Tobacco Industry News

Reports

Exclusive tobacco analysis: Three months into SCHIP
A three-part series in the Convenience Store-Petroleum (CSP) newsletter reports the tobacco retail industry’s perceptions and the effects on tobacco sales since the federal excise tax increase in April. Click here to read Part 1, which includes results from a survey of convenience store chains. Stores have seen a 5-10% overall decline in volume of tobacco sales, and have responded by scaling back inventory and decreasing the amount of shelf space for cigarettes. Click here to read Part 2, which details the effects on sales after Altria’s attempt to gain market share in smokeless tobacco by lowering its everyday pricing. Click here to read Part 3, which presents the lasting effects of a one-time floor-stock tax on retailers’ stocking practices.

Tobacco stocks may thrive despite FDA regulation
After the FDA was granted regulatory control of tobacco products, investments in tobacco have remained stable, and may even rise, according to a Wall Street Journal analyst. Because the effects of the law are unknown at this point, tobacco stock prices are staying low, with considerable dividends being paid out. Several factors could potentially help tobacco stocks, such as the possibility that the FDA’s new regulations may help big tobacco companies by reducing independent competition and legitimizing the industry. In addition, while many smokers will quit smoking as a result of FDA regulation, a segment of smokers who are unable to quit will continue to smoke. Read more here.

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International

Big Tobacco sets its sights on Africa
Although the continent still has a low smoking prevalence overall, several trends suggest that the tobacco use may soon increase in Africa. Because much of the population is too poor to buy cigarettes, Nigerian shopkeepers sell individual cigarettes for about seven cents each to make cigarettes more accessible. Alarmingly, smokers who buy cigarettes individually—often the poor, the uneducated or the young—may never see the health warnings that appear on British and American cigarette packaging. Tobacco companies also court private organizations, and even governments, with sponsorships. So far, 48 African countries have taken action to limit the tobacco industry’s power by adopting the Framework Convention on Tobacco Control (FCTC). In addition, Nigeria has filed a $45 billion damages suit against British American, Philip Morris, and International Tobacco, alleging that the companies have blatantly marketed their products to young people. Click here to read the article in Time.

Rising tobacco output flies in the face of WHO commitment (India)
India, the third largest tobacco exporter in the world, showed an increase in tobacco output in 2008-2009. The increase is making it more difficult for the nation to meet its commitment to the Framework Convention on Tobacco Control to reduce production by 50% within the next decade. An increase in global demand has led to arise in tobacco prices, which has tempted farmers to cultivate more tobacco. The Commerce Ministry has mandated the Tobacco Board to prepare a road map for shifting farmers to other crops and work out a rehabilitation formula for those whose livelihood depends upon tobacco cultivation. Read more here.

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