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September, 2016:

What Philip Morris International Is Doing to Fight Smuggling

Sep 16th, 2016
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The tobacco company takes a big hit from illegal trade every year and is looking to do something about it.

http://www.fool.com/investing/2016/09/16/what-philip-morris-international-is-doing-to-fight.aspx

The tobacco industry around the world is huge, with millions of smokers consistently looking for ways to get the cigarettes they want. However, many governments tax cigarettes heavily, and whenever there’s a financial incentive to cut corners and circumvent taxation of a high-value product, smugglers will emerge to conduct illegal trade activity. Philip Morris International (NYSE:PM) has historically been a huge victim of illegal trade, estimating that if it could cut the illegal tobacco trade by just a single percentage point, it would equate to a $120 million boost to its operating income if it could capture its fair share of the resulting increase in sales volume. Although the company has always worked to try to eliminate smuggling, Philip Morris took a bigger step forward earlier this year, and its efforts have already started to produce some promising proposals.

Philip Morris and its antismuggling efforts

For a long time, Philip Morris has centered its efforts to fight illicit trade on controlling sales of products to its direct customers. By ensuring a clean supply chain to bring Philip Morris products from manufacturing facilities to the retail outlets that then sell them to smokers, the tobacco giant worked to keep its grip on its cigarettes while they were in its control.

However, expectations among government regulators were broader than that, and they expressed a desire to have Philip Morris exercise more oversight even when its products had left its direct control. Improvements in technology helped Philip Morris be more effective in tracking and preventing illegal trade. Pack authentication practices have rolled out in more than 90 countries, and Philip Morris has trained more than 11,000 law enforcement officials on smuggling issues. By the end of 2017, the company expects it will cover 80% of its total cigarette production with pack-tracking capabilities.

PMI Impact: The latest move from Philip Morris

But at its core, Philip Morris believes that it can’t do the job alone, and it will need help from all corners in order to put an end to the smuggling problem worldwide. The tobacco giant has memoranda of understanding with governments in more than 20 countries, but it wants to bring even more stakeholders into the mix.

That’s why earlier this year, Philip Morris launched its PMI Impact initiative. The move seeks to bring together various public, private, and nongovernmental organizations to come up with new projects that can fight illegal trade and the crime that often accompanies it. Philip Morris pledged $100 million toward PMI Impact, and it believes that the initiative will not only facilitate the development of good ideas and coordinate the implementation of those ideas but also produce a broader understanding of the factors that lead to corruption, organized crime, and money laundering associated with cigarette smuggling.

Earlier this week, PMI Impact received its initial round of project proposals. More than 200 projects from 170 different organizations came in, including many from government agencies, research institutes, universities, nongovernmental organizations, and private entities. More than 40 countries were represented, with the majority in Europe and North America. That makes sense, given the first round’s emphasis on fighting illegal trade and related crime in the European Union. PMI Impact expects to make final decisions by the middle of 2017.

Future rounds of funding will address different themes. In general, each project must address one or more of PMI Impact’s primary focus areas, which include research to increase the knowledge base surrounding illegal activity, education and awareness of consumers and the general public of the problem of illegal trade, and action toward solving the problems more permanently.

Philip Morris knows that no single effort will be enough to eliminate the problem of smuggling. Yet when it looks at the economic impact of illegal trade on its own business along with the broader impact on the communities it serves, Philip Morris believes that it’s in everyone’s best interest to limit smuggling as much as possible and reduce the related crime that often accompanies illegal trade activity.

Our Opinion: Addressing the economic costs of addiction

Sep 13th, 2016
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http://www.southbendtribune.com/news/opinion/our_opinion/our-opinion-addressing-the-economic-costs-of-addiction/article_7312db39-6708-5fd1-8952-98726c75a2c8.html

Two recent studies offer proof that Indiana’s battle with tobacco and opioid addictions goes far beyond impacting public health; there are real economic consequences, too.

The studies, released by the Fairbanks Foundation and conducted by IUPUI’s Richard M. Fairbanks School of Public Health, show addictions cost Indiana more than $8.2 billion a year.

The toll from tobacco alone comes to US$6.8 billion when taking into account health care costs, the impact of secondhand smoke, lost productivity on the job and other smoking-related diseases. The studies also found that opioid overdose deaths also cost the state $1.4 billion in 2014.

Indiana is not doing enough when it comes to addressing these critical health care issues. The state has shortchanged itself when it comes to tobacco prevention and cessation programs. The General Assembly has continually raided money intended to pay for smoking cessation efforts and public initiatives aimed at helping smokers. In 2014, lawmakers cut tobacco prevention and control funding to $5.8 million, which is about 7.8 percent of what the Centers for Disease Control and Prevention recommends spending to help Hoosiers kick the habit.

For the first time in at least six years, drug overdose deaths in 2015 in St. Joseph County outnumbered murders and fatal auto crashes combined, driven by a dramatic increase in lethal overdoses linked to heroin and related opiate painkillers.

Some say the studies represent increasing attention being paid to these issues. That’s good if that’s indeed the case. These deadly addictions can only be treated if they’re addressed openly with help from both the private and public sectors. It’s not only a critical public health issue, it’s also important for the economic vitality of Hoosiers.

Dumping tobacco industry investments

Sep 13th, 2016
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http://www.scoop.co.nz/stories/PO1609/S00155/dumping-tobacco-industry-investments.htm

Hapai Te Hauora, the voice of Tobacco Control in New Zealand are pleased with the investment dump of at least $109 million in controversial tobacco industry and weapons investments following a Herald investigation into responsible investment policies. The Insights series Dirty Secrets of Your KiwiSaver sparked a public outcry and intensified debate after the story broke a few weeks ago.

Hapai CEO, Lance Norman says this is a powerful example of direct public response to slash any association with the tobacco industry. It highlights the significance of responsible investing by kiwi’s and the need to maintain a strong vigilant hand in all our public or private dealings with the tobacco industry. The New Zealand public have spoken through action to refuse investments with tobacco industry.

Zoe Hawke who leads the National Tobacco Control Advocacy services says, “We don’t want their (tobacco industry) money or their products, it is clear, this is a solid public statement against firms making tobacco or guilty of gross human rights abuses.”

New Zealand have a goal of becoming Smokefree by 2025 with international and local evidence showing that the majority of smokers regret ever smoking or wish to stop smoking.

Mr. Norman says, “It is important to ensure our communities, iwi, whanau and tamariki have zero exposure to the harms of tobacco industry products and other industries that contribute to the detriment of human kind.

The Insights series Dirty Secrets of Your KiwiSaver found providers managing the retirement savings accounts for more than 2 million New Zealanders had made $153 million of investments in companies blacklisted for ethical reasons by the government-run New Zealand Superannuation Fund.

Hapai are leaders in Public Health and Tobacco Control Advocacy and deliver national and local services. Hapai provide a strategic focus that is underpinned by evidence based research for the advancement of health and wellbeing for communities. The mission of Hapai is to increase opportunities for Maori and all communities to enjoy good health and to be sustained by healthy environments.

Legalising electronic cigarettes could save thousands of NZ smokers’ lives

Sep 12th, 2016
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http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=11707688

Thousands of New Zealand smokers’ lives could be saved by legalising domestic sales of electronic cigarettes containing nicotine, a leading vendor says.

The claim by Cosmic, which is selling the devices despite the current legal ban, comes as submissions close today on a legalisation plan and has some backing from public health experts, both here and overseas.

Public Health England, which has helped to revolutionise official views on e-cigarettes in New Zealand, has said the nicotine delivery systems can help smokers quit, and they carry only a small fraction of the risk of smoking tobacco.

Auckland University’s Professor Chris Bullen, who led the world’s first high-quality trial to compare the quit-smoking rates of e-cigarettes and nicotine patches, said: “I don’t think they are a magic bullet.

They’re not the sole thing that’s going to get us there [to the Smokefree 2025 goal], but I think they will help some population groups where we haven’t seen a breakthrough before.

“There could be some real potential for Maori smokers.”

His group’s trial found in 2013 that nicotine e-cigarettes were as good as patches, but he said the e-cigarettes sold today were superior to those in the trial, which delivered less nicotine than a cigarette.

“Experienced users can [now] get nicotine equivalent to smoking a standard cigarette.”

Around 546,000 Kiwis smoke daily, 15 per cent of the adult population. Every day on average, at least 13 people die from a smoking-related disease, around 5000 people a year. Half of smokers die from a smoking-related illness and on average their deaths will be 14 years earlier than if they didn’t smoke.

Many smokers and e-cigarette users will be carefully watching the Health Ministry’s response to submissions on its proposal to legalise and regulate e-cigarettes. The ministry said it has received more than 100 submissions. It will advise the Government by the end of the year on proposed changes to regulations under the Smokefree Environments Act.

A group of Otago University researchers are pushing for dairies, supermarkets and petrol stations to be prevented from selling e-cigarettes and liquid nicotine, saying instead that the permitted vendors should be limited to pharmacies or licensed “vape” shops.

Users “vape” on an e-cigarette, inhaling its nicotine-containing vapour, in the way that smokers inhale the smoke of a tobacco cigarette, which contains nicotine plus many cancer-causing chemicals.

Cosmic, which sells from seven retail stores nationally and an online business, said it had gained knowledge of e-cigarettes from the tens of thousands of customers who had bought its devices.

“There is no question these new devices represent the current best option to help smokers of traditional cigarettes to cut back or even stop altogether,” said the chain’s owner, Mark Carswell. “This is partly because they provide an ‘oral fix’ that nicotine patches don’t.”

In England, e-cigarettes are the leading form of quit-smoking aid, used by 35 per cent of smokers trying to quit, compared with the 27 per cent who use NRT.

Some researchers argue that e-cigarettes risk providing a “gateway” into smoking for youth, but Bullen said there was no evidence of this.

He and colleagues on the National Smokefree Working Group have recommended that only vape shops with staff trained to provide quit-smoking support, pharmacies and online stores be permitted to sell e-cigarettes at first.

Bullen favours later allowing supermarkets – but not dairies or petrol stations – to join in “if there is no evidence of youth uptake or other harms”.

His group is starting a new trial which will compare the quit-smoking rates of three groups of smokers: one using just a daily nicotine patch, another using that plus a nicotine e-cigarette, and the third using patches plus a nicotine-free e-cigarette. All participants will receive standard telephone-based behavioural support.

E-cigarettes now

• A legal grey area
• It’s unlawful to sell the nicotine or the devices containing it locally
• They can be legally imported via internet for personal use
• Health Ministry takes no enforcement action

Health Ministry proposal
• Local sales permitted
• R-18
• Advertising restricted
• Vaping banned in smokefree areas, such as in bars and other workplaces.

Philip Morris: 5 Secrets You Didn’t Know (PM)

Sep 11th, 2016
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http://www.investopedia.com/articles/company-insights/091116/philip-morris-5-secrets-you-didnt-know-pm.asp

Global cigarette manufacturer Philip Morris International Inc. (NYSE: PM), best known for its iconic Marlboro brand, had its genesis in a cigarette and tobacco shop opened in London by Mr. Philip Morris in 1847. Although you might think that all the secrets of the major tobacco companies have long been exposed, the following are five interesting and surprising facts about Philip Morris and its Marlboro cigarettes.

1. High Annual Taxes

Most people are aware that cigarette taxes are among the most severe sin taxes levied anywhere on anything, but it is doubtful if many people really understand the heavy tax burden faced by tobacco companies. In fact, major cigarette manufacturers such as Philip Morris have to hand over more than half of their annual revenues to the taxman. In 2013, Philip Morris paid taxing authorities $48.8 billion of its $80 billion in total revenues, roughly 60%. Basically, the government is getting paid for 12 cigarettes out of every pack of 20 sold by Philip Morris.

2. Marlboro Originally Marketed as Cigarette for Women

Although the Marlboro Man is one of the most widely recognized advertising images in history, a little known fact is that the Marlboro brand was originally marketed, in the 1920s, as a cigarette for women using the ad slogan “Mild as May.” The cigarettes even featured a red band around the filter to hide lipstick stains. Famed advertising executive, Leo Burnett, was the man charged with transforming the brand into a cigarette for men, and came up with the iconic cowboy figure that came to be known as simply “the Marlboro Man.”

Another little-known fact is that the company’s move to reposition Marlboro as a cigarette for men was spurred by a study in the early 1950s that linked smoking to lung cancer. Filtered cigarettes were seen as safer than unfiltered cigarettes, but prior to the 1950s, filtered cigarettes were almost exclusively marketed to women. Because of this, men were reluctant to smoke filtered cigarettes until the advent of the ultra-macho Marlboro Man cowboy.

3. Philip Morris Paying Big on a Settlement Reached in 1998

To avoid a potential avalanche of thousands of individual or class action lawsuits related to health risks from smoking, in 1998, the largest U.S. tobacco firms, including Philip Morris, reached the Master Settlement Agreement (MSA) with the Attorney Generals of 46 states and the District of Columbia. While it is widely known that the MSA was incredibly costly for the tobacco companies, most people are not aware that Philip Morris and the other cigarette manufacturers are still, nearly 20 years later, paying out billions annually per the terms of the settlement.

The MSA ensured that the tobacco companies paid the states an approximate total of $10 billion every year for an indefinite period of time, at least through 2025. The principal lawyers for the states also continue to receive annual payments in the millions. Although the yearly payments were supposed to be used to fund public health projects, states have largely used the money for whatever pet projects that they decide deserve a windfall, such as a sprinkler system for a public golf course or the construction of a government office building.

4. Philip Morris Is a Good Investment

Given the fact that tobacco companies have to operate under such onerous marketing restrictions, with expensive settlement fees and such a huge tax burden, it is reasonable to conclude that firms such as Philip Morris offer little, if any, profit potential. However, surprisingly enough, Philip Morris has continued to manage net and operating margins in the 20 to 40% range, and to consistently show investors solid returns on investment. As of August 2016, the company’s stock offered a generous dividend yield of 4.09%, and the company has increased its dividend every year for the past eight years. Philip Morris’ earnings have doubled approximately every 10 years since as far back as 1985, and the company’s stock has more than doubled in price since its 2008 spinoff from parent Altria Group Inc. (NYSE: MO).

5. Rights to the Entire E-cigarette Technology

In 2000, Philip Morris considered buying the rights to the technology behind electronic cigarettes, but company executives eventually decided that the price was too high. The company has, however, entered the e-cigarette marketplace with its MarkTen and iQOS brands.

NZ Plain tobacco packaging bill passes third reading

Sep 11th, 2016
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http://www.stuff.co.nz/timaru-herald/news/84079801/plain-tobacco-packaging-bill-passes-third-reading

Timaru North Street Dairy owner Jay Tailor does not think the Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill will make a positive long term impact on smokers.

Plain tobacco product packaging will not help a Timaru smoker who spends $70 every five days on his habit quit, he says.

The Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill passed its third and final reading in Parliament on Thursday to address the 4500 to 5000 premature deaths caused by smoking every year in New Zealand.

To prevent potential young smokers from starting through the attraction to branding and bright coloured labelling, it is hoped the plain standardised packaging, to be implemented by the end of next year, will deter them.

Though the planned plain packaging had not been finalised, it was likely to follow the Australian design of green-brown with 75 per cent of the front emblazoned with health warnings and the brand name in small plain font.

Jamie Robinson, a 28-year-old freezing worker, has smoked for 17 years. Robinson has used gum, patches and pills to give up smoking but still can’t kick the addiction.

He spends $70 on 50 grams of tobacco, filters and rolling papers which lasts him about five days.

He can recall the same amount of tobacco 10 years ago was about $35. His wages have not increased at the same rate.

“I get agitated if I run out. I’m not very fit … I cough a lot and get out of breath.”

Robinson’s late brother introduced him to his first cigarette at the age of 11.

He did not think packaging would make a difference to his habit or to young people as peer pressure to smoke was stronger.

“It’s not socially acceptable for adults to smoke anymore but kids don’t think ahead.”

Murray’s Barber Shop and Beauty Salon owner Geoff Gibson said he would rather see someone smoking while driving than drinking a bottle of liquor while driving.

He did not agree with the Government changing the packaging of “a legal product’ such as cigarettes when labelling on alcohol was remaining.

“The Government does not want to touch liquor and that causes social issues.”

Heather Sutcliffe has been the owner/operator of the Morgans Rd Four Square for 13 years. In that time, measures to curb smoking, such as graphic health warnings introduced in 2008 and hiding tobacco products in cabinets in 2012, had not stopped her regular smoking customers – or prevented new ones starting. She did not expect the new packaging to make an impact either.

“[Smokers are] addicted and try to stop but can’t manage it.”

At a cost of $25 on average for a packet of 20 cigarettes, people were still buying them, she said.

“We have parents come in with their kids and the kids are not allowed to have anything, but [the parents] still buy smokes. It puts families into hardship.”

Mountain View Dairy owner Kirtesh Shah did not think the bill would make a difference.

“People smoke anyway.”

And North Street Dairy owner Jay Tailor predicted once the bill was implemented, it may slow sales for the first six months but then it would return to pre-bill numbers.

A 24-year-old Timaru mother of two, who did not want her name to be published, admits she was attracted to smoking by the packaging at the age of 14.

“I used to buy a packet because of the colour [of the packaging] and buy a lighter the same colour to match it.”

She still smokes but said her children did not miss out on anything because what she spent would be money she spent on herself anyway.

“I buy smokes instead of getting my hair done.”

South Canterbury District Health Board smokefree facilitator Carmen Chamberlain said Australia had found the introduction, in 2012, of plain packaging, larger health warnings and new warnings, had reduced smoking prevalence beyond the pre-existing downward trend.

“It is estimated that plain packaging would have a similar overall effect as a five per cent price increase from a tobacco excise tax rise, without imposing an extra financial burden on low-income smokers,” she said.

“Overall, new evidence suggests that plain packaging will not only deter smoking initiation (its primary objective), but also stimulate cessation among smokers.

“Tobacco is a highly addictive product known to kill two out of three long-term users, and we welcome any steps that will support smokers to become smokefree.”

For face to face support to quit contact 0800 111 880 or check out the Facebook page Kick Ash South Canterbury.

Vaping is linked to deadly lung infections

Sep 11th, 2016
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http://www.thetimes.co.uk/article/vaping-is-linked-to-deadly-lung-infections-fwbr59mbc

Vaping may raise people’s risk of pneumonia and other deadly bacterial infections, a leading lung scientist has warned.

Professor Jonathan Grigg has found that the chemical propellants and nicotine used in ecigarettes both have a powerful effect on lung cells, effectively opening them up to infection by the bacteria that cause pneumonia.

“People who vape should consider vaccination against bacterial pneumonia,” said Grigg, professor of paediatric respiratory and environmental medicine at Queen Mary University of London.

Ecigarettes work by heating a mix of propylene glycol (the propellant), nicotine and various flavourings, creating a vapour that the user inhales.

Sex, Lies, and Cigarettes

Sep 11th, 2016
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In this Emmy-nominated documentary, Christof Putzel investigates Big Tobacco’s successful and deadly expansion into the developing world. From the smoking baby to the Marlboro Man, little is off limits in the “Wild West” of the world’s fastest growing smokers market.

-Overseas Press Club Award
-Prism Award

Sex, Lies, and Cigarettes from Christof Putzel on Vimeo.

REP. HUNTER, WHO TOOK $42,000 FROM TOBACCO INDUSTRIES, PUSHES TO ALLOW FREE TOBACCO FOR TROOPS

Sep 10th, 2016
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http://www.eastcountymagazine.org/rep-hunter-who-took-42000-tobacco-industries-pushes-allow-free-tobacco-troops

Tobacco poses serious health risks U.S. troops and veterans, costing our military $1.6 billion a year for medical treatment of smoking-related illnesses. The military in recent steps has taken steps to discourage tobacco use and encourage soldiers to kick the habit and save lives.

But now Congressman Duncan Hunter (R-Alpine) is fighting to allow tobacco companies to give free cigars to U.S. military personnel. Hunter has taken $42,011 from the tobacco industry since 2010, including over $13,511 for his 2016 campaign, according to Open Secrets.

Asked about threats posed by tobacco to soldiers’ lives and health, as well as the high costs of caring for veterans suffering from tobacco-related illnesses, Hunter stated, “I don’t care. When it comes to guys overseas fighting, I don’t care,” the San Diego Union-Tribune reports.

Hunter, a combat veteran and former artillery officer, has said he believes tobacco helps calm nerves of soldiers and improve morale in high-stress situations. Hunter has said he smoked while serving in Iraq and Afghanistan, but has since switched to vaping (electronic cigarettes) and occasionally cigars.

In 2010, the Centers for Disease Control found that 29% of veterans were smokers and that the smoking rate among those who served in combat could be as high as 50%, U.S. Medicine reported. Chronic obstructive pulmonary disease is four times higher than in the general population and 80% of COPD deaths are due to smoking, Dr. David Au, an investigator in the Veterans Administration Northwest Center of Excellence.

Tobacco related illnesses can also weaken combat readiness of troops, the Defense Department has said. Before health dangers were widely known, the military used to put free cigarettes in field rations, but halted that practice over 40 years ago.

In the past, tobacco companies routinely gave cigarettes and other tobacco products to U.S. soldiers, an action that led many soldiers to become addicted to nicotine, costing countless lives.

A new Food and Drug Administration regulation that just took effect bars tobacco companies from giving away products and imposes fines for violations. Hunter, in a letter to the FDA, Hunter wrote,” It would be unacceptable for the FDA to prohibit the distribution of tobacco products to service members who are fighting to protect those very rights that may be restricted.”

This isn’t Hunter’s first outspoken action on behalf of smokers. In February, he drew controversy for vaping on the House floor to argue against a ban on e-cigarettes on airplanes, CNN reported, with video.

But with the health hazards of smoking well known and US$42,000 in tobacco industry donations lining his campaign coffers, the burning question remains: just whose interest is Rep. Hunter truly representing?

Tobacco giant warns of plain packet ‘black market’

Sep 10th, 2016
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New Zealand adopting plain packaging on cigarettes will fail to deter smokers, a global tobacco company has said.

http://www.radionz.co.nz/news/national/313004/tobacco-giant-warns-of-plain-packet-‘black-market’

A bill which will mean cigarettes can only be sold in bland brown or green packaging passed its final reading in Parliament this week.

The bill means mandatory health warnings will cover at least three quarters of the packet and tobacco company logos will be removed.

It’s taken three years for the legislation to pass after tobacco companies tried to sue the Australian government.

That legal battle failed last year, and even though the law was still facing challenges, such as by the World Trade Organisation, with other countries also introducing plain packing, legal action was less likely.

But British American Tobacco’s New Zealand spokesman Saul Derber said plain packaging in Australia had been a failure – and it would fail here too.

“Not only is the Australian tobacco plain packaging experiment failing to meet its objectives, the policy is having serious unintended consequences,” he said.

“The tobacco black market has grown by over 20 percent in Australia since the introduction of plain packs, costing the Australian government about $NZ1.5 billion in lost revenue in 2015, Mr Derber said.

He said with no graphic health warnings, no controls preventing sales to youth and no tax it was likely the introduction of plain packaging would grow the black market here as well.

Yadayadayadayada “Plain packaging is an attack on companies’ intellectual property rights and undermines the principles on which international trade is founded,” he said.

Associate Health Minister Sam Lotu-Iiga said yesterday the government was confident it could win any legal action taken by tobacco companies.

“We can’t determine what will happen in the courts, but we feel like we’ve seen the evidence from overseas, we’re pretty comfortable with that, and we’re going to move forward,” Mr Lotu-liga said.

Plain cigarette packaging is expected to hit New Zealand shelves from next year.

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