Ukraine Complaints over Aussie’s Tobacco Plain Packaging Law

As it was expected, Ukraine has submitted a complained to the World Trade Organization (WTO) regarding the Australian government’s legislation banning logos and branding of cigarettes and other tobacco products on the grounds that the measure is an infringement of the international regulations on intellectual property.

Australia became the first country across the world to oblige cigarette makers pack their products in identical generic packs. From December 1st, 2012, cigarettes will be selling in olive-colored packs, lacking any logos or images, besides the graphic health warning labels. The world’s leading tobacco companies , among which are British American Tobacco, Imperial Tobacco and Japan Tobacco International, have pledged to contest the legislation, which Australian lawmakers plan to extend to comprise loose tobacco and cigars.

Ukraine states the peer-reviewed evidence on which the legislation is based is arguable and not sufficient, while plain-packaging regulations will not help to meet the country’s public health goals, but simply contribute to growth of the black market of fake cigarettes.

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Smokers Opt for Going Cold Turkey to Quit

Going cold turkey is the most popular way of getting rid of smoking, according to a study carried out by the University of Sydney Department of Public Health researches. Since nearly 60 percent of smokers managed to quit smoking permanently through this method, the scientists wanted to find out why.

The study is performed by a team of researchers, led by Dr. Sally Dunlop, who is specializing in the determinants of behaviors related to health. The objectives of the study were identified as investigation of causes and ways why cigarette smokers opt for different methods for quitting smoking.

Officially named as ‘unassisted cessation‘ this method of quitting is considered the most effective and successful way to stop smoking. However, Dr. Dunlop believes this method has not been studied and used as together with other methods of smoking cessation applied across the nation.
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Lorillard Inc.’s Second-quarter Net profit Increases

Cigarette manufacturer Lorillard Inc.’s second-quarter net profit increased more than 10% as it sold Newport and Maverick cigarette brands at higher prices.

The third largest tobacco company cautioned that its third-quarter cigarette volumes will be affected because wholesalers stocked more than usual last year, and that could damage its earnings.

Lorillard gives significant attention to promotion of its brands, most of all on it currently launched non-menthol version of Newport.

The manufacturer didn’t give any guidance for this particular quarter.

Its shares dropped $5, or 4.4 %, ending trading at $107.29.

Investment analyst Vivien Azer declared that the company’s shares were under considerable pressure due to concerns about increase slowing down in the second half of the year, but the sell-out is “overdone.”

Lorillard spokesman stated that company’s net profit increased to $291 million, or $2.05 per share, for the period till June 30, up from $263 million, or $1.73 per share, a year earlier. The per-share figure was lifted due to lower number of outstanding shares.

The volume of cigarettes Lorillard sold increased about 10% to approximately 10.8 billion cigarettes on profits of 9.6 % from its Newport brand and nearly 21 % for its lower-priced Maverick brand, while it expected a 1.3 % decrease for the whole industry.

According to the company’s representative their non-menthol Newport cigarettes, launched in November, presented the bulk of the increase in Newport shipments during the quarter, but it also underlined that the price of promoting it affected its profit.

Competitors Reynolds American Inc. and Altria Group Inc. both declared selling fewer tobacco products in the same quarter.

Increased unemployment and growing cigarette prices and taxes have led many smokers to switch to lower-priced brands during the recession trying to save money. Lorillard’s Maverick and Reynolds American’s Pall Mall have been among the beneficiaries.

The majority of tobacco enterprises have been increasing prices and dropping costs in order to maintain profits up, as the recession and reducing demand affected cigarette sales. Tax increases and smoking bans have made cigarettes industry stricter.

Lorillard’s retail market share raised 1.4 points within the quarter to 14.2 % of the U.S. market. Newport’s share of the menthol cigarettes was firm at 36.6 %, while its main competitors have increased efforts to confer some of the raising menthol market.

The company’s gross revenue dropped to 35.4 % due to promotional costs for Newport non-menthol.

Lorillard it is the last one of the country’s largest tobacco companies to present second-quarter results.

The first was Altria Group, holding company of Marlboro producer Philip Morris, which declared that, while cigarette sales dropped, the prices were increasing. The top-brand Marlboro also lost its market share.

Phillip Morris Starts Legal Suit against Australian Government

Today the leading cigarette manufacturer Philip Morris started a legal suit against the Australian government, which plans to remove company logos from cigarette packages and substitute them with horrible images depicting the consequences of smoking.

The government supposes that these images featuring blinded eyes, cancerous mouths and many other awful things will make the cigarette package less attractive to smokers.

Australian government authorities also think that the new regulations will make the country the world’s rigorous place on tobacco advertising.

But several enraged cigarette producers have since threatened lawsuits, declaring that the move illegally decreases the value of their trademarks. Philip Morris is one of those companies to lay an action for compensation.

“We would expect that the compensation would constitute billions,” said Philip Morris representative Anna Edwards.

The legislation, which will be revised by the Parliament, would prohibit cigarette manufacturers from placing their logos and various attractive images on cigarette packages. Brand names will instead be printed in a quite small font and depict large graphic warnings and grisly colored images of the consequences of smoking. The law would be gradual, starting in January 2012.

Hong Kong-based Philip Morris Asia Limited, laid an action on Monday declaring that the legislation infringes a bilateral investment treaty between Australia and Hong Kong. The tobacco enterprise states that the treaty defends the companies’ property, such as trademarks. The plain packaging plan strictly decreases the value of the company’s trademark, according to Anna Edwards.

“Our cigarette brands are the one and the most indisputable key valuable assets that we possess as a company – it is what allows us compete and moreover it’s what empowers us to differentiate our products. This move would significantly mean the confiscation of our brand in Australia,” Edwards stated.

Authorities are also eager to move forward the message that smoking affects your children.

The government disclaims that the given plan infringes any laws and declared that it would not stop.

“Our authorities are resolute more than ever to undertake everything they can in order to decrease the hazard caused by smoking,” Health Minister Nicola Roxon stated.

“We won’t permit be frightened by various tobacco companies, which take legal actions,” said Prime Minister Julia Gillard.

She also ignored Philip Morris’ threats stating that they are not going to allow tobacco producers to implement their skilful tactics.

The legal action laid on Monday starts a three-moth period of collaborations the two parties.

Philip Morris declared if a positive outcome is not achieved by the end of this period, it will require arbitration. The U.S. Food and Drug Administration (FDA) introduced similar graphic warnings for cigarette packaging last week.

Tobacco Companies Could Gain $2 Billion if Signing 1998 Agreement

The largest cigarette producers could compensate $2 billion under an advised deal with attorney general of the State in order to settle a prolonged dispute over payments required by the landmark 1998 tobacco settlement.

Negotiators for Altria Group Inc.’s Philip Morris USA and other cigarette enterprises have achieved a provisional deal with officials representing the 46states that signed the 1998 Settlement Agreement.

Native American cigarette brands, as for instance Seneca, account for more than 4% of U.S. volume.

The given agreement would permit leading tobacco companies to keep part of the funds they have kept from states or disputed under the 1998 pact, in accordance to which they agreed to pay about $200 billion in order to help states charge the costs of curing sick smokers.

In concordance with the new deal, moneyless states would obtain several billion of the contested dollars. The deals also would review the rules to how states charge fees and taxes from smaller enterprises that haven’t joined the 1998 agreement.

If the deal will be introduced, the main loser could be Native American tobacco companies, which have become powerful competitors with their cheap brands. The deal would require states to introduce rules demanding these enterprises to start paying sate excise duties and fees for sales on tribal lands, which could oblige them to raise prices. Advocates representing Indian cigarette interests are currently threatening legal challenges.

“What the states and companies are doing is not right. All states under the present deal would be disputing tribal economies in order to protect largest tobacco companies’ market shares,” stated Lance Morgan, chief manager of the Ho-Chunk Inc., which distributes tobacco products on tribal lands.

Native American brands as King Mountain, Mohawk and Seneca account for approximately 4% of the U.S. cigarette volumes, according to Morgan Stanley findings.

Altria, Reynolds American Inc. and Lorillard Inc. refused to comment on the issue.

Several states have adopted laws requiring the nonparticipating enterprises to put money aside in escrow accounts. In 2010, the U.S. market share of nonparticipating enterprises increased to 6.5%, the highest figure since 2004, when it remained at 8.27%.

In order to decrease their annual payment, the largest tobacco companies should demonstrate that their market-share loss is mostly due to the agreement. They successively have observed the condition, according to enactments by independent consultants.

An arbitration committee has started examining the issue in determining how to proceed with about $1.1 billion in disputed 2003 payments.

How much the enterprises would gain through the new agreement depends mostly on how many states participate in it. In case all states and U.S. territories in the 1998 agreement sign on, the tobacco enterprises would gain nearly $2 billion.