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ASH Daily News

22 November 2004

HEADLINES

New Doubts over BAT's Chinese venture
Teen who smoked her way to an early grave
Puffing and panting over pub closures
"Nanny State" Minister responds to jibes
Public Health: What the papers say

FULL TEXT

New Doubts over BAT's Chinese venture

China's tobacco monopoly has announced that new joint ventures with foreign manufacturers, will not receive the go-ahead in the near future. The news once more throws into doubt British American Tobacco's (BAT) ambitious plans for a share of the world's biggest cigarette market.

Zheng Benfu, general manager of China Tobacco Import & Export, an arm of the country's tobacco monopoly said the country would not permit any further joint ventures with foreigners because the market was already "saturated".

Earlier this year BAT announced that it had reached agreement with the central government to build a £800m plant manufacturing up to 100bn cigarettes a year in China.

Disagreement at the helm of the bureaucracy in China over the BAT deal reflects the desire of some policymakers to increase competition and efficiency by allowing foreign investment, and the determination of the present monopoly to resist it.

Cigarette sales remain a very reliable and important element of China's tax base, amounting to 10 percent of national revenues, as well as funds for many local governments.

Source: Financial Times, 20 November 2004


Teen who smoked her way to an early grave

Diane Singh started smoking at 14 and within weeks she was addicted. At 37 she was dead. Now her mother, Evelyn Miller, from Huddersfield in Yorkshire has told how the habit robbed her of her beloved daughter.

Diane died in September from lung cancer, leaving a 10 year old son without a mother.

In a desperate attempt to dissuade her away from smoking, Evelyn made her daughter smoke an entire packet of cigars. It didn't work and before long Diane was puffing on 30 cigarettes a day.

Two years ago doctors discovered a shadow on her lung and diagnosed an inoperable tumour.

Evelyn said: "Since she died, two of my friends have given up smoking and if telling Diane's story gets even more people to give up then it will have been worthwhile."

Source: News of the World, 21 November 2004


Puffing and panting over pub closures

The prospect of "thousands" of pub closures as a result of the Government's smoking ban is considered by a number of newspapers. The Observer mentions, then quickly moves on from the, "120,000 smokers each year" who endure painful hear and cancer deaths. Although "everyone knows smoking kills", it's the fate of the "fog-filled, male-dominated smoky old boozer the paper is keen to dwell on.

Professional services firm BDO Stoy Hayward estimates that 32,000 jobs could go and profit margins plummet by £230million among Britain's 60,000 pubs. "Many rural and community pubs could just close. This could send them over the edge", said Tony Payne, Chief Executive of the Federation of Licensed Victuallers' Association, which represents 18,000 free houses.

The Observer notes that "panic was the order of the day" when the White Paper was announced on Tuesday: "Shares in Enterprise Inns and Punch Taverns dropped by 11p to 610p and 8p to 551p. The industry is aghast that measures it is already taking have been, in effect, wiped out by Health Secretary John Reid's move."

There is further speculation that as many as 20,000 pubs currently serving food will cease to do so, in what is increasingly becoming a profitable sideline. "The average profit margin in "wet sales" is 47 percent. But this conceals figures as high as 58 percent in London and as low as 38 percent in parts of the north-west, where price competition is intense."

Elsewhere in the paper Tim Clarke, CEO of the pubs giant Mitchells and Butlers is relieved but disappointed at the Government's White Paper. Mr Clarke is relived that the White Paper proposals did not opt for the "Irish solution" of a blanket ban without recourse for the commercial consequences. Yet he is far from triumphant and issued dire warnings about "wet led" pubs who opt for smoking drinkers over their non-smoking food eaters. "The margins on drink sales are three times that on food", he estimated.

The Times estimated that smoking restrictions could shave 10 percent off the sale of cigarettes. However, it added that the City had cautioned against downgrading profit expectations for Imperial Tobacco and Gallaher, the two leading British cigarette companies. This was largely due to the amount of time that will elapse before they come into effect.

"Britain is the world's 18th biggest tobacco market, with smokers consuming 58 billion cigarettes a year", it announced. Gareth Davis, Imperial Chief Executive indicated that he did not expect the new smoking legislation to impact significantly on profits, whilst analysts JP Morgan believed that cigarette consumption could suffer a one-off fall of up to 10 percent in 2009.

"By 2009 we believe that both companies [Imperial and Gallaher] will have changed sufficiently such that the impact of the proposed ban is diluted", suggested Gerry Gallagher, an analyst with Deutsche Bank.

The Financial Times was in gloomy mood warning that tobacco and pub stocks could go up in smoke. Yet the paper did caution against drawing parallels with the Irish experience: "The Irish ban is more stringent because it makes no distinction between pubs that do or do not serve food. The UK White Paper estimates that between 10 and 30 percent of UK pubs do not serve food, a figure that could easily once the ban comes into force."

The Sunday Telegraph reports that a number of Britain's best restaurants are planning to introduce membership lists and token admission charges to circumvent a Government ban on smoking in public places.

Sir Terrance Conran, founder of the Conran chain is believed to be among a number of restaurateurs planning to turn their premises into private members' clubs.

Source: Observer, Sunday Times, Sunday Telegraph, The Business, (21st), Times 22 November 2004


"Nanny State" Minister responds to jibes

Culture Secretary Tessa Jowell admits that the public perception of her appears to have swung from "the nation's nanny in chief to a "gambling gangster's moll in a few weeks.

She outlines the rationale behind that underpins the Government White Paper. Acknowledging that Governments have always restricted personal freedoms for the common good, the Cabinet Minister writes: "On issues like smoking, drinking and gambling, government has three basic choices: we can prohibit, regulate or leave it to the market. Prohibition does not work - it drives the activity underground or, in the case of online gambling, it drives activity offshore where there are zero safeguards for either players or their credit-card details and no requirements of social responsibility. Only ideological extremists favour a free-for-all where only the laws of the market hold sway. So the third option is regulation - and regulation with as much emphasis on the quality of the debate as the policy outcome. 'Better regulation' has to mean government engaging people in the decisions that affect their lives and doing so in new and better ways."

On the issue of smoking she adds: "Every cigarette is bad for you, every cigarette pollutes the air that others breathe and every cigarette contains psychologically and physiologically addictive chemicals that make it hard for smokers to give up. So the balance between the individual's right to smoke and the right of others who do not smoke (including bar staff) not to suffer their smoke needs to be set in a different place. Most people want to keep smoking and eating separate in restaurants and pubs and that's precisely what John Reid and I have done."

Source: Observer, 21 November 2004
Article Link: http://observer.guardian.co.uk/comment/story/0,6903,1356080,00.html



Public Health: What the papers say

The Economist appears to think the chief reason underlying the White Paper proposals is money.

"The government is pouring cash into the NHS (National Health Service) at the moment, but the spending spree is due to end in the spring of 2008. The new measures will cost around £1 billion over three years. But Mr Reid told the House of Commons this week that 'many times that amount will be saved'".

The Economist goes on to explain that improvements in life expectancy have resulted from a decline in smoking. However, despite the fall from 45 percent of adults who lit up 30 years ago to its present 26 percent, the decline has flattened out since the early 1990s.

"The link between health inequalities and behaviour is manifest. Smoking is now concentrated among lower social groups," it notes.

Yet the lead article in the magazine, which dwells on government intervention in health matters and fox hunting ends by warning that Liberal democracy demands governments should inform people and then leave citizens to their own vices: "If they want to be fat, smell like ashtrays and die early, let them."

Writing in the Observer Henry Porter dismisses the smoking restrictions as "small stuff" compared to the global issues of Africa, climate change and the danger of species extinction.

The Observer editorial claims Labour's timid approach in regulating the economy has meant they have sought compensation in meddling into people's personal lives.

Predictably, the "irascible" Simon Heffer in the Mail complains that the police have their hands full already without having now to tour pubs and arrest smokers. Health John Reid pleads in the Sunday Telegraph that he is "no health zealot". Referring to his smoking habit he said: "Carine (his wife) didn't like me smoking but she didn't nag me. She helped me come to the conclusion that I was cutting my life short. Since I enjoy my life, why put a 10-year limit on it?" Dr Reid began smoking when he was 15. He was lured into the habit as a favour to a fellow school mate who, punished by a teacher for a crafty drag during a trip to Rome, was forced to smoke the rest of the pack.

Source: Economist (20th), Observer, Sunday Telegraph (21st), Daily Mail, 20 November 2004

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Harold Wilson
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