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September 26th, 2016:

3 Key Markets for Philip Morris International

Sep 26th, 2016
by Editor.
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The tobacco company does business around the world, but some of its markets are more important than others.

http://www.fool.com/investing/2016/09/26/3-key-markets-for-philip-morris-international.aspx

Cigarette maker Philip Morris International (NYSE:PM) has built a truly global business, serving customers on six continents. Yet some of the nations in which Philip Morris sells its cigarettes and other tobacco products are more important to the company’s overall success than others, and investors need to watch those markets particularly closely to make sure that they catch any potential changes that could help or hurt the company. Below, we’ll look at three key markets for Philip Morris to see how they’ve fared recently.

1. Indonesia

Indonesia has one of the largest overall cigarette markets of any country that Philip Morris serves, and unlike many areas of the world, that market is growing. In the second quarter of 2016, Philip Morris estimated the size of the total cigarette market at 83.6 billion units, up 5 billion in just the past year. For its part, Philip Morris shipped more than 28.5 billion units to Indonesia during the quarter, claiming about a third of the overall market with brands like Sampoerna and Dji Sam Soe. In particular, Philip Morris has had success with what it calls the Whites segment, claiming four-fifths of the market in that category. The key Machine-Made Kretek market, which makes up about three-fourths of Indonesia’s total market, has been less successful for Philip Morris, but the company still claims about 30% of that segment.

Indonesia has suffered from a sluggish economic environment lately, and Philip Morris has seen its market share fall by a full percentage point over the past year. Gains in the size of the market were largely due to the timing of the Ramadan period compared to last year’s second quarter, and Philip Morris expects long-term trends to be closer to flat. Nevertheless, Indonesia’s sheer size will make it an important market for Philip Morris to target going forward.

2. Russia

Russia also has a strong culture of smoking, and its size makes it an essential element of Philip Morris International’s overall strategic vision. The Russian cigarette market sold about 72.1 billion units in the second quarter, and Philip Morris was responsible for 20.5 billion of them, climbing market share of 27%.

Oddly enough, though, Russia is one area in which the Marlboro brand has been almost inconsequential. Marlboro has a market share of just 1.4%, compared to 8% for Bond Street and 3.9% for Parliament. Other brands, which include L&M, Chesterfield, Optima, and Next/Dubliss, were collectively responsible for more than half of Philip Morris sales in Russia.

Troubling for Philip Morris is that the Russian cigarette market is shrinking quickly, posting a nearly 7% year-over-year drop compared to last year’s second quarter. The price increases that Philip Morris has implemented to try to offset falling volume have resulted in a hit to market share, and the company will have to balance competitive pressure against its desire for higher profit in order to get the most from the nation.

3. Italy

By contrast, Philip Morris’ markets in the European Union are relatively small. Yet the EU is an essential component of Philip Morris’ success because of the company’s ability to squeeze higher profit margin from many countries there.
As an example, in the second quarter, Philip Morris’ sales in the EU and in Asia were roughly the same, but EU operating company income of $1.07 billion was more than $320 million higher than the corresponding figure in Asia.

Within the EU, Italy stands out. The Italian cigarette market sold only about 18.7 billion units in the second quarter, but Philip Morris was responsible for more than half of them, at 10.1 billion. Marlboro had market share of nearly a fourth all by itself, and the Chesterfield and Philip Morris brands were responsible for another 20 percentage points of share.

The good news for Philip Morris in Italy is that efforts to reduce the level of illegal trade in cigarettes has paid off somewhat. With the new PMI Impact campaign, Philip Morris hopes to engage a broader set of interested parties to fight smuggling, and the likely result is potential further gains in legitimate sales volumes of its tobacco products. Investors should watch results in Italy closely for additional signs of success on the illicit trade front.

Philip Morris wants to serve the whole world, and it will continue to reach out to customers everywhere it can find them. These three countries will be especially important for Philip Morris in its efforts to capture as much growth as possible going forward.

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Analysing Harmful Chemicals from E-Cigarettes

Sep 26th, 2016
by Editor.
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http://www.chromatographytoday.com/news/preparative/33/breaking_news/analysing_harmful_chemicals_from_e-cigarettes/40428/

Reports have found that e-cigarettes release compounds that are toxic, and now a study from the Lawrence Berkeley National Laboratory has looked at the source and formation of the emissions and has shown how temperature, shape, and age of the e-cigarette influence the emissions. The data is important to the manufacturers and regulators looking to minimize the impacts of e-cigarettes on health.

The study was published in Environmental Science and Technology and found that the decomposition of propylene glycol and glycerine — due to the temperature of e-cigarettes — allows the emission of a poisonous blend of substances, including acrolein and formaldehyde. Since propylene glycol and glycerine are found in most e-fluids — the liquid vaporized in e-cigarettes — these toxic compounds are likely to be emitted from most vaporizers.

Is that machine smoking?

In the study the researchers recreated vaping using three different e-fluids in two vaporizers and used different battery settings. The two e-cigarettes were different, one low priced vaporizer with a single heating coil, the other more expensive with two heating coils.

Gas and liquid chromatography was used to analyse the vapour produced in the e-cigarettes and to examine what was in the vapour. They looking at the initial puffs and the later puffs after the e-cigarette had warmed up and achieved a constant state. They also looked at the effects of using an aged e-cigarette. The use of GC to analyse vapours is discussed in the article, Sample Preparation Options for Aroma Analysis.

A major finding was that the initial and steady state puffs were very different. Using a jig configured to copy a user drawing on an e-cigarette, the team drew on the e-cigarette taking puffs of 5 seconds each every 30 seconds. They found that the vapour temperature climbed quickly inside the initial 5 to 10 minutes until accomplishing a standard state temperature after about 20 puffs.

The difference in concentration of compounds between the initial and steady state puffs was a factor of 10 different in some instances — depending on the vaporizer used, the battery voltage, and the compound measured. For acrolein — an eye and respiratory irritant — a solitary loop e-cigarette working at 3.8 volts transmitted 0.46 micrograms for each puff in the initial 5 puffs, however at the steady state it emitted 8.7 micrograms for every puff. By comparison, regular cigarettes emit 400 to 650 micrograms of acrolein for every cigarette. The likely total for an e-cigarette — puffed for 20 puffs — is in the range 90 to 100 micrograms.

Keep your vaporizer clean

The team also looked at the effect of aging of an e-cigarette on its emissions. They used a single device for nine sequential 50-puff cycles without purifying. They found that emissions of formaldehyde, acetaldehyde, and acrolein —all either cancer agents or respiratory irritants — increased with age. This could be associated with the build-up of deposits on the heating coil.

In a news release from Berkeley Lab, Hugo Destaillats the paper’s lead author stated that ‘Regular cigarettes are super unhealthy. E-cigarettes are just unhealthy.’