Japan Tobacco aims to blow smoke in rivals’ faces

On the wall of the chief executive of Japan Tobacco International’s office in Geneva is a picture of a Marlboro man with a difference. 

In place of the traditional cowboy that has been the face of rival Philip Morris International’s signature brand, is Joe Camel, the advertising mascot for JTI’s Camel cigarettes, decked out in pinch front cowboy hat and rugged leather boots, cigarette dangling from its lips.

The sly subversion of the iconic Marlboro image hints at the scale of Pierre de Labouchere’s ambitions for Japan Tobacco, the world’s third-biggest publicly listed cigarette maker.

“Our goal is to overtake PMI as the industry’s number one,” says Mr de Labouchere with a laugh. “So yes, I guess you can say there’s a subliminal message in the painting.”

As the head of a division that has been the main driver of profit growth for JTI over the past four years, the 54-year old Frenchman has reasons to be ebullient.

Japan Tobacco, which also owns food and pharmaceuticals businesses, still has some way to go before it topples PMI from the top spot. But the gap between it and British American Tobacco, the industry’s number two, became a lot narrower last year after JT swooped up Gallaher, the UK maker of Benson & Hedges and Silk Cut cigarettes, for £7.5bn ($12bn).

The acquisition has also enabled JTI to secure its dominance in Russia, the world’s third-biggest tobacco market behind China and the US as well as in the former Soviet bloc, where the booming economies are creating a middle class that can afford to trade up to JTI’s higher price brand.

As in the US and western Europe, cigarette sales in Japan have fallen amid rising health fears and stringent tobacco advertising regulations.

With fewer smokers lighting up in its home market, JT has had to look abroad to compensate for the decline. It made its first big move in 1999, when it splashed out $7.9bn to buy Reynolds International, the non-US tobacco operations of RJR Nabisco.

At the time, many analysts were sceptical whether JT, a former state-owned monopoly that is still 50 per cent-owned by the Japanese government, had the managerial acumen to make the acquisition work. But in an unusual move, Mr de Labouchere – then the president of Reynolds International – was asked to stay on to head the business, which was renamed JTI.

With the purchase of Gallaher, JTI now accounts for 48 per cent of JT’s operating income and 70 per cent of its sales volume. The combination of the two companies is expected to generate $400m in cost savings and other synergies by 2010.

But the challenge for Mr de Labouchere will be whether he can internationalise any of Gallaher’s brands – most of which are relatively local in nature.

In the longer term, JTI still faces gaps in its portfolio, notably in Asia and Africa, and particularly in Latin America.

“At the moment our priority is to combine Gallaher into JTI’s existing operations,” he says. “But we are always looking. Asia is a region we would like to increase our presence in.”

Source: The Financial Times, 26 October 2008
Link: http://tinyurl.com/6xpekc

"Liquid cigarettes"  to be launched

A soft drink claiming to offer the same nicotine fix as a cigarette is to be launched in the UK. Cans of Liquid Smoking, which look similar to red and white cigarette cartons, offer smokers an alternative to shivering outside bars and restaurants.

"We've got a product that has the same effects as nicotine, but which you can drink in restaurants and on flights," said Martin Hartman of the United Drink and Beauty Corporation.

However, anti-smoking groups are concerned the product, which contains 15 per cent nicotine, may promote smoking. "Our concern would be if the packaging led to the promotion of cigarettes," said Deborah Arnott of Action on Smoking and Health.

Source: The Independent on Sunday, 26 October 2008
Link: http://tinyurl.com/6pn4a9

Also reported in:

The Telegraph - http://tinyurl.com/65eaph

The Daily Mail - http://tinyurl.com/6jmffx

The Sun - http://tinyurl.com/6ksman
 

USA: Boston proposes tougher regulations on tobacco

The Boston Public Health Commission is proposing some of the nation’s strictest smoking regulations, banning the sale of cigarettes at drugstores, on college campuses, and shutting down the city’s 10 cigar and hookah bars by 2013.

The goal, the commission said, is to discourage young people from buying tobacco products, to keep a harmful product out of stores that promote health, and to protect employees who are exposed to secondhand smoke.

The Board of Health will vote on the regulations on Nov. 13. If approved they will take effect within 60 days.

“Should tobacco be treated as any other consumer good? No,” said Barbara Ferrer, director of the Board of Health. “We don’t sell guns everywhere, we don’t sell alcohol everywhere and we don’t need to be selling tobacco everywhere. They’re all dangerous products, and they all require regulation.”

The proposal has angered smokers and small business leaders, who say the pharmacies and cigar bars are unfairly being singled out.

Jon Hurst, president of the Retailers Association of Massachusetts, which represents small businesses, including pharmacies said, “We believe it’s discriminatory. It’s tying the hands of sellers and consumers alike, and that isn’t what government should be about.”

San Francisco passed a regulation in July banning the sale of cigarettes in drug stores. It was challenged in court, and a judge allowed the ban to begin on Oct. 1 despite the pending lawsuit.

Boston, however, takes the policy further with curbs on cigarettes on campuses and plans to close the smoking establishments. The smoking bars were exempted from a 2003 ban on smoking in all city workplaces, including bars and restaurants.

Ms. Ferrer, the health director, said the proposal was aimed at the growing number of hookah bars near college campuses, where patrons smoke flavored tobacco out of a water pipe.

The bars, she said, tend to attract 18- to 20-year-olds, who are too young to drink at a bar but want for a place to hang out.

But people who want to smoke and employees of the establishments where they can still do so say their rights are being threatened.

Source: The New York Times 26 October 2008
Link: http://tinyurl.com/6j8mbb

Youth activist campaigns to ban smoking in cars 

Seventeen year old Zander Percival who has asthma wants to make it illegal for adults to smoke in the car when they have a passenger under 16 with them. 

He was subjected to second-hand smoke when he was younger and feels it can have a major impact on youngsters, and not just in terms of their health.

"It's a really horrible memory for me and I want to stop other kids having the same experience."

Zander's 'You smoke I Choke' campaign is being followed by Channel 4 for a 'Battlefront' documentary which will hit our screens in early December.

Last Thursday he went down to the Civic Centre [in his home town of Hemel Hempstead] to drum up support for the campaign, with a camera crew and a posse of supporters in tow.

Zander already has the backing of Hemel Hempstead MP Mike Penning and anti-smoking charity ASH. But now he is looking for members of the public to get behind him.

Martin Dockrell, policy manager for ASH, said: "Even at the ages of 14 and 15 Zander was very active in campaigning for smoke free public places.

"Kids have not benefited at all from the ban. It's ironic he should have campaigned so hard and to have benefited so little from it. We are 100 per cent behind him - it's great when young people speak for themselves."

Mike Penning, who is the Conservative spokesman for health, added: "He's been to see me in Westminster and we've spoken about how the campaign can go forward."

"He needs to make sure it is heard by the right people and I will make sure the Primer Minister and David Cameron hear about it."
 
Mr Penning added, "He's a very impressive young man."

Zander also plans to set up a petition, visit local schools and demonstrate outside the Houses of Parliament in his effort to improve the lives of children who he believes 'don't have a voice.'

"People I have spoken to are absolutely in favour of the ban," added Zander.

"I'm just a small fish in a big pond, but sometimes a small fish can make a big difference."

Source: Hemel Today, 26 October 2008
Link: http://tinyurl.com/6qf6pv