Altria Reveals its 1Q Results

Altria Group, the parent company of Philip Morris USA, leading tobacco company across the nation reported on April, 21st about its first quarter profits, which according to the company added 38 percent, as its flagship brand Marlboro gained an even bigger market share, while its major smokeless brand Copenhagen also grew its share.

The Philip Morris owner, based in Richmond stated that price increases, rise in market share in the cigarette segment, growing popularity of smokeless tobacco and successful wine business helped to offset present economic challenges.

Altria showed an impressive performance regardless of the reduction of consumer confidence, and huge layoffs from the closure of a cigarette manufacturing plant last summer, as well as many challenge in shrinking cigarette market, according to Michael E. Szymanczyk, Altria’s Chief Executive Officer.

Marlboro that was selling for an average of approximately $5.42 a package won 0.3 percent of market share to account for a highest-ever 42.7 percent of the national cigarette market, thanks to its latest additions – Marlboro Menthol Blend No 54 and Marlboro Special Blend. The legendary brand contributed to Philip Morris’s cigarette sales rise 5.5 percent to end up with $3.4 billion over the 1Q (excluding excise taxes).

Altria states that cigarette sales sank less than 1% to 34.1 billion from 2009 quarter, when shipments were cut in anticipation of the one-time federal cigarette tax on inventory.

However, the company said this, when its overall sales dropped 11 percent last year, in comparison to its calculation of a 10 percent industry wide decline.

Sales of flagship Marlboro rose 1.6 percent, whereas other major brands, among which are Virginia Slims and Parliament dropped sale volumes and lost market share.

Altria CEO admitted that taking into account Marlboro’s growth it is evident that consumers consider the state of things to be acceptable currently.

According to the report, the company earnings constituted $813 million, up from $589 million reported previous year.

Earnings excluding excise taxes went up by nearly 2% to $3.9 billion. Industry experts predicted profits of $3.84 billion. When including taxes, the earnings increased by 27 percent to $5.76 billion, in the most part due to the implementation of the latest federal tax of 62 cents per pack, which entered into force in April 2009.

Like its major rivals, Altria is concentrating on other tobacco products – such as smokeless tobacco, cigars, and loose tobacco – considering these products to be the key of future success, since the implementation of anti-smoking policies, heftier taxes and the spread of social stigma concerning the effect of cigarette smoking on public health cause the national cigarette market to shrink.

Altria reported about the decrease in the sales of Black & Mild cigars, however its snuff business, with such brands as Copenhagen and Skoal, showed an astonishing performance by growing by 21.9 percent over the first months of 2010. Excluding taxes, earnings from cigar sales dropped 12 percent to end up with $87 million in the first quarter, while smokeless tobacco brought the company $355 million, a 24percent increase.

Hypocritical Altria threatens Indian Tribes’ Economy

Altria, the owner of leading tobacco maker Philip Morris is sponsoring an offensive advertisement campaign targeting the Indian Tribal smoke shops and calling on the NY State to tax tobacco sold in reservations.

Indian tribal leaders complain the campaign is another move to oblige them to levy taxes on their products, demolishing their business – a plan that would strengthen Philip Morris’ leadership in nationwide tobacco market.

The ads funded by the tobacco giant appeared in all major newspapers across the New York State in the beginning of April.

“Albany Lets Billions Slip through Its Fingers. Tax Dollars We Need for Vital Services Go Uncollected,” one of the adverts states, ignoring the fact that Indians pay federal taxes, as well as other U.S citizens.
The campaign plays on the concerns of NYS residents regarding the unbelievable $9.2 billion deficit in the budget.

James Ransom, St. Regis Mohawk Indian Nation co-chairman, states that the ad campaign is not an act of altruism from Philip Morris, but a pure hypocrisy, as they are eager to destroy competition from Indian tribes and increase their own cigarette sales.

The same Philip Morris that did their best to encourage and promote sales of their products by signing contracts and giving discounts to Indian smoke shops, has now attempting to eliminate Indian retailers from the fading U.S tobacco market, said Ransom.

“Now Philip Morris demonstrates shocking disregard for Indian retailers who assisted them in creating the market dominance they achieved today, so they don’t need us anymore, and thus, they are willing to eliminate us and boost their presence in the market even more,” stated Mr. Ransom.

The aggressive advertisements have made Indian retailers raging with anger.

“If I could, I would stop selling Marlboros in my shop. I can’t stand people, attempting to crack down our business,” admitted Patti Snow, an owner of smoke shop in Seneca Nation reservation.

According to Snow, Philip Morris was evidently trying to put an end to the loss of market share to low-cost Indian-made cigarettes, hugely popular among adult smokers.

Indian-made cigarette are selling for much less than the tobacco products made by Philip Morris products. For instance, a carton of Marlboros is selling $65 whereas Native American Niagara cigarettes are selling for $32 per carton.

The Native American tobacco industry that pays millions of dollars annual directly to the general economy or through opening industry-related jobs, is currently in huge jeopardy.

On April 1st, President Barack Obama signed into law the Prevent All Cigarette Trafficking (PACT) Act that prohibits the U.S. Postal Services to ship cigarettes purchased thorough the Internet, a niche occupied by Indian Nations and especially popular among American smokers since the 1990s.

“The Representatives of Philip Morris ensured us they would be neutral in the issue concerning the taxation of Indian-made cigarettes. Then two weeks ago, totally unexpectedly and even without notifying us about their potential attack, they publish these atrocious ads, literally naming us as criminals, despite namely Philip Morris helped us to establish our business,” Ransom said.

FDA to Consider the Impact of Menthol Cigarettes

Menthol cigarettes account for more than one-third of the American cigarette market, and menthol-smoking trend even keeps growing. Public Health advocates claim that the fame of menthol cigaretts particularly among new smokers should be decreased; however, it demands consideration and will lead to negative aftermaths.

The latest meeting of the recently-formed Tobacco Products Scientific Advisory Committee, established after the American Food and Drug Administration was authorized to regulate tobacco industry, will be devoted to the health risks related to the consumption of menthol flavoring in tobacco. The meeting is scheduled for March 31 and will be held in Washington, DC.

The Committee will consider and advice to the FDA of the methods of regulating mentholated tobacco products. Menthol is the sole flavor not covered by the Tobacco Control Act, which banned such flavorings as fruit, vanilla and chocolate in cigarettes, however, it could be banned if there is reliable evidence on the risks of its prolonged consumption in cigarettes.

In conformity with a nationwide survey, smokers who took up cigarettes lately are more probably to consume menthol cigarettes than experienced cigarette lovers. Moreover, the number of present smokers who prefer mentholated cigarettes is growing.

According to the survey, the consumption of menthol cigarettes is higher among smokers who began puffing over the last 12 months (44.6 percent) than among experienced smokers (32percent). Also, among smokers who lit up during the last month, the number of those who preferred menthol cigaretes grew up from nearly 31 percent in 2004 to almost 34 percent in 2008. Such growth is the most perceptible among teenage tobacco users (4 percent increase) and among younger adults (from 34 percent to 41 percent).

Eric Broderick, Director of Substance Abuse and Mental Health Services Administration admitted that menthol flavoring may have its appeal in encouraging the smoking habit – one of the most severe problems of public health across the USA. He added that the evident fascination that mentholated cigarettes exert on adolescent smokers is very concerning since menthol tobacco products can lure more teenagers and younger adults to start the hazardous smoking habit.

The research demonstrates that the number of smokers who prefer menthol cigarettes among Black Americans (83 percent) is much higher than among Hispanic populations (32 percent) and White Americans (24 percent) and other populations. Among Black Americans, the experienced smokers were more probably to consume mentholated cigarettes than those who started smoking over the last 12 months, while the opposite behavior is found among other populations.

In addition, there was a considerable increase in the number of male menthol smokers, which went up from 26.9 percent in 2004 to 30.8 percent in 2008.

Menthol flavoring is an ingredient added to cigarettes in order to conceal the harshness of tobacco, by providing a feeling of coolness and freshness during the process of smoking. However, when concealing the harshness, mentholated cigs could ease the way to cigarettes for the adolescents. Several recent studies found out that menthol cigarettes can be harder to give up than the regular flavored ones.

Study Proves Nicotine-free cigs Effective in Giving up Smoking

The majority of smokers have tried to give up at least once, but only 3 of 10 smokers manage to overcome their addiction. So, pharmaceutical industry has been trying to create more products that will help smokers overcome their habit, but a great part of smoking-cessation therapies were useless for inveterate smokers who have been addicted to the mental part of smoking, i.e. holding cigarette between their fingers. Thus, a nicotine-free cigarette is the best choice for them.

A research recently published in the Minnesota Journal of Public Health and carried out by a group of scientists from the Minnesota State University demonstrated that nicotine-free cigs are useful in giving up smoking, and especially for long-time and chain smokers.

The research financed by the National Institute on Drug Abuse comprised the survey of 165 men and women of middle age, who had been lighting up on a regular basis for at least 15 years. All the smokers who took part in the research were divided into three groups: one group used nicotine troches, second group took conventional low-nicotine cigs and the third group got nicotine-free cigarettes.

The participants had to use the aforementioned products for six weeks, and then underwent urine and lung tests. The research team compared the tests of all the participants and came to an interesting conclusion.

The tests showed that 19 of 53 members of the group which used nicotine-free cigarette to quit smoking, managed to get rid of their habit, in comparison to only 7 of 52 smokers who used low-nicotine cigarettes and were able to give up.

Dr. Dorothy Hatsukami, the lead researcher admitted that during their work they found out that nicotine-free cigarettes were nearly as efficient as nicotine troches in helping smokers to give up.

Dr. Hatsukami said that the percentage of quitters in the group that used nicotine lozenges and nicotine-free cigarettes as nearly equivalent because nicotine-free cigarettes help smokers get rid of mental part of their addiction, while lozenges are useful in overcoming nicotine withdrawal symptoms.

The scientist added that unfortunately nicotine-free cigarettes are not currently offered in cigarette stores across the United States, but can purchased in online cigarette shops. These cigarettes contain no nicotine, or just 0.1a milligram of nicotine, whereas conventional low-nicotine cigs provide at least 0.4 mg

Dr. Hatsukami stated that for many smokers repeating the process of lighting up and smoking can be enough to overcome the withdrawal symptoms, whereas traditional nicotine-replacement therapies do not provide any help in getting rid of the metal part of the habit that is, for instance, lighting up while drinking a morning coffee or talking over the phone.

She noted that they plan to have another research, this time comparing the effectiveness of using the patches together with nicotine-free cigarettes, and both products separately.

Smoking in bars banned in tobacco state

As more and more eating and drinking venues prohibited smoking inside at their own will, the latest Virginia Anti-smoking policy would not trigger much opposition in the state which is home to the most ancient traces of tobacco consumption originated in the Jamestown settlement more than four centuries ago.

Thus, beginning from December 1, Virginia became the 27th state to outlaw lighting up in restaurants and bars. The only exemptions make up those places where smoking sections are physically separated from non-smoking areas and having specialized ventilation system.

The ban is especially landmark for tobacco-loving Virginia, where tobacco plant is the most spread crop on source of huge revenue for the state coffins. The primary role of tobacco crop can be vividly demonstrated by seeing the roof of Virginia State Capitol located in Richmond, which is decorated by frescoes with golden tobacco leaves.

Moreover, the Capitol building is situated several blocks away from the largest manufacturing plant of Philip Morris USA, the maker of legendary Marlboros.

However, the proximity to cigarette industry did not stop City Councils of Richmond and North Carolina’s Raleigh, where leading tobacco companies, Philip Morris and Reynolds American reside, from implementing their own citywide bans on smoking in eateries.

For instance, North Carolina, the second largest tobacco state behind Virginia, also banned indoor smoking on January 2, 2010. The NC legislation permits smoking in cigar clubs, tobacco shops and patios, similar to Virginia law. However, in contrast to Virginian ban, NC legislation would not exempt any eatery, no matter whether it provides smoking section or not.

Thomas Hoselton, spokesman for Virginia Restaurateurs Coalition said that uniform legislation with no exemptions would be more beneficial for restaurant owners, because they would not have to spend thousands dollars on designating a smokers’ section.

Owners of several venues like Richmond-based Jazz Café opted for making his place smoke-free long before the statewide ordinance entered into effect. However, for other like Hisham Arazi the smoking ban appears to be an unfair jeopardy for his small hookah lounge in Richmond. The Palestinian immigrant has to spend huge sums of money to build a separate section and install expensive ventilation system there in order to allow his customers smoke hookah a traditional Arabian after lunch pastime that became very popular across the nation recently.

Arazi said that even upon making required changes he would not be sure his business would survive, as anti-smoking advocates are eager to convince the legislature to cancel all exemptions.

The American Heart Foundation reported that 27 states and the District of Columbia have already adopted legislations to prohibit smoking in restaurants, and few of them provided exemptions for hookah bars.

Economists state that a partial ban on smoking like that in Virginia is not good for restaurant industry as it provides competitive disadvantages for small venues that are not able to build separate sections and have to become completely smoke-free, while their larger rivals would establish such smoker-friendly sections and attract more customers. They admit that comprehensive ban on smoking in restaurants would be more fair.

Menthol flavored cigarettes – a temptation for new-coming smokers

The research carried out by the U.S. Substance Abuse and Mental Health Services Administration showed that the usage of menthol cigs is more wide spread among those smokers who started to light up recently (45 percent) than among those who have been smoking for more than 5 years (32 percent).

Moreover, the researchers found out that the rate of menthol cigarettes lovers rose from 31 percent, registered 5 years ago to 34 percent of current smokers. This growth was the most dramatic among teenage smokers aged between 15 and 18 (from 43 percent in 2004 to 47 in 2008) and the rate of younger adults who prefer menthol cigarettes also increased from 34 percent four years ago to 41 percent.

Menthol is a flavoring agent of natural origin added to the cigarette content which is used to cover the real strength of cigarettes and providing smokers with a nice “freezing” aftertaste in the mouth. By offsetting the harshness with menthol flavor, the tobacco industry gives teenagers and young adults a gateway for getting hooked on smoking.

According to other studies by various research teams, menthol cigarettes are even more addictive than unflavored cigarettes, and therefore, it is much more difficult to give up smoking for those who prefer them in comparison with those who smoke ordinary cigarettes.

However, Menthol is the only flavoring not covered by the Tobacco Control Act, signed into federal law in June by President Barack Obama, although public health groups call the FDA to include flavored cigarettes in the ban.

SAMHSA lead researcher Christopher Louden, Professor of Public Health said that menthol-flavored cigarettes are able to keep smokers loyal to their deadly habit, and the leading cause of preventable deaths tormenting Americans. He added that evident fascination menthol cigarettes represent to adolescents and younger adults who recently tried smoking is especially concerning because these cigarettes can allure more young people to start smoking.

According to the study, the rate of smokers who prefer menthol cigarettes is the highest among African Americans (82.5 percent) what is significantly higher than among Hispanic smokers (33 percent) and White Americans (24 percent). The study showed an interesting tendency – among long-term African American smokers the overwhelming majority prefers menthol cigarettes, whereas new-comers are more likely to take up ordinary cigarettes, which is opposite to the tendency found among other ethnical groups.

Among other findings of the study is the apparent increase in the rate of male smokers of menthol cigarettes, which rose from 27 percent in 2004 to 31 percent in 2009.