bourgeoning skate scene. Photograph: David Levene for the Guardian

A vendor sells single sticks in central Nairobi’s Uhuru Park. Most Kenyan smokers prefer this to buying whole packs, given the cost.Manufacturers are not allowed to produce cigarettes in packs of less than 10, and they say they want customers to purchase full packs, and that they work with vendors to encourage them to sell them this way.The World Health Organization estimates that people in low-income countries can spend as much as 10% of household income on tobacco products.Uhuru Park is also a key spot for Nairobi’s bourgeoning skate scene.
Photograph: David Levene for the Guardian

Excises taxes are still the most effective controls against tobacco. In Kenya, they make up 35% of retail price, similar to the US’s 38%. One of the elements of government plans that BAT Kenya is fighting in the court is a new tobacco industry tax.Clear adverts may be outlawed, but still, Kenyans know what is being sold. These red boxes are instantly recognizable. Photograph: David Levene for the Guardian

Excises taxes are still the most effective controls against tobacco. In Kenya, they make up 35% of retail price, similar to the US’s 38%. One of the elements of government plans that BAT Kenya is fighting in the court is a new tobacco industry tax.Clear adverts may be outlawed, but still, Kenyans know what is being sold. These red boxes are instantly recognizable.
Photograph: David Levene for the Guardian

The afternoon sets on Enterprise Road in Nairobi’s industrial zone. Photograph: David Levene for the Guardian

The afternoon sets on Enterprise Road in Nairobi’s industrial zone.
Photograph: David Levene for the Guardian

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A smoker in a Nairobi smoking zone Photograph: David Levene for the Guardian

A Nairobi smoking zone Photograph: David Levene for the Guardian

A Nairobi smoking zone
Photograph: David Levene for the Guardian

Nairobi, Kenya Photograph: David Levene for the Guardian

Nairobi, Kenya
Photograph: David Levene for the Guardian

The combined revenues of the world’s 6 largest tobacco companies in 2013 was USD342 Billion, 85% larger than the Gross National Income of Kenya Photograph: David Levene for the Guardian

The combined revenues of the world’s 6 largest tobacco companies in 2013 was USD342 Billion, 85% larger than the Gross National Income of Kenya
Photograph: David Levene for the Guardian

Inside the murky world of Nairobi’s smoking zones

Jul 12th, 2017
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The Kenyan government has cracked down on cigarettes with a ban on advertising and smoking in public, driving the habit into the shadows

https://www.theguardian.com/world/2017/jul/12/nairobi-kenya-smoking-zones-cigarette-crackdown

There is a wooden shed in the middle of Nairobi city centre, dark, full of fumes, crowded and deliberately built beside the public toilets. It feels like a place of shame.

Jairus Masumba, Nairobi County’s deputy director of public health, calls it in jest the gazebo. It’s the public smoking place, created by his department. It is claustrophobic and filled with smoke, some of which drifts out through slats, but most of which hangs heavily in the fugged air inside.

Those who enter have to be desperate – and they’re usually men. A 27-year-old woman, who comes from the south of Kenya, is a rarity. She is heavily made-up and stands in the doorway. She smokes seven to 10 cigarettes a day. “It’s bad for you, no?” she says several times, though she knows the answer.

The men inside, barely visible as you enter because of the darkness and the fug, are smoking hard, standing up like a football crowd, all facing the same way though there is nothing to look at except the wooden slats of the far side of the shed. Music blares but nobody is dancing. They are grim faced, doing what they have to do. A young man, high probably on khat and cigarette in hand, chases some of the butts and the ash out with a broom, seeking money from the other smokers for cleaning up. He says he has a diploma in business marketing and another diploma in substance abuse counselling.

At the door are two cigarette sellers, doing a busy trade. It’s rare for anyone to buy whole packets. Packs of cigarettes in Kenya are broken up and sold by vendors as single sticks. That makes them cheap for women, children and the poor, despite manufacturers being banned from producing packets of less than 10. One of the two sellers sitting passively inhaling smoke is a woman who taps a packet of 20 and shakes them deftly out, one at a time, exchanging them for small coins. Men buy one, sometimes a couple, sometimes three. They will not all be smoked here. The sellers sit at the large red wooden boxes, with open lids that become the display cabinet. Most popular and cheapest is Sportsman at 100 shillings a pack (75p, 97 cents) or 5 shillings (less than 4p, 5 cents) for a single. Smokers buy sweets too, to take away the smell of tobacco when the worker goes back to the office.

The shed is vile, but few dare smoke even on the pavement outside in the cleaner air in the knowledge that the plain clothed official public health enforcers will be circling, ready to impose fines on anyone they catch. Nairobi city has got tough on smoking. The Kenyan government has banned advertising and marketing and smoking in public places, but it is up to the individual counties to interpret and enforce that and they all do it differently. Nairobi County has cracked down hard. Lighting up on the open street in the city centre can result in a stiff fine of 50,000 shillings (£374, $485) or even arrest. But it’s not so everywhere, or even outside of the city centre.

WHO-africa-deaths

Yusef, 58 and from Kenya’s second city, Mombasa, on the Indian Ocean coast, says people smoke openly in Mombasa. He has been smoking since the 1970s. His 28-year-old daughter died recently from colon cancer. That gives him a different perspective. “I’m more worried about GM foods,” he says.

Nairobi’s Uhuru Park is just under the nose of the ministry of health and has two small designated open-air smoking areas. On a Saturday, young women who are not smoking are there laughing and chatting with the young men who are. It’s somewhere to hang out. Elsewhere in the park, the same snack stalls proliferate. After 5pm, when the official public health enforcement officers go home, vendors and smokers relax. Cigarettes are sold and smoked openly.

Outside of the city centre, the restrictions do not appear to be enforced at all. In the High Ridge residential area, a predominantly Indian community, stall holders are grilling corn and frying cassava crisps on the street. Others run the small stalls selling sweets, biscuits, fizzy drinks and cigarettes, openly smoking themselves. People wander along the road with a cigarette between their fingers. A large lorry stops and a man jumps down to buy two sticks, lighting both and passing one to his fellow labourer before they unload.

These stalls are common near schools. A recent report compiled by the Consumer Information Network, a campaigning Kenyan anti-tobacco organisation, with Johns Hopkins University in the US, found such stalls selling sweets and single cigarettes within yards of primary schools across the country.

You won’t see an advert for Dunhill or Rothmans in Kenya. At least, nothing that looks like an advert. Advertising and promoting cigarettes has been banned. But everybody knows what the large red wooden boxes and red wooden display trays at stalls at the side of roads contain. Red is the colour of British American Tobacco (BAT). The words have been stripped off the red umbrellas that protect street vendors from the sun or patched over, but the colour is a tacit reminder of what they used to say and what is still sold there.

BAT said its products were for adult smokers only and that it would much prefer that stalls sold whole packets rather than single sticks, “given our investment in the brands and the fact there are clear health warnings on the packs.

“Across the world, we have very strict rules regarding not selling our products to retailers located near schools. BAT Kenya provides support to many of these independent vendors, including providing stalls painted in non-corporate colours, and providing youth smoking prevention and health warnings messages. We also educate vendors to ensure they do not sell tobacco products near schools.

“We are a company that takes its responsibilities very seriously, and we are naturally keen to look further into any instances that are brought to our attention, so we can take action if necessary.”

Pictures and video by David Levene. Multimedia editing by Ekaterina Ochagavia.

Threats, bullying, lawsuits: tobacco industry’s dirty war for the African market

Jul 12th, 2017
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Revealed: In pursuit of growth in Africa, British American Tobacco and others use intimidatory tactics to attempt to suppress health warnings and regulation

https://www.theguardian.com/world/2017/jul/12/big-tobacco-dirty-war-africa-market

British American Tobacco (BAT) and other multinational tobacco firms have threatened governments in at least eight countries in Africa demanding they axe or dilute the kind of protections that have saved millions of lives in the west, a Guardian investigation has found.

BAT, one of the world’s leading cigarette manufacturers, is fighting through the courts to try to block the Kenyan and Ugandan governments’ attempts to bring in regulations to limit the harm caused by smoking. The giant tobacco firms hope to boost their markets in Africa, which has a fast-growing young and increasingly prosperous population.

In one undisclosed court document in Kenya, seen by the Guardian, BAT’s lawyers demand the country’s high court “quash in its entirety” a package of anti-smoking regulations and rails against what it calls a “capricious” tax plan. The case is now before the supreme court after BAT Kenya lost in the high court and the appeal court. A ruling is expected as early as next month.

BAT in Uganda asserts in another document that the government’s Tobacco Control Act is “inconsistent with and in contravention of the constitution”.

The Guardian has also seen letters, including three by BAT, sent to the governments of Uganda, Namibia, Togo, Gabon, Democratic Republic of Congo, Ethiopia and Burkina Faso revealing the intimidatory tactics that tobacco companies are using, accusing governments of breaching their own laws and international trade agreements and warning of damage to the economy.

Extract – court document

“The Regulations are unlawful in their entirety as a result of procedural impropriety … The warning requirements [on cigarette packets] constitute an unjustifiable barrier to international trade.”

A petition by British American Tobacco Kenya to the country’s high court against aspects of the Kenyan government’s proposed tobacco regulations, 16 April 2015

BAT denies it is opposed to all tobacco regulation, but says it reserves the right to ask the courts to intervene where it believes regulations may not comply with the law.

Later this month, BAT is expected to become the world’s biggest listed tobacco firm as it completes its acquisition of the large US tobacco company Reynolds in a $49bn deal, and there are fears over the extent to which big tobacco can financially outmuscle health ministries in poorer nations. A vote on the deal by shareholders of both firms is due to take place next Wednesday, simultaneously in London at BAT and North Carolina at Reynolds.

Professor Peter Odhiambo, a former heart surgeon who is head of the government’s Tobacco Control Board in Kenya, told the Guardian: “BAT has done as much as they can to block us.”

Experts say Africa and southern Asia are urgent new battlegrounds in the global fight against smoking because of demographics and rising prosperity. Despite declining smoking and more controls in some richer countries, it still kills more than seven million people globally every year, according to the WHO, and there are fears the tactics of big tobacco will effectively succeed in “exporting the death and harm” to poorer nations.

There are an estimated 77 million smokers in Africa and those numbers are predicted to rise by nearly 40% from 2010 levels by 2030, which is the largest projected such increase in the world.

In Kenya, BAT has succeeded in delaying regulations to restrict the promotion and sale of cigarettes for 15 years, fighting through every level of the legal system. In February it launched a case in the supreme court that has already halted the imposition of tobacco controls until probably after the country’s general election in August, which are being contested by parliamentarians who have been linked to payments by the multinational company.

Extract – court document

“[A proposal for a new 2% tax on the industry in Kenya] … is arbitrary, capricious and inaccessible … it will have a significant effect on cigarette manufacturers and importers putting at risk further investment and direct and indirect employment opportunities in Kenya.”

A petition by British American Tobacco Kenya to the country’s high court against aspects of the Kenyan government’s proposed tobacco regulations, April 16th 2015

In Uganda, BAT launched legal action against the government in November, arguing that the Tobacco Control Act, which became law in 2015, contravenes the constitution. It is fighting restrictions that are now commonplace in richer countries, including the expansion of health warnings on packets and point-of-sale displays, arguing that they unfairly restrict its trade.

The court actions are brought by BAT’s local affiliates, BAT Kenya and BAT Uganda, but approved at Globe House, the London headquarters of the multinational, which receives most of the profits from the African trade. In its 2016 annual report, BAT outlined the “risk” that “unreasonable litigation” would be brought in to control tobacco around the world. Its response was an “engagement and litigation strategy coordinated and aligned across the Group”.

‘Focus on emerging markets’

At its annual meeting in March, chairman Richard Burrows toasted a “vintage year” for BAT, as profits rose 4% to £5.2bn after investors took their cut – their dividend had increased by 10%. When asked about the legal actions in Africa, he said tobacco was an industry that “should be regulated … but we want to see that regulation is serving the correct interests of the health mission and human mission which should lie behind it”.

Extract – court document

“Your Petitioner alleges and shall demonstrate that the Tobacco Control Act, read as a whole, has the effect of unjustifiably singling out the tobacco industry for discriminative treatment.”

A petition of British American Tobacco Uganda in the constitutional court against the Ugandan government’s Tobacco Control Act

So, “from time to time it’s necessary for us to take legal action to challenge new regulation” which he said was led by “the local board”.

BAT says it is “simply not true that we oppose all tobacco regulation, particularly in developing countries”. Tobacco should be appropriately regulated as a product that has risks to health, it said, but “where there are different interpretations of whether regulations comply with the law, we think it is entirely reasonable to ask the courts to assist in resolving it”. It was opposed to only a handful of the issues in Kenya’s regulations, not the entirety, it said in a statement.

Although most countries in Africa have signed the World Health Organisation (WHO) treaty on tobacco control, none has yet fully implemented the smoking restrictions it endorses.

The WHO predicts that by 2025, smoking rates will go up in 17 of the 30 Africa-region countries from their 2010 level. In some countries a massive hike is expected – in Congo-Brazzaville, from 13.9% to nearly half the population (47.1%) and in Cameroon from 13.7% to 42.7%. In Sierra Leone it will be 41.2% (74% among men) and in Lesotho 36.9%.

In contrast, research showed last year that just 16.9% of adults smoke in the UK; and last month new figures showed UK heart disease deaths had fallen 20% since that country’s indoor smoking ban.

“The tobacco industry is now turning its focus toward emerging markets in sub-Saharan Africa, seeking to exploit the continent’s patchwork tobacco control regulations and limited resources to combat industry marketing advances,” said Dr Emmanuela Gakidou and colleagues at the Institute for Health Metrics and Evaluation at the University of Washington in Seattle, publishing an analysis of smoking prevalence around the world in the Lancet in April.

Extract – letter

Uganda’s economy has “benefitted… significantly” from BAT’s tobacco business, employing 200 Ugandans and 1500 extra in the tobacco buying season. “This has helped to alleviate poverty and improve welfare in urban and rural areas …”

Extracts of a letter from Jonathan D’Souza, managing director of BAT Uganda to the chairperson of the Uganda Parliamentary committee on health, 14 April 2014

Africa’s growing numbers of children and young people, and its increasing wealth, represent a huge future market for the tobacco industry. The companies deny targeting children and cannot sell packs smaller than 10, but a new study carried out in Nairobi by the Johns Hopkins school of public health in the US and the Kenya-based Consumer Information Network found vendors selling cigarettes along the routes children take to walk to primary schools.

WHO-congo-smoke

Stalls sell single Dunhill, Embassy, Safari and other BAT cigarette sticks, costing around 4p (5 cents) each, alongside sweets, biscuits and fizzy drinks. The vendors split the packets of 20 manufactured by BAT. “They are targeting children,” said Samuel Ochieng, chief executive of the Consumer Information Network. “They mix cigarettes with candies and sell along the school paths.”

BAT said that its products were for adult smokers only and that it would much prefer that stalls sold whole packets rather than single sticks, “given our investment in the brands and the fact there are clear health warnings on the packs.

“Across the world, we have very strict rules regarding not selling our products to retailers located near schools. BAT Kenya provides support to many of these independent vendors, including providing stalls painted in non-corporate colours, and providing youth smoking prevention and health warnings messages. We also educate vendors to ensure they do not sell tobacco products near schools.”

Links with politicians

The Kenya case, expected to be heard after the elections on 8 August, is seen as critical for the continent. If the government loses, other countries will have less appetite for the long and expensive fight against the wealthy tobacco industry.

BAT has around 70% of the Kenyan market; its Kenyan competitor, Mastermind, has joined in the legal action against the government.

Extract – letter

“If these measures are brought into effect, the economic and social impact will be extremely negative. They could even threaten the continuation of our factory which has operated in Bobo Dioulasso for more than fifty years with more than 210 salaried employees.”

Excerpt from letter from Imperial Tobacco to the prime minister of Burkina Faso, 25 January 2016, concerning new regulations on plain cigarette packaging and large graphic health warnings.

Concerns have been raised about links between politicians and the tobacco companies. “There are allegations of some of them having been bribed in the past,” said Joel Gitali, chief executive of the Kenya Tobacco Control Alliance.

BAT whistleblower Paul Hopkins, who worked in Africa for BAT for 13 years, told a British newspaper he paid bribes on the company’s behalf to the Kenya Revenue Authority for access to information BAT could use against its Kenyan competitor, Mastermind. Hopkins has also alleged links between certain prominent opposition Kenyan politicians and two tobacco companies, BAT Kenya and Mastermind. Hopkins, who says he alerted BAT to the documents before the company made him redundant, claimed BAT Kenya paid bribes to government officials in Burundi, Rwanda and the Comoros Islands to undermine tobacco control regulations. Gitali is concerned about the outcome of the election: “If the opposition takes over government we shall be deeply in the hands of the tobacco companies.”

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.”

Extract – letter

“Once the decision to smoke is taken by an adult smoker, the pack provides adult consumers with pertinent information”

British American Tobacco letter to the prime minister of Gabon, 1 January 2012

‘We grow up dreaming we can be one of them’

Tih Ntiabang, regional coordinator for Africa of the Framework Convention Alliance – NGOs that support the WHO treaty – said the tobacco companies had become bolder. “In the past it used to be invisible interference, but today it is so shameful that it is so visible and they are openly opposing public health treaties like the case in Kenya at the moment … Today they boldly go to court to oppose public health policy. Every single government is highly interested in economic growth. They [the tobacco companies] know they have this economic power. The budget of tobacco companies like BAT could be as much as the whole budget of the Africa region.

“Our health systems are not really well organised. Our policy makers can’t see clearly what are the health costs of inaction on tobacco control because our health system is not very good. It puts the tobacco industry at an advantage on public health.”

The sale across the whole of Africa of single cigarette sticks was a serious problem because it enabled children to buy them. “They are extremely affordable. Young teenagers are able to purchase a cigarette. You don’t need £1 for a pack of 20,” he said.

WHO-africa-deaths

BAT has a reputation in Africa as an employer offering steady and well-paid jobs, said Ntiabang, based in Cameroon. “When I was about 10, I was always dreaming I could work for BAT. They have always painted themselves as a responsible company – a dream company to work for. All the staff are well-off. The young people think ‘I want to work for BAT’. They promote a lot of events and make their name appear to young people. We grow up dreaming we can be one of them.”

In Uganda in 2014, BAT managing director, Jonathan D’Souza, sent a 13-page detailed attack on the tobacco control bill, then going through parliament, to the chair of the government’s health committee.

BAT was contracting with 18,000 farmers and paid them 61bn Ugandan shillings for 16.8m kg of tobacco in 2013, said the letter. The economy has “benefited significantly” from BAT Uganda’s investments, it said. “This has helped to alleviate poverty and improve welfare in urban and rural areas,” it says.

Extract – letter

“The draft regulations which you have published deal with a wide range of issues which will have a massive impact not only on the tobacco industry but also on a wider scale on the Namibian economy at large.”

Excerpt from a letter from the general manager of BAT in Namibia to the minister of health and social services, 17 November 2011

BAT Uganda (BATU) agreed tobacco should be regulated while “respecting the informed choices and rights of adults who choose to smoke and the legal rights of a legal industry”. But it cited 11 “areas of concern”, claiming there is no evidence to support a ban on tobacco displays in shops, that large graphic health warnings on packs are ineffective, that proposals on bans on smoking in public places were too broad and that prohibiting smoking under the age of 21 was unreasonable, since at 18 young people are adults and can make up their own mind.

Documents made public by the University of Bath show that BATU had another concern: the ban on the sale of cheap single cigarettes. Adults should be “free to purchase what they can afford”, says an internal leaked paper. BATU also took action against the MP who sponsored the bill. A letter informed him that the company would no longer be contracting with the 709 tobacco farmers in his region. There is evidence that the company also lobbied other MPs with tobacco farmers in their constituencies.

The Tobacco Control Act became law in 2015, and in November last year, BAT sued. Many people choose to smoke, said an affidavit to the court from managing director Dadson Mwaura and it was important to ensure regulation did not lead to “unintended consequences that risk an untaxed and unrestrained illegitimate trade in tobacco products”. BATU’s legal product contributed to the Ugandan economy “in many dimensions”.

The Guardian has seen letters showing that at least six other African governments have faced challenges from the multinational tobacco companies over their attempts to control smoking.

Democratic Republic of Congo: Letter to the president sent in April 2017 by the Fédération des Entreprises du Congo (chamber of commerce) on behalf of the tobacco industry, listing 29 concerns with the proposed tobacco control regulations, which they claim violate the constitution, international agreements and domestic law.

Burkina Faso: Letter sent in January 2016 to the minister of health from Imperial Tobacco, warning that restrictions on labeling and packaging cigarettes risks economic and social damage to the country. Previous letter sent to the prime minister from the US Chambers of Commerce in December 2013 warning that large health warnings and plain packaging could put Burkina Faso in breach of its obligations to the World Trade Organisation.

Ethiopia: Letter sent in February 2015 to the ministers of health and science and technology by Philip Morris International, claiming that the government’s tobacco directive banning trademarks, brands and added ingredients to tobacco breached existing laws and would penalise all consumer retailers.

Togo: Letter to the minister of commerce in June 2012 from Philip Morris International opposing plain packaging, which “risks having damaging consequences on Togo’s economy and business environment”.

Gabon: Letter from BAT arguing that there is no evidence that plain packaging reduces smoking, citing the Deloitte report of 2011, alleging its introduction would put Gabon in breach of trade agreements and promote smuggling.

Namibia: Letter to the minister of health from BAT, warning that planned tobacco controls will have “a massive impact … on the Namibian economy at large”.

Extract – memo

“As a country whose economy heavily relies on exports, Togo can ill afford to anger its international partners by introducing plain packaging.”

Excerpt from memo on plain packaging from chief executive of Philip Morris West Africa to the minister of commerce of Togo, to reiterate its concerns following a meeting, 21 June 2013

Bintou Camara, director of Africa programs at Campaign for Tobacco-Free Kids, said: “British American Tobacco, Philip Morris International and other multinational tobacco companies have set their sights on Africa as a ‘growth market’ for their deadly products”. Throughout Africa, tobacco companies have tried to intimidate countries from taking effective action to reduce tobacco use, the world’s leading cause of preventable death, he added.

“Governments in Africa should know that they can and should move forward with measures aimed at preventing and reducing tobacco use – and that they do so with the support of the many governments and leaders around the world that have taken strong action to protect public health.”

Cloe Franko, senior international organizer at Corporate Accountability International, said: “In Kenya, as in other parts of the world, the industry has resorted to frivolous litigation, aggressive interference … to thwart, block, and delay lifesaving policies. BAT’s actions are emblematic of a desperate industry grasping to maintain its hold over countries and continue to peddle its deadly product.”

Philip Morris said it is regularly engaged in discussions with governments. “We are approached by or approach public authorities to discuss a range of issues that are important for them and for us, such as taxation, international trade, and tobacco control policies. Participating in discussions and sharing points of view is a basic principle of public policy making and does not stop governments from taking decisions and enacting the laws they deem best.” It said that it supports effective regulation, “including laws banning sales to minors, mandatory health warnings, and advertising restrictions”.

Imperial Tobacco said it sold its brands “where there’s a legitimate and existing demand for tobacco and take the same responsible approach in Africa as we do in any Western territory”. A spokesman said it supported “reasonable, proportionate and evidence-based regulation of tobacco”, including “health warnings that are consistent with global public health messages”. But, it said, Imperial would “continue to make our views known on excessive, unnecessary and often counter-productive regulatory proposals”.

How big tobacco has survived death and taxes

Jul 12th, 2017
by Editor.
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The world’s five major tobacco companies are thriving, profitable and increasing sales, despite many predictions of the industry’s decline

https://www.theguardian.com/world/2017/jul/11/how-big-tobacco-has-survived-death-and-taxes

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.

tob-increases

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.

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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.

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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 financialdirector.co.uk.

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.

BAT to expand ‘glo’ smokeless tobacco sales in Japan from July

May 30th, 2017
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British American Tobacco (BAT) will expand sales of its “glo” tobacco-heating device to Tokyo and Osaka from July and roll it out nationwide by year-end, intensifying a battle with Philip Morris International for a share of Japan’s vaping market.

http://www.thestar.com.my/business/business-news/2017/05/30/bat-to-expand-glo-smokeless-tobacco-sales-in-japan-from-july/

Big tobacco firms are investing in alternative products as more people give up traditional cigarettes amid health concerns.

Japan has emerged as a popular testing ground, mainly for “heat not burn” tobacco devices, given e-cigarettes using nicotine-laced liquid are not permitted under the country’s regulations.

In fact, both glo and Philip Morris’ vaping device “iQOS” were launched in Japan and have limited sales outside.

Glo has been on sale in the northeastern city of Sendai since December and iQOS was rolled out across the country in April 2016. According to their manufacturers, the products have been so popular in Japan that supply has fallen short.

BAT, known for Kent and Lucky Strike cigarettes, will start selling glo in the western Japanese city of Osaka, Miyagi in the country’s northeast and Tokyo from July 3, its Japan president Roberta Palazzetti said.

“Our ambition is to be a leader in next generation-products in Japan,” Palazzetti said at a news conference on Tuesday.

Glo, like iQOS, uses tobacco packed in replaceable sticks.

Instead of burning, the battery-powered devices heat the sticks to generate vapour, which their makers say emit less harmful chemicals than conventional cigarettes.

Marlboro-maker Philip Morris estimates that HeatSticks, used in iQOS, had already cornered a 10% share of the Japanese market as of April, up from 7.6% in January.

Apart from Japan, iQOS is available in at least 19 other markets. Glo went on sale in Switzerland and Canada earlier this year.

The latest version of iQOS is priced at 10,980 yen (US$99), while glo is priced at 8,000 yen. Japan Tobacco Inc’s vaping product “Ploom TECH”, which is set to be sold in Tokyo from June 29, costs 4,000 yen.

The former state monopoly, which commands 60% of Japan’s cigarette market, has been lagging in the new product category, but says it is aiming to grab the top share of the country’s vaping market in three years.

Japan Tobacco plans to spend 10 billion yen in marketing as it expands the sale of Ploom Tech to the rest of Japan in the first half of 2018, CEO Mitsuomi Koizumi told Reuters on Monday. – Reuters
Read more at http://www.thestar.com.my/business/business-news/2017/05/30/bat-to-expand-glo-smokeless-tobacco-sales-in-japan-from-july/#0kPxiDzxQM2ex1jq.99

British American Tobacco nabs 40 per cent market share in Bulgaria with its purchase of Bulgartabac brands

Apr 12th, 2017
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British American Tobacco (BAT) has agreed to buy some of Bulgarian cigarette maker Bulgartabac’s top brands in a deal worth more than €100m (£84.8m).

http://www.cityam.com/262852/british-american-tobacco-nabs-40-per-cent-market-share

The move to buy Victory, Eva Slim and GD brands will bring BAT’s market share in the country to 40 per cent from just 12 per cent previously. The deal will include retail and distribution assets in the country and the wider Adriatic region.

BAT, which has operated in Bulgaria for 25 years, said it is proud to be making the biggest investment in the country this year.

“We are committed to the Bulgarian market and are very excited about this investment in a country which is increasingly demonstrating that it has a very bright future. This significant investment demonstrates our confidence both in Bulgaria and our future growth here,” said Richard Widmann, general manager of BAT’s central European cluster.

Subject to regulatory approval, the deal will be complete by mid-2017, BAT said.

A spokesperson for BAT added the transaction aligns financially and strategically with the business objectives for the central European region. The group will grow its business in Bulgaria and further enhance its position in the Balkans, following its acquisition of TDR in 2015.

Branded tobacco packaging rule riles BAT

Mar 2nd, 2017
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The company warns a proposed ban on branded tobacco packaging poses a threat to British American Tobacco’s only cigarette plant in SA

https://www.businesslive.co.za/bd/companies/2017-03-02-branded-tobacco-packaging-rule-riles-bat/

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.

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“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.

Bloomberg

Forthcoming European Conference on Fighting Organised Crime and Terrorism 2017 Letter

Feb 22nd, 2017
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PMI, BAT units fined KRW 300 billion for hoarding

Feb 13th, 2017
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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.

http://www.tobaccojournal.com/PMI_BAT_units_fined_KRW_300_billion_for_hoarding.54071.0.html

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

Jan 3rd, 2017
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British American Tobacco ends the supplier deal for its long-delayed Voke inhaler

http://www.wsj.com/articles/british-american-tobacco-ends-voke-supply-deal-1483457898

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.

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