Clear The Air News Tobacco Blog Rotating Header Image

August 4th, 2015:

State-ownership of tobacco industry: a ‘fundamental conflict of interest’ or a ‘tremendous opportunity’ for tobacco control?

Download (PDF, 493KB)

Large Outflow of Money Witnessed in Philip Morris International Inc

By Brian Driehaus

Philip Morris International Inc (NYSE:PM) managed to eke out gains of 0.15% in intraday trade. The share price increased by 0.13 points to $85.66. Till last observation, the net money flow was recorded at a negative $(-17.98) million. The total inflow of $40.08 million in upticks was completely overshadowed by an outflow of $58.06 million in downticks, giving the up/down ratio a value of 0.69. The shares have seen a change of 0.15% in the past week.A block trade occurred in the shares in which the composite value of the upticks was $0.86 million and the composite value in downticks was $20.69 million. The resultant up/down ratio for the block exchange was 0.04. The block trade had a negative money flow of $(-19.83) million.

The company shares have rallied 4.14% in the past 52 Weeks. On November 5, 2014 The shares registered one year high of $90.25 and one year low was seen on April 1, 2015 at $75.27. The 50-day moving average is $83 and the 200 day moving average is recorded at $82.05. S&P 500 has rallied 8.5% during the last 52-weeks. Philip Morris International Inc (NYSE:PM): 7 Analyst have given the stock of Philip Morris International Inc (NYSE:PM) a near short term price target of $89.71. The standard deviation reading, which is a measure by which the stock price is expected to swing away from the mean estimate, is at $3.86. The higher price target estimate is at $94 while the lower price estimates are fixed at $82.

On a different note, The Company has disclosed insider buying and selling activities to the Securities Exchange, The Securities and Exchange Commission has divulged that Calantzopoulos Andre, officer (Chief Executive Officer) of Philip Morris International Inc., had unloaded 25,000 shares at an average price of $85.37 in a transaction dated on July 23, 2015. The total value of the transaction was worth $2,134,250. Company has received recommendation from many analysts. JP Morgan initiates coverage on Philip Morris International Inc (NYSE:PM). Investors must note that the brokerage house has a Neutral rating on the shares of the company. The Brokerage Firm announces its price target at $90 per share on the company. The rating by the firm was issued on May 13, 2015.

Philip Morris International Inc (NYSE:PM) : On Monday heightened volatility was witnessed in Philip Morris International Inc (NYSE:PM) which led to swings in the share price. The shares opened for trading at $85.5 and hit $85.91 on the upside , eventually ending the session at $85.66, with a gain of 0.15% or 0.13 points. The heightened volatility saw the trading volume jump to 2,622,267 shares. The 52-week high of the share price is $90.25 and the company has a market cap of $132,703 million. The 52-week low of the share price is at $75.27 .

Philip Morris International Inc. (PMI) is a holding company. PMIs subsidiaries and affiliates and their licensees are engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States of America. Its products are sold in approximately 180 countries. The Company divides its markets into four geographic segments: The European Union (EU) Region , The Eastern Europe, Middle East & Africa (EEMA) Region , The Asia Region and The Latin America & Canada Region. In January 1, 2011, it established a business structure with Vietnam National Tobacco Corporation (Vinataba) in Vietnam, further developing its joint venture with Vinataba through the licensing of Marlboro and establishing a PMI-controlled branch for the building of its brands. Effective June 26, 2014, Philip Morris International Inc acquired Nicocigs Ltd

Altria Group Inc. and Philip Morris International Inc. Team Up For E-Cigarettes

Altria and PMI are combining their resources to develop new e-cigarettes.

Leo Sun

Tobacco giants Altria (NYSE:MO) and Philip Morris International (NYSE:PM) recently announced that they would expand their agreement to sell e-cigarettes. This deal isn’t surprising, since the two companies used to be a single entity. Altria, which generates all of its sales domestically, spun off its overseas operations as PMI back in 2008.

Two years ago, Altria granted PMI the exclusive right to sell its e-cigarettes overseas, in return for the right to sell two of PMI’s “heat-not-burn” tobacco products in the United States. Under the new agreement, both companies will also share their research, development, and technologies to jointly produce new e-cigarette products. Will this new partnership help both companies diversify away from traditional cigarettes?

The business of e-cigarettes

Reynolds American’s (NYSE:RAI) Vuse brand is currently the market leader with 36% of the U.S. e-cigs market, according to Nielsen’s May figures. Vuse was notably one of the first e-cigs to regulate puffs and deliver consistent flavor with a computer chip. The second most popular brand is Blu, with 23% of the market. Lorillard sold Blu to Imperial Tobacco prior to its acquisition by Reynolds. The third largest player is Japan Tobacco’s Logic, with a 14% market share.

Only Lorillard has reported e-cig sales separately. During the first quarter of 2015, it stated that sales of its Blu e-cigarettes fell 45% annually to $28 million due to aggressive competition. By comparing that figure with Blu’s market share, we can assume that e-cigs aren’t generating much meaningful revenue for the top players in the U.S.

The entire worldwide e-cigs market was only worth $1.4 billion last year, according to Nielsen. By comparison, Altria and Philip Morris respectively generated $24.5 billion and $80.1 billion in revenues last year.

Where does that leave Altria and PMI?

Altria entered the e-cig market last year with its MarkTen brand, which only claimed about 6% of the U.S. market. It also acquired premium e-cig brand Green Smoke last year to complement Mark Ten’s growth.

Last year, PMI acquired U.K. e-cigs maker Nicocigs, which controlled over a fourth of the nation’s e-cig market. It sells Altria’s MarkTen as “Solaris” in Spain. It also introduced its iQOS e-cigarette in Italy and Japan. But unlike traditional e-cigarettes, which vaporize nicotine cartridges into water vapor, the device heats a tube of tobacco known as a “Marlboro Heatstick.” Since the tube doesn’t burn the cigarette and produce smoke or ash, it’s arguably “healthier” than traditional cigarettes. A pack of 20 heatsticks costs about the same as a pack of traditional Marlboro cigarettes.

Altria and PMI’s 2013 agreement diversifies both companies’ e-cig portfolios. Altria can sell heated tobacco products to Americans who aren’t accustomed to e-cigs, while PMI can sell Altria’s vapor-based products overseas. Sharing R&D and tech will also reduce expenses at both companies. That’s important for tobacco companies like Altria and PMI, which often use price hikes and job cuts to offset declines in cigarette shipments.

Potential pitfalls ahead

Despite this apparent land grab in the e-cig market, investors should remember that increased regulations, higher taxes, public bans, and the competition in the vapor market could derail that growth.

The FDA hasn’t starting regulating the e-cig market yet, but the American Lung Association warns that early studies show that e-cigarettes still contain carcinogens. The Surgeon General has also warned that nicotine can still adversely affect fetal development and adolescent brain development. The CDC reports that e-cig usage among U.S. teens has tripled in a single year, which could increase pressure for tighter regulations. Several states plan to raise taxes on e-cigarettes, which could diminish their appeal with higher prices. Many cities are also extending their bans on cigarettes in public places to include e-cigarettes, which could further throttle growth.

Another major issue is the rising popularity of refillable vaporizers, which can be customized with more liquid and battery power. These vaporizers, which are sold at “vape shops,” offer more types of flavored liquids at lower prices than regular e-cig manufacturers. This mix-and-match model undermines Altria and PMI, which sell proprietary cartridges on a traditional razor-to-razor blades model.

The bottom line

Tobacco giants like to talk a lot about e-cigarettes, but the overall market is still tiny. Instead of simply focusing on e-cigs, Altria and PMI investors should see whether or not they can keep raising prices to offset shipment declines. PMI investors should also beware of the strong dollar, which wiped out its top and bottom line growth last quarter. The e-cig market is certainly growing, but it would be premature to claim that they can replace traditional cigarettes.


Taiwan says no plans to end duty-free cigarettes sales

Stephanie Chao
The China Post/ANN

TAIPEI, Taiwan – The Ministry of Finance (MOF) has no plans to end duty-free tobacco sales at airports or further restrict the import of cigarettes, officials announced yesterday following speculation about the issue by local media.

National Treasury Agency official Hsieh Chih-tung stated that the the MOF will continue current regulations and “has no plans of making any changes as of now.”

Ending sales of duty-free tobacco at airports and introducing tighter limitations on the number of cigarettes that can be brought into Taiwan were suggestions brought forward by health officials during a tobacco control meeting, a Cabinet-hosted meeting held at the end of June. Amendments were to be made to regulations under the Tobacco and Alcohol Tax.

Stricter rules on cigarettes included lowering the maximum number of cigarettes brought into Taiwan to 19 individual cigarettes, essentially banning cigarettes from entering the country at all.

According to a study conducted by the MOF, many countries worldwide continue to let travelers carry a single cigarette or one liter of alcohol upon entering a country. While tobacco imports are completely banned in Singapore, a maximum of 19 individual cigarettes are allowed into Hong Kong.

“Based on international practices and mutual respect in international trade relations,” the MOF stated, “the current tobacco and alcohol tax regulations will be maintained for now,” as a unilateral change to the rules on bringing tobacco and alcohol would be “unwise.”

The MOF also stated that the feasibility of making the legal amendments and executing such changes are matters to think about as well, apart from considering international practices and regulations.

Financial officials cited the difficulty of implementing the possible regulations, as the changes will involve a number of governmental sectors, including the National Treasury Agency, in charge of making regulatory amendments, Taxation Administration, in charge of collecting taxes, and the Customs Administration, in implementing any changes.

Good for Anti-Tobacco

Control Cause

The proposals for canceling and implementing restrictions on cigarettes brought into Taiwan were supported by the Health Promotion Administration (HPA).

According to local media, Director-General of the Health Promotion Administration Chiou Shu-ti stated that Taiwan’s cigarette per bag prices were relatively low, at NT$74 (S$3.22) on average, compared with Thailand’s NT$81 and Malaysia’s NT$100.

Chiou pointed out that Taiwan’s duty-free cigarette prices were ranked among the lowest worldwide, which resulted in many foreign tourists buying Taiwan’s duty-free tobacco as gifts. The end of sales of tax-free tobacco would be an important step in the tobacco control effort, Chiou said.

People have also used traveling abroad as a chance to buy and resell duty-free tobacco in bulk, which is a violation of the law on selling smuggled tobacco, stated Chiou, citing this issue among the reasons to cancel duty-free tobacco sales. The MOF promised to consider increasing the fine for reselling tobacco during the meeting.

One liter of liquor product (regardless of the quantity of bottles), 200 individual cigarettes, 25 individual cigars or a pound of tobacco are the current maximum quantities enforced on passengers arriving in Taiwan. However, such privileges are restricted to adult passengers, aged 20 and above.

According to the current Tobacco and Alcohol Tax Act Article 5, goods that are brought in from abroad such as personal effects of either travelers or crewmembers for personal use, whose quantity does not exceed the limitations prescribed by the government, are exempt from the act’s restrictions.

Chinese anti-smoking inspectors ‘barred’ from centre run by government tobacco monopoly


An anti-tobacco promotional event held at the National Stadium in Beijing in May, just before a widespread ban on smoking in public places was introduced. Photo: Xinhua

beijing-anti-tobaccoThree anti-smoking inspectors were barred from entering a training centre in China run by the government body that controls the tobacco industry, according to a news website report.

Inspectors had found on a previous visit that the centre in Beijing had broken an indoor smoking ban in public places introduced in the capital in June and also regulations on tobacco advertising, reported.

The inspectors were kept out of the building managed by the China National Tobacco Corporation for two hours in a stand-off with its staff, according to the report.

The anti-smoking team was told that signs in the building that appeared to be promoting a brand of cigarettes called Zhonghua were for a brand of toothpaste with the same name.

The inspectors said the aim off the centre’s staff was to humiliate them and stop them carrying out further checks, the report said.

The health inspection authority in Beijing is investigating the allegations.

Tobacco worker, 43, dies in industrial accident at Hong Kong factory after falling into machine

Ernest Kao

A 43-year-old worker from mainland China was killed in an industrial accident after he fell into a machine at a Hong Kong tobacco factory late yesterday afternoon. Emergency services received a call at about 5pm yesterday that an accident had occurred at the Nanyang Brothers Tobacco factory in Tuen Mun. The man was cleaning a large tobacco processing machine when he got caught in one of the rollers, according to police. Firemen managed to rescue the man, who was unconscious, but efforts to resuscitate him were to no avail. He was sent to Tuen Mun Hospital where he was confirmed dead. Police said the accident does not appear suspicious. The case is now being handled as an industrial accident. The Labour Department is investigating the cause. It is understood the man, who possess a Hong Kong identity card, is the sole breadwinner of his family. He leaves behind a wife, an 11-year-old son and eight-year-old daughter. Nanyang Brothers Tobacco, founded in 1905, is a subsidiary of Shanghai Industrial Investment Holdings. It is best known for manufacturing the Double Happiness brand of cigarettes. The company could not be reached immediately for comment on Tuesday.

According to the department, 25 people were killed in a total of 11,677 industrial accident cases last year. Five fatalities have been recorded in the first quarter of this year from 2,404 industrial accident cases.

Why more tobacco taxes are needed

Oleg Chestnov and Tim Evans

Over the past 10 years, impressive gains have been made in the battle against the tobacco epidemic. Spurred by the World Health Organization (WHO) Framework Convention on Tobacco Control, which came into force in 2005, most countries have launched comprehensive tobacco-control programmes.

But there is much more to be done. If the tobacco epidemic is left unaddressed, the WHO estimates its use will kill one billion people over the course of this century.

Tobacco use has the potential to undermine economic and social development worldwide. In order to offset this, the WHO has identified six policies, encapsulated in the acronym MPOWER, that can stamp out the tobacco epidemic: Monitor tobacco use and prevention policies; protect people from tobacco smoke; offer help to quit tobacco use; warn people about the dangers of tobacco; enforce bans on tobacco advertising, promotion and sponsorship; and raise taxes on tobacco.

Each letter of the acronym is important and necessary in the fight against the tobacco epidemic. But the last one, raising taxes on tobacco products, deserves careful attention.

The latest WHO Report On The Global Tobacco Epidemic said levying taxes on tobacco is one of the cheapest and most effective measures to prevent death and suffering. Unfortunately, it is a tool that few countries are using.

Strong case for MPOWER

The evidence of progress detailed in the WHO’s report is impressive. The report makes a strong case for the implementation of MPOWER, showing how effective robust interventions can be.

Decisive action in many countries has ensured that almost half the world population is covered by at least one MPOWER measure applied at the highest level. Since 2007, the number of countries implementing some form of the recommendations has more than doubled — and millions of lives have been saved.

The report also details the efforts countries are making to meet tobacco-control targets and makes recommendations for improvement. In many cases, it suggests raising taxes on tobacco. Despite the strategy’s proven effectiveness, it is the least implemented MPOWER measure. A WHO report showed that only 33 countries levy sufficiently high taxes on tobacco, amounting to at least 75 per cent of the retail price of cigarettes. This means that only one in 10 people worldwide benefits from this measure.

Taxes on tobacco cost little to implement and lead to a windfall of benefits. They make tobacco products less affordable, helping addicts quit and preventing non-users, especially young people, women and the poor, from ever starting. Raising taxes lowers the burden of non-communicable diseases, improves public health and reduces expenditures on tobacco-related illnesses.

The levies also provide countries with additional revenue that can be used to fund vital health programmes and other essential public services. Indeed, tobacco taxation is an untapped source of domestic financing that will be important for the successful implementation of the post-2015 United Nations Sustainable Development Goals.

The tobacco industry and other vested interests argue that tax increases on tobacco products fuel illicit trade. Accumulated international experience, however, exposes the flaws in this argument. In high-income countries, where taxes have increased tobacco prices, illicit trade is less widespread than in low-income countries with few taxes on tobacco. Indeed, many countries including Chile, Brazil, Hungary, Spain and the United Kingdom have increased tobacco taxes while curbing illicit trade.

Govts obliged to safeguard our well-being

Every country has an obligation and the ability to protect its people’s well-being. Governments have made tremendous progress in the fight against the tobacco epidemic through the implementation of multiple MPOWER measures, but many could be doing much more if they were willing to raise taxes on tobacco.

Our organisations, the WHO and The World Bank Group, believe it is a moral and economic imperative to support every possible measure of tobacco control.

Taxes on tobacco — the least expensive, least implemented, and most effective tool in the fight to reduce the use of this deadly product — should not be left unimplemented. By raising the cost of tobacco, we have the potential to reverse the epidemic, prevent widespread illness and suffering, and save millions of lives every year.


Oleg Chestnov is assistant director-general for noncommunicable diseases and mental health at the World Health Organization. Tim Evans is senior director for health, nutrition and population global practice at The World Bank Group.