Rolling up market share

Not long ago, the RYO (Roll-Your-Own) market was very static and generally seen as “the poor relation” of the cigarette market. Such is the case no more, as new innovations are constantly luring smokers away from the factory-made variety and the sector gains respect.

Most consumers may have switched to RYO as a less expensive alternative to highly taxed, ready-made cigarettes, but recent changes in packaging and marketing have resulted in RYO/MYO becoming a product of preference over factory-made cigarettes (FMCs).

Paper is one sector where innovations have been ongoing for some time already, with embossed images and logos having been introduced a few years ago.

Another example of paper innovation is the range of flavours and colours now available, products that are especially popular in the US, but are also now starting to catch on in Europe. Fruity flavours appear to be the most popular, particularly amongst female smokers, with the perennial favourite, menthol, also up amongst the front runners. Flavoured tobacco tubes for the MYO sector are also gaining market share.

There are also innovations in the way that the paper is used to roll a cigarette, none more revolutionary than the self-stick system developed by VPapers of Maidstone in England, as its R&D director, Mark Harrison, explains: “No one licks their postage stamps or envelopes anymore, so why should you lick your cigarette paper?”

Packaging has also been receiving a boost. Owing to the fact that many RYO smokers are “dualists” – that is to say, they smoke both RYO and FMCs – Imperial Tobacco recently launched a Golden Virginia in a new 14g cigarette-style pack, containing two separate blocks of tobacco. This pack design is said to be especially appealing to the dualists, who prefer the sturdy square box of the FMCs to the soft pouch more normally associated with smoking tobacco. The design ensures that the tobacco remains fresher longer and can also be used to hold RYO accessories such as rolling papers, filter tips and a lighter, once one of the blocks has been removed.

The RYO/MYO sector also benefits from a much wider range of accessories than is needed in the FMC sector. An ever-growing range of RYO machines is an example of this, and some of the latest innovations claim to be able to make a pack of cigarettes in just two minutes. As the economic prospects in the western world continue to decline, most experts think that the strong performance of the RYO sector is set to continue for the foreseeable future, as smokers continue to switch to cheaper alternatives.

Marketing strategies are also being employed. As the profile of RYO/MYO rises, tobacco retailers are providing much larger space for it and better placement within stores. Retailers and their employees are becoming more knowledgeable about the products and are able to educate the consumer on their use, through rolling demonstrations and by providing instructional CDs and DVDs.

The advancing smoking bans also appear to have influenced the growth in the RYO segment, as it has encouraged people to smoke “differently”. Along with “smirting” (smoking and flirting outside the pub), RYO smokers rolling their cigarettes in the pub before smoking them outside has become something of a familiar sight and has helped to de-stigmatise the product, which is now seen less as “down-market” and more as the mark of an individual.

Source: Tobacco Journal International, 22 October 2008
 

Increased rates and severity of child and adult food insecurity in households with adult smokers

Abstract

OBJECTIVE: To investigate rates and severity of child and adult food insecurity (the inability to access enough food in a socially acceptable way for every day of the year) in households with and without smokers.

DESIGN: Cross-sectional survey.

SETTING: Nationally representative sample of the US population from 1999 to 2002.

PARTICIPANTS: Households with children through age 17 years (n = 8817) in the National Health and Nutrition Examination Survey.

MAIN EXPOSURE: Presence or absence of adult smokers in the household. Covariates included age, sex, and race/ethnicity of the child, and the poverty index ratio.

MAIN OUTCOME: Measure Rates and severity of food insecurity were ascertained using the US Department of Agriculture Food Security Survey Module.

RESULTS: Food insecurity was more common and severe in children and adults in households with smokers. Of children in households with smokers, 17.0% were food insecure vs 8.7% in households without smokers (P < .001). Rates of severe child food insecurity were 3.2% vs 0.9% (P < .04), respectively. For adults, 25.7% in households with smokers and 11.6% in households without smokers were food insecure, and rates of severe food insecurity were 11.8% and 3.9%, respectively (P < .003 for each). Food insecurity was higher in low-income compared with higher income homes (P < .01). At multivariate analyses, smoking was independently associated with food insecurity and severe food insecurity in children (adjusted odds ratio, 2.0; 95% confidence interval, 1.5-2.7, and adjusted odds ratio, 3.1; 95% confidence interval, 1.4-6.9, respectively) and adults (adjusted odds ratio, 2.2; 95% confidence interval, 1.6-3.0, and adjusted odds ratio, 2.3; 95% confidence interval, 1.4-3.7, respectively).

CONCLUSIONS: Living with adult smokers is an independent risk factor for adult and child food insecurity, associated with an approximate doubling of its rate and tripling of the rate of severe food insecurity.

Referenced APAM editorial:

Smoking, Food Insecurity, and Tobacco Control
http://archpedi.ama-assn.org/cgi/content/extract/162/11/1096

Source: Arch Pediatr Adolesc Med. 2008;162(11):1056-1062. Cynthia Cutler-Triggs, MD; George E. Fryer, PhD; Thomas J. Miyoshi, MSW; Michael Weitzman, MD
Link: http://archpedi.ama-assn.org/cgi/content/abstract/162/11/1056

US: Antismoking groups flare over pink cigarette “Purse Packs”

Antismoking organizations took advantage of the final day of Breast Cancer Awareness Month to register their protests over Philip Morris USA’s plans to introduce a new Virginia Slims cigarette product with heightened appeal for young women.

The company has said it will launch new Virginia Slim “Super Slim” cigarette in the first quarter of 2009. The cigarette, in both light and ultra light flavors, is smaller in diameter than a standard cigarette and will come in a narrow pink rectangular box with squared ends. While the box will hold the standard 20 cigarettes, it will be slimmer than a standard pack and will apparently be marketed as a “Purse Pack”.

A joint statement issued at the end of October by a number of health-advocacy non-profit groups critisized Philip Morris for targeting women, and particularly young women, with the new product.

“Philip Morris shows contempt for women and their health by putting a pink gloss on a product that causes lung cancer and heart disease, two of the leading killers of women,” read a joint statement issued by the American Cancer Society Action Network, the American Heart Association, the American Lung Association, the American Medical Association and the Campaign for Tobacco-Free Kids.

According to the statement, the pink “purse packs” will make smoking look feminine and fashionable, while the use of “slim” in the name will set up a link between smoking and weight loss—something that might appeal to young women with body-image issue.

The groups also call for Congress to enact a pending bill to give the Food and Drug Administration jurisdiction over tobacco products, including regulating the use of the term “light” in cigarettes and imposing tighter restrictions on tobacco marketing that kids might see. The House has approved a rule giving the FDA that power; it now waits in the Senate.

The American Legacy Foundation, the non-profit group behind the Truth antismoking campaigns, joined with the Susan G. Komen for the Cure organization to protest against the new Virginia Slims products.

The new “Purse Packs,” wrapped in pink packaging and clearly designed to appeal to young women, present a serious public health issue at a time when tobacco-related diseases kill more than n 178,000 in the U.S. annually, according to the two groups.

“Philip Morris’ timing of this announcement is particularly outrageous,” ALF president and CEO Cheryl Healton said in the statement. “The pink ‘Purse packs’ of cigarettes—the deadliest consumer product in the world—are an insult to the women and their families who have suffered from breast cancer.”

Cigarette makers have run afoul of many of these same advocacy groups before for allegedly designing their products, packaging and marketing campaigns to appeal to women and underage children. Most recently, R.J. Reynolds caught flack from the same opponents a year ago for introducing its “Camel No. 9” brand extension.

The groups charged that packaging for that Camel product, featuring shiny black boxes with flowery designs in light blue or hot pink, was meant to appeal to women, and that even the name was intended to carry connotation of a famous Chanel perfume. Ad taglines called the cigarettes ‘light and luscious”, and one creative said a new thinner size was “available in stiletto.”

In the summer of 2007 ALF and other groups urged the publishers of 11 women’s magazines such as Vogue, Cosmopolitan and Glamour to stop accepting ads for Camel No. 9. About 40 members of Congress, led by Rep. Lois Capps, D-CA, added their support to the effort.

But the magazine publishers refused to drop the ads, saying that Congress should set up clearer legal guidelines for tobacco advertising. Without those, the publishers said, bowing to pressure from outside groups to refuse the ads is “at odds with the basic fabric of our country’s legal system.”

Source: Promo Magazine, 03 November 2008
Link: http://promomagazine.com/retail/news/1103-antismoking-groups-flare/

Smoking coupled with obesity raises death risk

Abstract

BACKGROUND: Smoking and high adiposity are strong independent health risk factors but are also interrelated. Smoking is related to a lower body mass index (BMI) but not necessarily with a smaller waist circumference. Smoking cessation is associated with increased body weight and a substantial increase in waist circumference. How this affects mortality risk is unknown.

OBJECTIVE: This study examined the combined relations of smoking status with BMI and waist circumference and smoking status to all-cause mortality.

DESIGN: Data were from 149 502 men and 88 184 women aged 51–72 y participating in the National Institutes of Health–AARP Diet and Health Study. All-cause mortality was assessed over 10 y of follow-up from 1996 to 2006.

RESULTS: Current smokers with a BMI (in kg/m2) <18.5 or >=35 had a mortality risk 6–8 times that of persons within the normal BMI range who never smoked. Current smokers with a large waist circumference had a mortality risk about 5 times that of never smokers with a waist circumference in the second quintile.

CONCLUSION: Both smoking and adiposity are independent predictors of mortality, but the combination of current or recent smoking with a BMI >= 35 or a large waist circumference is related to an especially high mortality risk.

Source: Koster, A et al, The combined relations of adiposity and smoking on mortality, American Journal of Clinical Nutrition, 2008. Vol. 88, No. 5, 1206-1212.
Link: http://www.ajcn.org/cgi/content/abstract/88/5/1206

PQ: meetings with BERR officials

David Taylor: To ask the Minister of State, Department for Business, Enterprise and Regulatory Reform how many meetings (a) the Secretary of State, (b) other Ministers and (c) officials in his Department had on the future of tobacco sales regulation with tobacco (i) retail businesses and (ii) manufacturers between September 2007 and August 2008.

Ian Pearson [holding answer 20 October 2008]: While there were no meetings with BERR Ministers during the period in question, we have identified 12 meetings between BERR officials and either tobacco manufacturers or representatives of small tobacco retailers, at five of which tobacco sales regulation was discussed. However there may have been other meetings with officials and to identify them all would incur disproportionate cost as this information is not held centrally. In addition, the Department has regular contact with retailers (some of which sell tobacco products), on a variety of business issues.

Source: Hansard, 6 Nov 2008 : Column 722W 

PQ: Tobacco Smuggling

Michael Penning (Shadow Minister, Health; Hemel Hempstead, Conservative): To ask the Chancellor of the Exchequer what assessment HM Revenue and Customs has made of the correlation between levels of use of hand rolling tobacco in the UK and the amount of hand-rolling tobacco illegally smuggled into the UK.

Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour): HMRC has made no assessment of the correlation between levels of use of hand rolling tobacco in the UK and the amount of hand rolling tobacco illegally smuggled into the UK. Estimates for the total amount of hand rolling tobacco used in the UK and the amount of hand rolling tobacco illicitly smuggled into the UK are estimated separately for the years 2001-02 to 2005-06 and are reported in "Measuring Indirect Tax Losses—2007" published by HMRC in October 2007, which is available in the House of Commons Library.

Source: Hansard, 11 Nov 2008 : Column 1089W
 

TJI interview with Christopher Ogden, chief executive, Tobacco Manufacturers’ Association

Extract

How about the recent public discussion raised in the UK regarding plain packaging?

Branding is a key component of the marketing mix for any manufacturer of consumer goods and although there are no definite policy proposals on packs we know that should they be made at some future date, the TMA and its member companies will make a robust response.

Sometimes it seems as though counterfeit trade and smuggling are never meant to be resolved; can you suggest any effective means for curbing the problems?

Our engagement ranges from the provision of electronic readers to customs and trading standards officers to enable them to identify counterfeit product, to the provision of funding support for police anti-illicit trade activities at the local level. We have also funded the provision of posters in retail outlets warning consumers not to purchase illicit tobacco products. As the financial secretary to the treasury has stated: “Contact with the main UK tobacco manufacturers and exchange of information has been a key part of the success of the tackling tobacco smuggling strategy.”

In our pre-budget meeting with the exchequer secretary to the treasury earlier this year, the TMA suggested top-level measures that would reduce the level of smuggling and cross border shopping: Freeze the level of tobacco tax as any rise, as demonstrated in previous years, only serves to increase the incentives for both those who smuggle and those who purchase illicit tobacco. Next, full use by customs of existing legislation to prosecute illicit tobacco traders. Third, the allocation of greater resources and manpower to customs and other law enforcement agencies. Finally, the introduction of a fixed rather than indicative level on the amount of tobacco products that travellers can bring into the UK from elsewhere in the European Union.

What should the tobacco industry be most concerned about?

In my view, we need to do more to counteract the social construct of ‘denormalisation’ that has been created by the tobacco control lobby. It is a term that has been picked up and now freely used by governments as an underlying justification for more and more tobacco control measures. There is something sinister about it. Totalitarianism, as we all know, is in the nature of those states which throughout history have tried to control the lifestyle of their people.

How essential is the need for the industry to have a public health dialogue in order to turn the corner and move out of the current atmosphere?

There is no question that we, as an industry, are up against a powerful, influential and internationally networked tobacco control lobby. Their aspiration is global – a tobacco-free world. It is not so long, however, since we were up against another powerful block with global aspirations and then suddenly down came the Berlin Wall.

Source: Tobacco Journal International, 22 October 2008
 

'Save Our Shops', tobacco retailers urge

A display ban on tobacco products could force 2,600 independent stores to close and cost 8,000 jobs, according to the Tobacco Retailers Alliance, a coalition of around 25,000 independent shopkeepers. The Alliance has launched a campaign against the Government’s proposal to ban the display of tobacco products in shops.

The campaign, called ‘Save Our Shops’, is calling on Prime Minister Gordon Brown to scrap the proposals and discuss other ways to reduce youth smoking.

“Our members are at the sharp end of this recession and being forced to hide their tobacco out of sight will be the last straw for many,” said Ken Patel, National Spokesman of the Tobacco Retailers Alliance.

“The bottom line is, any legislation which restricts small business must be evidence-based, fair and balanced,” he added. “The Government has said that it wants to help small business at this difficult time – yet these proposals would force many small shops to close.”

Note: The ASH Briefing on Tobacco Displays at the Point of Sale counters this argument

Source: The Grocer, 05 November 2008
Link:  http://www.thegrocer.co.uk//Articles.aspx?page=articles&ID=194749

BAT report on sustainability; TJI interview with Paul Adams, BAT CEO

In June 2008, British American Tobacco, the world’s second-largest cigarette maker, became the first tobacco company to publish a report on sustainability. It replaces the company’s corporate social responsibility reports (CSR), with which some years ago it also made a debut in the industry. By the end of 2006, CSR reporting had expanded to cover 40 countries.

However, according to Paul Adams, BAT’s chief executive, company reporting over the years has gradually shifted from an emphasis on best practice standards towards sustainability efforts, which simply translates to a focus on the most material issues for the company’s stakeholders and its business with more performance measures to demonstrate progress. 

BAT has opted for a rather comprehensive approach to achieving sustainability. In addition to striving to uphold high standards of corporate conduct, working for positive social, environmental and economic impacts within the supply chain and actively addressing the impacts of its business on the natural environment as well as focusing on the development of its staff, the company also includes the development of commercially viable, consumer-acceptable reduced-risk tobacco products as the most pressing sustainability issues it will address.

The following are questions raised regarding the report in an interview by TJI (Tobacco Journal International) with Paul Adams, CEO, BAT:

Generally the current discussion among corporations when it comes to sustainability usually focuses primarily on the environmental impact within a business context. However, your groundbreaking report takes a much broader view of the term. Why? 

Simply because we believe in order to be a truly sustainable business, we must look at all business-related impacts: social, environmental and economic in a way that builds value for all our stakeholders.

How does the quest for reduced-risk tobacco products fit into this more holistic definition of the term?

It’s a good example. We believe that developing reduced risk products, particularly ones supported by public health experts and widely liked by consumers, could help to reduce the impact of tobacco use on public health whilst generating sustainable revenue and profits. And that is why we see harm reduction as an important part of our business strategy.

Some critics say that your focus on voluntary sustainability efforts is a strategy to avoid oversight of other aspects of your business. What do you say?

In pulling together our sustainability agenda we carefully evaluated all the topics raised by stakeholders over several years. All the key issues are there, from social and environmental issues in the supply chain to how our products are sold and regulated. By and large, our stakeholders see this process as the most effective way to raise their concerns, and groups who previously would not have engaged with us find we are willing to listen. There will probably always be some who don’t want to talk to us, but our door is always open.

Given the negative public opinion about the tobacco industry in general, why does it matter whether the major industry players use sustainable practices?

It matters a great deal. There are a billion or more smokers in the world and tobacco consumption isn’t going to stop any time in the foreseeable future. Given the special challenges for our industry – producing products that can cause serious harm to health but are also legal and pleasurable – it is even more important that we operate responsibly.

Have you seen an impact on your market share from your sustainable initiatives? How can this be measured?

We’re not necessarily looking to gain market share directly from our sustainability initiatives. We don’t link them to any brands. Qualitatively we aim to lead our industry as the preferred partner of key stakeholders and through demonstrating responsibility.

Source: Tobacco Journal International, 22 October 2008
 

Tobacco giant asks Supreme Court to intercede

Tobacco giant RJ Reynolds is to ask the US Supreme Court to intercede in a patent suit by Star Scientific over a carcinogen-reducing method of curing tobacco. The case has been running since 2001. 

The information was contained in a memorandum sent to Star Scientific by the US District Court that outlined the framework of proceedings in its suit against RJ Reynolds. The memorandum summarised the results of a meeting between lawyers for the two sides on November 5, and also stated that the case would be heard by a jury between April 20 and May 29, 2009.

RJ Reynolds needs to file its petition for a writ of certioari with the Supreme Court within 90 days of October 22, 2008, when the Federal Circuit denied RJ Reynolds's petition for rehearing. Star then has 30 days to file a response in opposition to the petition.

If the Supreme Court grants RJ Reynolds's petition, the trial dates in the Court's order will be rescinded.

Star Scientific is seeking damages from RJ Reynolds of more than $1 billion.

Source: IP World News, 11 November 2008
Link: http://www.ipworld.com/ipwo/doc/view.htm?id=172052