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Imperial Tobacco files legal challenge against tobacco control bill

Anti-smoking groups say they are not at all surprised that Imperial Tobacco is challenging the provisions of Quebec’s Bill 44 that ban the sale of flavoured cigarettes and sleeker packaging that appeal to youth.

On Friday, Imperial Tobacco Canada filed legal proceedings against the Quebec government claiming Bill 44 infringes on the company’s constitutional rights.

The company said in a statement released on Tuesday that the government committee that reviewed the bill adopted a number of additional provisions “without due consideration given to ensuring that the constitutional rights of those affected by the measures were infringed to the least extent possible.”

Mélanie Champagne, Director of Public Issues with the Canadian Cancer Society’s Quebec Division, said the company’s legal action is predictable.

“All it shows is that the measures (Quebec is taking) would be effective,” she said.

Tobacco companies, she said “would not spend so much money on legal proceedings if they didn’t realize this will affect their revenues substantially. But that is exactly what we want: lower revenues for tobacco companies means less smoking, and fewer cancer deaths.”

Anti-smoking groups rejoiced last November when Quebec’s National Assembly adopted Bill 44, “An Act to Bolster Tobacco Control”, unanimously. They said the new legislation made Quebec a world leader in the struggle against smoking, because Bill 44 bans all flavoured tobacco products, including menthol, and imposes a minimal size for health warnings on packages.

Current federal legislation requires health warnings to take up 75 per cent of the packages, but as packages were getting smaller, anti-smoking advocates those warnings were less effective. Quebec has countered this with its regulation, which requires the health warnings to be at least 4.6 square centimetres.

That means tobacco companies here cannot sell cigarettes in the tall, thin packages, sometimes called “purse packs” or “lipstick packs” that anti-smoking groups claim are designed to appeal to young people. An estimated 250 teenagers in Quebec begin smoking every week, and an estimated one third of all cancer deaths are related to smoking.

Flavoured cigarettes and cigars, including menthol, are also very popular with Quebec teens. Studies have shown that more than 50 per cent of Quebec youth who smoke use flavoured tobacco products.

Although menthol flavours are thought to appeal mainly to adults, new smokers do use them because they reduce irritation of the throat, said Flory Doucas, co-director of the Quebec Coalition for Tobacco Control, said menthol cigarettes are particularly appealing to youth.

“Menthol has analgesic properties so it masks the irritation caused by smoking. Menthol cigarettes are like training wheels for smoking.”

She added that legal challenges by tobacco companies are designed to have a chilling effect on other jurisdictions in Canada or elsewhere that might be considering legislation.

But Eric Gagnon, head of Corporate and Regulatory Affiars for Imperial Tobacco Canada, said the ban on flavoured tobacco products, including menthol cigarettes, will result in the growth of an already significant illegal cigarette market in Quebec.

“There is an incredible amount of hypocrisy around the sale of tobacco in Quebec,” he said. “The government of Quebec will generate over $1 billion in tobacco taxes in 2016. There is already comprehensive legislation … 75 per cent of the package is a health warning, they are hidden from view, and very highly taxed. There is nobody in Quebec who could say they don’t know the risk of smoking but an important part of the adult population will still continue to smoke. At the end of the day we are still a legal company and we believe we have the right to sell our products.”

The company is not challenging other provisions of the bill, such as the ban on smoking in motor vehicles when children under 16 are present and the prohibition on smoking on patios adjoining businesses and restaurants.

But it is challenging the bill’s restrictions on how tobacco companies communicate with retailers. The bill will not allow the companies to advertise to retailers, which Gagnon said unfairly prohibits retailers from passing on information to customers.

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, Imperial Tobacco products likely to vanish

The tobacco products of retailers Philip Morris and Imperial Tobacco are expected to disappear from shelves soon as the two companyʼs did not agree with Hungary’s centralized tobacco distributor, which begins operations today, Hungarian online daily reported.

After a bill approved by Hungarian Parliament mid-December on the establishment of a centralized distribution company for tobacco products, the concession was reported to have been awarded to British American Tobacco (BAT) and Hungary’s Tabán Trafik. The two companies will act together as middlemen between manufacturers and retailers for the next few years.

Imperial Tobacco Magyarország Kft., JTI Hungary Zrt. and Philip Morris Magyarország Kft. have said the concession was not awarded fairly. They said in a press release in mid-June that they were jointly offering a concession of HUF 6 bln to operate a competition-free tobacco product distribution system that would create 500 jobs, while BAT and Tabán are expected to pay HUF 600 mln to the state for the concession.

According to, the products are expected to disappear from store shelves temporarily, as Philip Morris and Imperial Tobacco are hoping that the European Commission will declare Hungaryʼs centralized tobacco distribution system unlawful, thereby cancelling the new system, and restoring the old one.

However, the Ministry of National Development rejected their unsolicited tender application for the concession of a centralized tobacco distribution system, saying the tender did “not complying with legal requirements”, according to the ministry. “The bid is based on proper calculations, it is deliberate and economically substantial. We still stand by this offer expecting that the Ministry reconsiders it”, the three companies said, adding that they were open to negotiations.

Lajos Csizmadia, the spokesperson of the tobacco workers union (DDTSZ) told the Budapest Business Journal earlier that the new system is likely to cause the dismissal of 1,200 Hungarians who work in the industry.

Codentify Wars: Imperial Tobacco Strikes Back

Big Tobacco has sunk to a new low in their battle to promote Codentify and in doing so proven that my blog is clearly a threat to them.

Today I opened my email to find an interesting comment awaiting approval on my last blog post. The comment accused me of being funded by SICPA, another big corporation involved in the track and trace industry. Let me first make it very clear that I am NOT being funded by any companies what so ever.

Here is the post which I of course approved.


Maybe after I finish exposing the extent of corruption in the Tobacco Industry I will move on to focus on SICPA as well. Many big corporations have “interests”, the tobacco industry just more than most. The little funding I have received has been from individuals. but this is not the point of my post.

If you pay close attention to the screenshot above, you will see an IP address listed. I looked up the IP in google and guess who sent the comment…


Who would have guessed… Imperial Tobacco Group. When you signed the comment BAH, I think you meant to spell BAT.

By going out of their way to defame my credibility by associating me with some big corporation, and doing so in an amateurish manner, that is easily traceable, big tobacco has proven that my hard work is paying off. they perceive my blog as a threat and thus are trying to discredit it. By doing so they embolden me further and clearly demonstrate they are on the defensive.

If I can stand up to big tobacco, we all can. Lets together make sure they do not have the opportunity to regulate themselves in such a shameless manner that Codentify would allow them to.

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!

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.


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Tobacco companies file lawsuits against UK government over plain packaging laws

The measures have been opposed by Big Tobacco from day one

Two of the world’s biggest tobacco companies have filed lawsuits against the UK government over its plan to introduce plain packaging for tobacco products.

Philip Morris International (PMI) and British American Tobacco (BAT) both argue the measures deprive them of property in the form of trademarks, and are seeking compensation that could extend to billions of pounds if they succeed.

In legal objections filed to the High Court, they also claim the measures violate European intellectual property laws. The Department of Health said it would not let policy “be held to ransom by the tobacco industry”.

The legal challenges had been anticipated, following the introduction of standardised packaging legislation in March this year.

The measures, which are planned for a 2016 introduction, and full roll-out by 2017, have been opposed by Big Tobacco from day one. Similar legislation in Australia, where the introduction of plain packs has coincided with falls in smoking, has already been subject to an unsuccessful lawsuit.

Lawyers for the Government are understood to be confident that all legal aspects of the new measures have been taken into account. But even if unsuccessful, tobacco companies may be hoping legal action will delay implementation or discourage other countries from taking similar action.

“We respect the government’s authority to regulate in the public interest, but wiping out trademarks simply goes too far,” said Marc Firestone, PMI’s senior vice president and general counsel. “Countries around the world have shown that effective tobacco control can co-exist with respect for consumer freedoms and private property.”

A spokesperson for BAT maintained that the company had “no other choice” to launch legal action adding: “Any business that has property taken away from it by the state would inevitably want to challenge and seek compensation.”

Other tobacco giants, including Japanese Tobacco International and Imperial Tobacco, are also understood to be considering lawsuits.

A Department of Health spokesperson said: “We will not allow public health policy to be held to ransom by the tobacco industry.

“Smoking is the biggest preventable cause of death in England – killing 80,000 people every year. We would not have gone ahead with standardised packaging unless we had considered it to be defensible in the courts.”

Health charity Action on Smoking and Health (ASH), said it had commissioned legal advice that indicates the legislation is compatible with European law. The group’s chief executive Deborah Arnott said: “The tobacco industry knows it has little or no chance of winning but by threatening legal action it is trying to stop the infection spreading to other countries.

“Standardised plain packaging threatens the profitability of the industry and they are desperate to prevent other countries from following the example set by Australia, the UK and Ireland.”

MPs voted to back plain packaging by 367 to 113 in March. The vote came one year after the publication of an independent review of evidence by Sir Cyril Chantler, which concluded it was “highly likely that standardised packaging would serve to reduce the rate of children taking up smoking and implausible that it would increase the consumption of tobacco.”

In Australia, where the measure was introduced in 2012, smoking rates fell by more than 12 per cent between December 2013 and 2014.

The power of the tobacco industry to market their products has been slowly eroded, to varying extents, by legislation in countries around the world. In the UK, advertising was phased out between 2003 and 2005, and in 2012, tobacco products were banned from display in supermarkets and large shops – a measure that was extended to small shops last month.

Smoking guns? UK tobacco giant blames ISIS for cigarette sales slump

Imperial Tobacco has blamed a slump in cigarette sales on regional instability caused by the Islamic State (IS, formerly ISIS/ISIL) in the Middle East.

The UK tobacco giant, which owns global brands such as Golden Virginia and Gauloises, said 2 percent of the 5 percent fall in sales in the last quarter was due to “the deteriorating political and security situation” in Iraq.

Imperial Tobacco claim that land grabs by the Islamic State (IS, formerly ISIS) in northern Iraq have caused distribution problems, making it harder to get cigarettes to the areas.

While the Bristol-based company saw an overall decline in sales, its ‘growth’ brands – including Gauloises Blondes and Davidoff – sold 12 percent more.

The FTSE 100 firm’s profits also dipped by 2 percent to £959 million ($1.46 billion).

“Trading reduced significantly against a backdrop of a worsening political and security situation in territories where we have a high presence,” Imperial Tobacco’s earnings report read.

“The deteriorating political and security situation has significantly impacted industry volumes.”

The IS enforces strict anti-cigarette and alcohol laws in the territories it controls, according to reports from Raqqa, the group’s de facto capital.

Anyone caught smoking a cigarette could face public flogging, huge fines or even execution.

A founder of Raqqa is Being Slaughtered Silently (RBSS), Abu Mohammad Hussam, told the Independent: “The first time he will be arrested and flogged (40 lashes).

“If he smokes again, he will be whipped and imprisoned. On the third occasion, he will be taken to a camp in the countryside and fined a large sum of money.”

A senior figure in the IS police force was found decapitated in Syria in February, allegedly with a cigarette left in his mouth.

The words “O Sheikh this is munkar” were written on his body, translated as “this is evil, you Sheikh,” according to the British-based Syrian Observatory for Human Rights.

Imperial Tobacco may face trouble in its home market also, as the Labour Party has pledged to introduce a new levy on cigarette makers if it wins the general election on Thursday.

The company has said the windfall tax, which Labour leader Ed Miliband says will pay for cancer tests for NHS patients, will be passed on straight to customers.

Chief Executive of Imperial Tobacco Alison Cooper said “We know little about it, but this looks like a quasi-increase in excise so we would have to pass it on.

“We already have concerns about the high levels of excise in the UK, this will unfortunately increase those further.”

Despite regional instability in the Middle East and the prospect of increased taxes in the UK, Imperial Tobacco has seen its share price increase steadily over the past year.

The firm is currently awaiting permission from US regulators to acquire two American tobacco companies, Reynolds and Lorillard.

Business pundits expect the merger to be given the green light by US anti-trust enforcers, a move which will see Imperial attain around $7 billion worth of asset

Prohibition on Showing Tobacco in Little Shops in Scotland Emerges Into Power

A boycott on tobacco and cigarette showed in little shops in Scotland has come into power.

The latest Scottish Government enactment, which was originally set up for expansive general stores, has now likewise been forced on little stores.

The boycott is aimed for diminishing youngsters’ introduction to cigarettes and tobacco items in shops all over the country.

A legitimate offer to have the boycott upturned by tobacco multinational firm,” Imperial Tobacco”, was brought in the eyes of the Preeminent Court.

The organization contended that the boycott was out with the locale of the Scottish Parliament item security and deals which are held matters. But unfortunately, the lawful case was rejected by judges.

Martine Stead, representative executive at the Establishment for Social Advertising based at the College of Stirling, said: “It’s well established that exposure to tobacco advertising encourages people to take up, and to continue, smoking. “At the point when promoting was banned in the UK in 2003, one of the couple of manifestations of advertising left to the tobacco business was the mass of appealing packs behind the counter in the corner shop.

“The decently supplied, brilliantly lit tobacco gantry has, essentially, been a substantial publicizing hoarding. Behind the counter, at client eye level, clients have seen it each time they purchased a daily paper or a parcel of desserts, strengthening the thought that cigarettes are an ordinary regular buy.”

Hazel Cheeseman, chief of approach at Cinder, said: “The display ban will work hand in hand with standardized packs, which will be introduced in May 2016, to further protect children from glitzy tobacco packaging.”

A representative for the Tobacco Retailers’ Collusion, said: “The presentation of the showcase boycott into bigger shops hasn’t even been assessed, so how would we know it will function in littler shops? Obviously retailers will need to agree to the law yet this is a further superfluous measure that will hit little organizations. “There will be genuine troubles around its application, including longer exchange times, and the expenses of usage, for example, the establishment of new gantries. Going ahead top of plain bundling, it is a pointless weight on shops officially battling with formality.

“There are other more viable methods for preventing youngsters from taking up smoking.”