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Japan Tobacco International launches first tank e-cigarette across the UK

Big-four cigarette maker Japan Tobacco International (JTI) has launched its first tank e-cigarette nationwide.

JTI’s New Logic PRO tank e-cigarettes have been available at Sainsbury’s stores since January, but were launched nationwide this month and will be boosted with a TV and outdoor media campaign from 1 May.

Tanks are the cartridges that hold the e-cigarette’s vaping liquid and can be replaced when empty.

The launch comes a year after JTI bought one of US’ leading independent e-cigarette makers, Logic, last April.

Founded in 2010, Logic specialised in rechargeable, ready-to-use and disposable e-cigarettes, including the Logic Pro tank system.

Around 85 per cent of vapers use tank e-cigarettes, equating to around two million regular users in the UK.

A study by Public Health England released last year concluded that vaping is 95 per cent less harmful than tobacco.

France orders plain packaging for cigarettes; Japan Tobacco to appeal

PARIS – France published a decree on Tuesday that requires cigarette manufacturers to introduce plain packaging by the end of the year.

Japan Tobacco International immediately said it would challenge the measure.

The publication of the decree was the culmination of government efforts launched in 2014 to require tobacco firms to sell cigarettes in packages decorated with neither logos nor distinctive coloring.

But Japan Tobacco International’s French subsidiary quickly announced it would challenge the decree before the Council of State.

“The introduction of plain packages doesn’t take into account the damage it does to the property rights of companies, in particular intellectual property rights,” JTI France’s Corporate Relations and Communications Director Benoit Bas said in a statement.

That is the argument tobacco companies have used against the introduction of plain packaging in Australia.

In 2012, Australia became the first country to mandate plain packaging for cigarettes in a bid to reduce smoking rates, and is being followed by Ireland and Britain as well as France.

The British ban on logos and branding on cigarette packets goes into force in May, but tobacco firms have filed a legal challenge.

The appeal by JTI before the Council of State, the nation’s supreme court for administrative justice, will not suspend the introduction of plain packages.

Tobacco firms lost their legal cases in Australia and failed to have the matter accepted for international arbitration.

They also failed to overturn an EU law allowing member states to impose plain packaging.

Tobacco firms challenge packaging law

Some of the world’s largest Tobacco firms have gone to the High Court to challenge the lawfulness of the government’s new packaging rules.

The case has been brought by four of the world’s biggest firms against regulations which come into force in May next year banning companies from using any logos or branding on packets of tobacco products.

Mr Justice Green, sitting in London, is being asked to rule on the legality of the new “standardised packaging” regulations in a judicial review action by Philip Morris International, British American Tobacco, Imperial Tobacco and Japan Tobacco International.

The challenge is being contested by Heath Secretary Jeremy Hunt, who argues that the regulations are lawful.

At the start of an estimated six-day case, David Henderson QC, for Japan Tobacco International (JTI) said the companies were “entitled to know” whether the regulations “are lawful or not.”

He told a packed court: “The claimants manufacture products which are lawful, which contribute approximately £10bn per year in excise duty alone for the UK exchequer, which are used by some 19% of the adult population, and which the secretary of state … has never sought to ban.”

Anderson, referring to written legal submissions before the court on behalf of the secretary of state, said he was “quite wrong when he says that we are trying to protect our ability to market unencumbered by legitimate legislation.”

The QC submitted that “on the contrary” the industry was “regulated in a way almost unprecedented in any other field.”

At the heart of the case are the Standardised Packaging of Tobacco Products Regulations 2015, which the companies argue will destroy their highly valuable property rights and render products indistinguishable from each other.

Under the regulations any part of tobacco packaging not covered by the health warning carried on it must be a dark brown or green colour, and brand names must be in small, non-distinctive lettering.

The government argues that the new measure will discourage more people from smoking.

As well as hearing arguments from lawyers for each of the companies and the Health Secretary, the judge will hear submissions from campaigning public health charity Action on Smoking and Health (Ash), which says it “works to eliminate the harm caused by tobacco.”

The firms are putting forward a number of grounds of challenge, including a claim that the regulations violate a number of UK and EU laws, and that they are “disproportionate.”

In written submissions to the judge, Philip Morris International (PMI) argues that the regulations are “disproportionate and so must be quashed.”

PMI QC Marie Demetriou said the defendant (the health secretary) has “failed to demonstrate” that the regulations are suitable or appropriate to meet the objective of “improving public health by reducing smoking” because “it has failed to establish that the regulations will cause a material decrease in smoking rather than an increase”.

PMI further submits that the health secretary has failed to demonstrate that the regulations “are necessary in that the same public health objective cannot be achieved through a less restrictive means, namely taxation.”

Demetriou said: “The defendant has failed to demonstrate that the regulations strike a fair balance between their public interest objectives and the interests of the claimants, given that the regulations will substantially interfere with the claimants’ fundamental rights and freedoms, and destroy their valuable, and often very long-standing, property rights.”

James Eadie QC, representing the health secretary, said in written submissions that the companies manufacture and sell tobacco products “which are the only legal consumer products in the world that cause half of their long-term users to die prematurely.”

He said: “At the heart of the claimants’ case is the assertion that the regulations will not be effective in achieving their public health objectives.

“In short, according to the claimants, standardised packaging will not reduce the appeal of smoking and will not achieve a reduction in tobacco consumption.

“To the contrary, standardised packaging is likely to increase tobacco consumption, and have other adverse consequences such as an increase in illicit trade in tobacco.”

Eadie added: “The secretary of state’s case is that none of the grounds of challenge are made out and the regulations are lawful.

“The claimants’ attack on the proportionality of the regulations is without substance.”

The QC said that “independent and systematic reviews of the evidence” concluded that branded packaging plays an important role in encouraging young people to smoke, and that “standardised packaging is highly likely to reduce both uptake and prevalence of smoking, and thus will have a positive impact on public health.”

He argued that if the tobacco industry “is prevented from using packaging to promote its products to consumers or potential consumers, the appeal of cigarettes is likely to diminish, with inevitable reducing effects on smoking itself.”

Tobacco giants and Government in plain packaging showdown

British American Tobacco and Imperial Tobacco will line up against the Government

The world’s biggest tobacco companies will this week start their High Court battle with the Government over plans to sell cigarettes in plain packets, a controversial law that the manufacturers argue deprives them of their property rights.

FTSE 100 companies British American Tobacco and Imperial Tobacco, along with Marlboro maker Philip Morris International and Japan Tobacco, will line up against the Government on Thursday, when a six-day hearing will start.

The firms are not claiming compensation or costs, but if they succeed in scrapping the ban they could receive large payouts.

Although the companies originally lodged papers separately, their bids to have plain packaging ruled illegal will be heard as one case. The new law is due to come into force in May next year.

The four cigarette companies are co-operating with each other so that each one will present a different argument against the legislation on standardised packets.

Mr Justice Green will hear the case, with a decision expected by January. Whatever the outcome of the hearing, the side that loses will almost certainly appeal.

MPs voted to ban brands and logos on cigarette packets in March, becoming only the third country in the world to do so after Australia and Ireland.

The Government hopes the measures will make smoking less appealing, particularly to youths.

The tobacco companies, however, argue that the measures are unlawful. They believe plain packaging breaches European Union law on community trademarks and that they have been deprived of their valuable brands without compensation.

The firms will also argue that the introduction of plain packaging in Australia, in December 2012, did not lead to a reduction in smoking, although the Government is expected to counter by saying that it is too early to judge the impact of that ban.

In a separate case in Luxembourg, the manufacturers are also attempting to prove that the plain packaging measure in the UK exceeds the EU Second Tobacco Products Directive.

The advocate general will issue an opinion on the matter in less than three weeks, with a ruling to follow early next year. The outcome of the High Court battle will become irrelevant should the tobacco companies win in the EU, because they will have proven that the UK had no legal right to introduce plain packaging.

It is hoped that, even in the event of an appeal, the matter will have been decided one way or another before plain packaging is introduced in May.

If that looks unlikely, the companies are expected to try to delay the start of the ban.

Philip Morris: Reading The Smoke Signals In 2015 – Part 1

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…)I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


Roughly one year after my series on international tobacco, I have decided to write an update.

I will focus primarily on the performance of Philip Morris versus its three largest international competitors.

In the first part of the 2015 series, I will study the competitive dynamics in Western Europe.

Due to popular demand, I have decided to write another installment of my 2014-published series on international tobacco called ‘Reading the Smoke Signals’. As customary, I will focus mostly on the international arena (excluding the U.S. and China), because this is the primary battleground for Philip Morris (NYSE:PM) and its largest competitors: British American Tobacco (NYSEMKT:BTI), Japan Tobacco (OTCPK:JAPAY) and Imperial Tobacco (OTCQX:ITYBY). This article will focus on the relative performances delivered by these four companies in some of the different geographic areas in which they compete. I will also look at some of the important structural developments, including the increased pace of consolidation seen year to date. Since Philip Morris is the international market share leader, this company in particular is the focus of the article. In this first installment, I will take a look at the competitive landscape in Western Europe.

Philip Morris in Western Europe

Western Europe is a mature cigarette market with high average prices as a result of high excise tax levels. It also has an increasingly strict regulatory environment with more regulation in sight, as the new EU tobacco products directive is mandated for adoption by EU member states in the spring of 2016 at the latest. Profitability in this region is above average as a result of high average income levels and high average tobacco prices at retail. Philip Morris is the undisputed share leader in the region, due in important part to Marlboro’s long-time leadership and continued resilience. The new Marlboro 2.0 architecture appears to have benefited the brand’s consumer perception and its market share has continuously showed improvements over the past 4 years or so. Marlboro market share in the region was up to 19.3% for 2014 and has increased further to 19.4% as of September 2015. That is an important indication of PM’s ability to keep the brand relevant despite its reliance in part on an aging demographic.

The pace of volume declines in the EU market overall accelerated during the economic crisis in 2008. Next to economic reasons like pressure on personal incomes and high unemployment rates, other important factors contributing to this pressure have been increasing tax rates, an increased prevalence of illicit trade, e-cigarette consumption and increasing regulation because of health concerns. In 2014, however, the industry saw significant moderation in volume declines as a result of the decreased popularity of e-cigarettes, a decrease in illicit trade and some economic improvements as well.

Market share for Philip Morris in the region was up to 39.8% for 2014 and to 39.9% as of September 2015. Next to Marlboro, PM relies on brands like L&M (up 0.1pp to 7.1% share) and Chesterfield (up 0.3pp to 5.8% share) as its most important volume drivers. In markets like Italy and the Czech Republic, it also has ownership of local brands like Diana and Red & White, respectively, that have generally witnessed declines as consumers gradually move to international brands. Philip Morris’s performance has been strong in recent years, as it continues to gain share in many of the region’s most important markets. Its market shares were up during 2014 in all of the following markets: France (up 0.8pp to 41%), Germany (up 0.4pp to 36.6%), Italy (up 1.8pp to 54.9%), Poland (up 1.9pp to 40.1%) and Spain (up 0.9pp to 32.1%). Marlboro’s performance was strong primarily in France and Spain, while L&M drove performance in Poland and Germany. Improvements in Italy were driven by share gains delivered by Chesterfield, which continued to derive benefits from its price repositioning in this market. Market share improvements were reflected in PM’s overall volume improvement of +0.1% during 2014, while the total cigarette market was lower by -3.1%.

The trends seen during 2014 have largely continued during the recently reported 9M period of 2015, with further share improvements seen in France, Germany and Spain. In Italy, the positive performance of 2014 was reversed due to share declines seen in Marlboro as a result of price increases (from €5 to €5.20 a pack), with weakness in brand Philip Morris as well (which includes the morphed local brand Diana), as a result of increased competition in the low-price segment.

British American Tobacco in Western Europe

British American Tobacco has been locked into a battle for the No. 2 share position in Western Europe with Japan Tobacco for a number of years now. BAT appears to be losing this battle when looking at current data. British American’s volume in the Western European segment was down by -5.88% to roughly 112 billion sticks during 2014, while Japan Tobacco’s volume was up slightly by 0.09% to 111.4 billion sticks (for comparison: PM’s was 185.2 billion). In 2014, BAT performed well in markets like France, the Benelux, the U.K., Spain and Poland. Weaker performances were delivered in markets like Italy, Denmark, Switzerland and Germany. Weakness seen in Italy during 2014 appears to have improved notably during the first half of 2015, although the company’s reporting does not really allow for great market share insights.

BAT’s Rothmans brand continues to amaze in terms of volume improvements and added 10 billion sticks during 2014 to its 2013 volume of 26 billion sticks globally (roughly +38.5%). This brand’s strong growth benefits BAT’s European performance in certain markets as well. Italy is one of the markets, where the company is deriving benefits from the performance of this brand, which was up to 4.1% share of market in H1-2015, up from 0.2% in H1-2013 and 2.4% in H1-2014. Rothmans is probably the fastest growing cigarette brand globally (out of those with notable size of course) as a result of its roll-out into new markets and the strong performance of innovations like convertible cigarettes. BAT’s share in Italy stabilized at 20.2% for H1 of 2015 as a result of the performance displayed by Rothmans in this market.

Romania continues to be a BAT stronghold with total share up to roughly 54% in Aug-2015 versus 53.8% during 2013, largely as a result of higher share for Global Drive Brands (GDB) like Kent, Dunhill and Pall Mall. Pressure on BAT’s German share of market during 2014 seems to have been reversed during H1 of 2015, with important brands like Pall Mall and Lucky Strike bouncing back and rising above their shares of last year. This development pushed BAT’s share back up to 19.5% (June 2015) versus 19.4% for the same period last year. In France, BAT’s share has been on the rise thanks to strength displayed by Lucky Strike, with that brand’s share up a full share point to 8.3% in July 2015 and total BAT share up to 17.6% in the same month (17% during 2014).

The most important development in the area of European tobacco M&A was conducted by British American, when it acquired TDR a couple of months ago. The acquisition price totaled €550 million including debt, roughly 12.5x EBITDA of €44 million (2014), which is broadly in line with historic tobacco buy-out multiples. It is not a particularly large acquisition and I am not very familiar with the business in question. TDR apparently has a leading market position in the Balkan country of Croatia (once part of Yugoslavia) and a relevant presence in the neighboring countries Bosnia and Serbia. I expect BAT will use the acquisition, which includes a manufacturing facility in Croatia, as a platform to further develop its business and brands in Central Europe.

Japan Tobacco in Western Europe

Japan Tobacco saw broad-based market share gains in many Western European markets during 2014 with important markets like France up to 20.8% share (+0.8ppt) and Spain to 21.7% (+0.7ppt), largely driven by strengths seen in brands like Winston and Camel. The good performances delivered in these markets were continued during H1-2015 with France up to 21.1% and Spain up to 22%. Market share in Poland improved further as well and was up to 16.4% during H1-2015. Other good performances were delivered in the Czech Republic, Hungary, Germany, the Benelux countries, Greece, Ireland, Poland and Switzerland.

Performance in Italy apparently was less favorable, which continued during H1-2015 because market share dipped to 20% during that period, even though the company’s newly launched Benson & Hedges value offering saw good growth. Austria was a weak performer as well as market share dropped to 32% (down 0.2ppt), with further declines to 31.4% during H1-2015. In the U.K., the company continued to show resilience by widening its leading position, with Amber Leaf further consolidated as the No. 1 fine-cut brand in this market, Sterling is still No.1 in cigarettes and total company share up to 41.6% as of June 2015. I consider the performance of JT in the U.K., especially admirable because it is being achieved largely through the continued strength of local brands, thereby defying the negative growth seen in national brands in most other cigarette markets. In the U.K., the tobacco market is largely divided between Imperial Tobacco and Japan Tobacco, with share gains made by Philip Morris and BAT apparently primarily at the expense of Imperial Tobacco.

In Romania, JT also continues to perform well with its share of market up to 25.2% due to strength in Winston, Sobranie and Benson & Hedges. It has a decent No. 2 position in this market after BAT, which has roughly half the market.

Imperial Tobacco in Western Europe

Imperial Tobacco meanwhile relies to an important degree on core markets like France, Germany, Spain and the U.K. for a large part of its European volumes. This company is extremely reluctant with providing data on market share performance, which I attribute to their largely unfavorable track record on this metric. I believe the company lost market share in all four of its core European markets, which is due at least in part to their inferior brand portfolio which contains mostly local brands. Their historic strength in fine-cut tobacco has also been less advantageous than one might expect to be the case in austerity-stricken Europe, because the other companies have leveraged their cigarette brands to launch fine-cut offerings as well.

Imperial Tobacco has been actively trying to gain share of the Italian market with its John Player Special brand, which I believe is the factor primarily responsible for the changed dynamics in the lower-priced segment of this market. Imperial gained share in Italy during 2014 from a modest level. This positive momentum was continued during H1 of 2015 with premium brand Davidoff also doing well. Other gains were delivered in Greece, the Nordics (in snus tobacco), Portugal and the Czech Republic. Share declines were registered in markets like the Benelux and Germany (in fine cut), with share developments apparently stabilizing in Austria. The developments in Imperial’s most important European markets largely continued in the same direction during 2015. The Benelux countries, which are also important fine-cut markets for Imperial, apparently showed more stabilized share performances.

Market share was reportedly down in the U.K. during H1-2015. Interestingly, the company reports having a ‘leading position’ in the U.K., but in my opinion they now trail Japan Tobacco in this market.

The U.K. is one of the most important European markets for Imperial Tobacco, because it has long held a significant market share there, although this position has been eroded somewhat by PM and BAT gaining share with Marlboro and Rothmans, respectively.

IMT does not provide extensive volume numbers either, but its global volume was down strongly during its fiscal year 2014, namely by -7.26% to 294 billion sticks. This was due in part to an inventory realignment program that ended during the year, as could be seen by the moderation in its reported decline to -2.77% for 9M-2015 (the underlying decline was -6% though). I strongly expect this company’s organic growth will continue to underperform its international peers, although it has in the past year benefited from its lower-than-average exposure to emerging market currencies and the brand acquisition in the US.


Philip Morris and Japan Tobacco continued to outperform in the Western Europe region during 2014 and H1-2015, with British American and Imperial showing significant weakness during FY 2015, but apparently showing some improvements during H1-2015. Since PM, BAT and JT have all reported significant gains in important markets like Germany, France, Spain and the U.K. over the past years, I strongly suspect Imperial Tobacco is losing ground rather quickly in these countries.

Imperial Tobacco is a company that has conducted a lot of acquisitions during the past two decades or so; its significant presence in France and Spain is the result of its 2008 acquisition of Altadis (which was created out of those two countries’ former state tobacco monopolies). It, therefore, relies extensively on local brands in these markets, which are very consistently being outcompeted by the international brands owned by PM, BAT and JT. In Germany, Imperial Tobacco also has a strong presence as a result of its 2002 acquisition of Reemtsma, which includes a strong presence in the fine-cut tobacco category. This is a very large segment of the German tobacco market overall, which should have served Imperial well since it is a fine-cut specialist, but the other companies have successfully taken share in this category as well. In my opinion, therefore, Philip Morris and Japan Tobacco have shown themselves to be the best operators in Western Europe.

In the upcoming Part 2 of my ‘Reading the Smoke Signals 2015′ series, I will take a look at the performance of the international tobacco companies in another geographic region, so keep an eye out!

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Activists decry tobacco industry incentives

DYING TRADE:A group called on the government to forbid the construction of any more tobacco factories and to close the industry to investment from overseas

Action should be taken to stop foreign firms investing in tobacco factories, activists said yesterday, condemning the Ministry of Economic Affairs for providing economic incentives even as tobacco production in other developed nations has fallen.

The Japan Tobacco International’s (JTI) investment in a new factory in the Tainan Technology Industrial Park comes as the “sun is setting” for the industry in Japan, John Tung Foundation chief executive officer Yao Shi-yuan (姚思遠) said, demanding that the government put the tobacco industry on a list of industries for which foreign investment is forbidden.

John Tung Foundation tobacco control division head Lin Ching-li (林清麗) said that four of Japan’s nine tobacco factories were scheduled to close by the end of the year, with an estimated 1,600 workers losing their jobs.

Because of the prohibitively high cost of producing cigarettes in Japan, the firms are being forced to move production overseas, Lin said.

The incentives the government provides for overseas investors — which include assistance acquiring land and exemptions from property and building taxes — are why Taiwan is seen as a base for expansion, she said.

The foundation called on the Executive Yuan to issue an order forbidding the construction of any more tobacco factories while also placing the industry on a list of industries closed to foreign investment.

It also called for the revocation of JTI’s construction license and the appropriation of Imperial Tobacco’s Miaoli factory, the only other foreign-owned tobacco factory in the nation.

Japan Tobacco set to acquire Reynolds American unit for $5bn

The acquisition of Santa Fe Natural Tobacco would be JT’s largest since it bought UK’s Gallaher for $11.4bn in 2007 Reuters

Japan Tobacco is in final rounds of talks to buy Reynolds American subsidiary Santa Fe Natural Tobacco for about $5bn (£3.29bn, €4.45bn). The deal is expected to be finalised this week.

Besides helping JT increase sales in domestic and overseas markets, the acquisition is in line with its recent initiative to focus on cigarette operations, as reflected by its exit from the soft-drink business in Japan this year. In February, Mitsuomi Koizumi, president, had said that 2015 would be the company’s “year of investments,” including increased stakes in other types of tobacco products such as e-cigarettes.

The Santa Fe deal will give the Japanese cigarette manufacturer access to marketing rights for the Natural American Spirit brand currently sold in the U.S., Japan and Europe.

Santa Fe reported $658m in sales and operating income of $337m for 2014. This highly profitable New Mexico-based company was founded in 1982. Its relatively new Natural American Spirit brand, marketed as made with additive-free tobacco, is popular among younger smokers and has become a premium brand in Japan. It is expected that JT will aggressively market this brand and position it behind its two other key brands — Winston and Camel.

JT, a former state monopoly, was privatized in 1994. In the 1980s the Japanese government opened the domestic market to foreign competitors, after which JT started expanding offshore aggressively through acquisitions. Another reason for JT’s acquisitions is a shrinking population and a stagnating smoking rate in its home market.

In the past, JT has actively acquired businesses not only in the tobacco space but also in the food and pharma sectors, both in its home country and overseas. These include the non-U.S. tobacco business of RJR Nabisco in 1999 for $7.8bn and Britain’s Gallaher Group for $11.4bn in 2007.

JT eventually wants to become the world’s largest cigarette manufacturer with brands such as Winston, Camel and Mevius, overtaking leader Philip Morris International and second-ranked British American Tobacco.

Holyrood urged to limit engagement with tobacco firms

LEADING health professionals and charities have urged Holyrood to limit engagement with the tobacco industry after a senior representative gave evidence to MSPs.

A public petition has been lodged calling on Scottish Parliament authorities to ensure politicians and staff adhere to international guidelines for interaction with tobacco companies.

It follows the appearance of Charlie Cunningham-Reid, the UK head of corporate affairs and communications for Japan Tobacco International (JTI), at Tuesday’s meeting of the health committee.

He was giving evidence on proposed Scottish Government legislation that would introduce restrictions on the sale and marketing of e-cigarettes as JTI owns the E-Lites electronic cigarette company.

But he also commented on another aspect of the Bill that would make it an offence to smoke in parts of hospital grounds, as did the company’s written submission to the committee.

Campaigners point out that the UK is bound by the Framework Convention on Tobacco Control (FCTC), an international health treaty set up by the World Health Organisation.

Parties to the convention are required to protect their public health policies from commercial and other vested interests of the tobacco industry.

The petition states: “For a senior tobacco industry representative to give evidence to a Parliamentary committee on a submission which claims to not relate to smoking raises serious concerns over the Framework Convention obligations regarding transparency, and the witness did take the opportunity to comment on smoke-free hospital grounds proposals.

“We believe that no guidance regarding the committee’s obligations under the Framework Convention on Tobacco Control was provided to the Health and Sport Committee members and would question how the members and clerks can operate within the obligations of the convention without good information as to what is required of them.”

The petition accepts that “materials originating with tobacco companies can and will still form a legitimate part of scrutiny and debate” at Holyrood but calls for “parameters and checks” to ensure compliance with international treaties, and better guidance for staff.

Signatories include Professor Derek Bell, president of the Royal College of Physicians Edinburgh, Dr Peter Bennie, chair of the British Medical Association Scotland, Dr Alastair Cook, chair of the Royal College of Psychiatrists in Scotland, and Sheila Duffy, chief executive of anti-smoking charity Ash Scotland.

Ms Duffy said: “The Framework Convention on Tobacco Control is there because there is fundamental conflict between tobacco industry profits and the health and well-being of their customers.

“For years tobacco companies have tried to protect their interests by opposing health policies and this is why they have been singled out for restrictions.

“We know that the tobacco industry seeks to influence political action on health, as shown by the millions it recently threw at opposing plain packaging for tobacco products.

“MSPs and Parliament staff need to know about this history, and the limits placed on engaging with the tobacco industry.”

Responding to the petition, Mr Cunningham-Reid said: “In addition to our written submission, JTI was invited to attend the Scottish Health and Sport Committee’s meeting to consider the Scottish Health Bill.

“The comments by Ash Scotland are unhelpful and deliberately confusing, as the FCTC and specifically Article 5.3 does not ban or exclude the tobacco manufacturers from the regulatory process but encourages any interaction to be open and transparent.

“This is something we support fully and what could be more open and transparent than a broadcast live debate in the Scottish Parliament building.”

A Scottish Parliament spokesman said: “A petition from Ash Scotland has been received and will be considered by the Public Petitions Committee in due course.

“During the course of their scrutiny, committees of the Scottish Parliament gather a diverse range of views in order to inform their work.

“All views expressed are considered by committees and their purpose is to inform MSPs in reaching their own conclusion on an inquiry or on proposed legislation.”

NGO questions Japan Tobacco’s claim

By Grace Ting-ann Lee, Special to the China Post

TAIPEI, Taiwan — The John Tung Foundation (董氏基金會) has questioned Japan Tobacco Inc. (傑太日煙) about its claims of injecting over NT$9 billion in foreign capital into a tobacco plant being built in Greater Tainan.

In a press conference yesterday, the nongovernmental organization stated that “it is all a lie and the money is coming from Taiwan citizens’ pockets.”

Japan Tobacco raised the price on 21 kinds of Japanese cigarette brands on Wednesday by NT$5 to NT$10 per pack. The NGO said that the money earned by the price increase is meant to pay for the construction of a NT$9 billion tobacco plant.

“There was no foreign capital all along,” said John Tung Foundation CEO Yao Si-yuan (姚思遠). “In other words, Taiwan people are establishing tobacco plants that harm our own people.”

“Many people have complained that the health costs around cigarettes is growing gradually, yet the government has not adjusted taxes on cigarettes since 2009,” said Lin Ching-li (林清美), a member of the foundation, stating that the Japan Tobacco has raised prices several times, by NT$10 to NT$30 per pack each time.

While NGOs have demanded that the government stop the plant’s construction, the Greater Tainan government has claimed that it would help the local economy.

Moreover, the construction is already halfway completed and under the Investment Agreement between Taiwan and Japan (台日投資協議), local authorities cannot halt construction, the Greater Tainan government said.

The Ministry of Health and Welfare also stated that the cigarettes are for export and will not affect the health of people in Taiwan.

“However, there is no provision that the cigarettes produced can only be exported,” Yao said.

With over 35 percent of market share in Taiwan, the John Tung Foundation stated that about 700 million packs of Japan Tobacco products are sold in Taiwan per year. Through price hikes and the tariff saved due to the investment agreement, Japan Tobacco earns over NT$13 billion from Taiwan every year, “and this does not include other tax concessions, which cannot be counted.”

The foundation pointed out that the Investment Agreement between Taiwan and Japan is one-sided with regard to tobacco production. Japanese companies can invest in Taiwan while Japan remains closed to Taiwan, Yao said.

“Investment agreements between nations should be equal … (The inequality) shows that our government neglects the health of people and tobacco hazard prevention,” Yao said.

The NGO said that it hopes that the government will stop the construction immediately.

“According to the Investment Agreement between Taiwan and Japan, if there are more important public policies to achieve, the government can choose to expropriate (projects) under due process, if there is a legal public purpose and if there is compensation,” Yao said.

”There is a price to pay,” Yao added, “but if you are not willing to pay it, it would cost you much more in the future.”

Taxing question of curbs on tobacco smuggling

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