Category Archives: world tobacco use

Philip Morris Interntional, world tobacco use

Philip Morris stock crashes

Woot! This story made my heart warm. Philip Morris International (a company split off from Altria that focuses specifically on the tobacco market outside of the U.S.) stock dropped 18 percent on April 19, partly because sales of its iQos product — a device that heats a tobacco plug without setting it on fire — has not gone as well as projected.

For the year, PMI stock has dropped 4 percent.

PMI is such a huge player in the tobacco market that its drop affected the stocks of all tobacco companies. British American Tobacco PLC and Imperial Brands PLC dropped 5.4 and 2.9 percent respectively while Altria dropped 7.7 percent.

Oh, ouch, I hope people lose their jobs. I hope CEOs lose their bonuses. I can dream, can’t I?

According to MarketWatch, much of this is tied to the iQos and its performance in Japan. From a MarketWatch article:

Philip Morris and its rivals have spent billions of dollars in recent years to research and market tobacco heating and other new products they believe will help lure existing smokers from conventional cigarettes, whose sales are in decline globally. While tobacco companies have so far been able to offset declining volumes with rising prices, that strategy is seen as having limits, and companies are scaling back investments in traditional tobacco operations.

Japan, where Philip Morris launched IQOS in 2016, is closely watched by investors and public-health researchers as a test case for how reduced-risk products could catch on with consumers. Smoking rates in the country have plummeted after IQOS’s introduction — it has captured 16% of the tobacco market — and Philip Morris has pointed to that success as an indication of what could be achieved elsewhere.

But Thursday, the company warned that once-breakneck sales in Japan had cooled.

“Device sales were slower than our ambitious expectations,” Philip Morris Chief Financial Officer Martin King said on a call with investors. Mr. King warned of a maturing market in Japan, saying Philip Morris had run through early adopters quicker than expected and must win over “the more-conservative consumers, especially the age 50-plus smoker segment which represents approximately 40% of the total adult smoker population.”

I would love to see all these companies go belly-up. I know it won’t happen overnight, but it’s a good sign that the end of Big Tobacco could be in sight.

India, Philip Morris Interntional, Reuters, world tobacco use

Reuters India investigation: Philip Morris definitely targeting young people

Interesting read here for my Indian readers on how India is threatening to crack down against Philip Morris International with some kind of “punitive action” for violating that country’s anti-tobacco laws prohibiting marketing cigarettes to minors.

The Indian Healthy Ministry sent a warning letter to PMI after a Reuters investigation this summer dug up secret memos from the company about how to market cigarettes to young adults, including using conveniently located advertising kiosks and through promotional giveaways. Reuters is making a big deal out of this and has even set up a website where you can peruse reams of Philip Morris International internal documents.

That investigation also found that PMI has a deeply entrenched strategy of trying to undermine what’s known as the Framework for Tobacco Control, a multi-nation treaty to try and curb tobacco’s influence in the developing world. That’s a whole another imbroglio I need to look into.

From the Reuters investigation:

… Indian government officials say Philip Morris is using methods that flout the nation’s tobacco-control regulations. These include tobacco shop displays as well as the free distribution of Marlboro – the world’s best-selling cigarette brand – at nightclubs and bars frequented by young people.

In internal documents, Philip Morris International is explicit about targeting the country’s youth. A key goal is “winning the hearts and minds of LA-24,” those between legal age, 18, and 24, according to one slide in a 2015 commercial review presentation.

As with the point-of-sale ads at kiosks, public health officials say that giving away cigarettes is a violation of India’s Cigarettes and Other Tobacco Products Act and its accompanying rules.

Philip Morris’ marketing strategy for India, which relies heavily on kiosk advertising and social events, is laid out in hundreds of pages of internal documents reviewed by Reuters that cover the period from 2009 to 2016. In them, Philip Morris presents these promotions as key marketing activities. In recent years, they have helped to more than quadruple Marlboro’s market share in India, where the company is battling to expand its reach in the face of an entrenched local giant. Reuters is publishing a selection of those documents in a searchable repository, The Philip Morris Files.

The company’s goal is to make sure that “every adult Indian smoker should be able to buy Marlboro within walking distance,” according to another 2015 strategy document.

PMI has been told repeatedly to remove the outside advertising at these kiosks, but enforcement in India is weak. The giveaways take place at social events with women dressed colourfully in the brand colours of different kinds of Marlboros.

Pretty sleazy huh? PMI is clearly looking for every tiny little loophole in the laws it can find, it appears.

India is a HUGELY important market for Big Tobacco, because smoking rates in the West are in steep decline, while China strictly controls tobacco sales as a state enterprise. That leaves … ta da! … India with its 1.3 billion people as the biggest available new market in the world (along with the Philippines and Indonesia). Big Tobacco is literally drooling over these markets, and the Indian government has a big fight on their hands to keep PMI and other international companies at bay.

 

 

Australia, CVS Pharmacy, U.S. Chamber of Commerce, world tobacco use

New Jersey Star-Ledger editorial: U.S. Chamber, stop promoting tobacco worldwide

chamber-smoking

The New Jersey Star-Ledger, a major daily newspaper in Newark, N.J., came out this week with a strong editorial bashing the U.S. Chamber of Commerce for promoting U.S. tobacco companies abroad. The Star-Ledger accuses the U.S. Chamber of being a “shill” for Big Tobacco around the world.

The Chamber, which has become an increasingly political group, has written dozens of letters to the governments of other nations, some of these small and poor nations, lobbying against a variety of tobacco regulations. CVS Health, which stopped selling tobacco products in its chain of drugstores recently, dropped out of the U.S. Chamber in protest.

Even Mother Jones joined in on the outrage over the U.S. Chamber’s behaviour.

This is something that has been covered by John Oliver and others. The world tobacco industry is fighting a number of small governments, some of which simply don’t have the resources to duke it out with Big Tobacco, over tobacco regulations regarding marketing, packaging and even smokefree workplace laws. The industry has filed a bunch of lawsuits, butting heads with small countries such as Ireland, Togo, Uruguay and others. The industry got into a full-on legal war with Australia over that country’s cigarette plain-packaging laws. The industry sued and it went all the way to the Australian Supreme Court, which ruled in favour of the government. Not satisfied, Big Tobacco enlisted the help of both Hong Kong and Ukraine to get those entities to claim that Australia was somehow violated trade treaties and laws with its plain packaging law.

Anyway, the Chamber decided to write dozens of letters to these little countries, attempting to pressure them to drop their rules and regulations regarding packaging or tobacco marketing. The Star-Ledger brings up the Ukraine-Australia spat (which Ukraine eventually dropped) and also included a video of the great John Oliver takedown of the tobacco industry on his show.

From the Star-Ledger:

It would be heartening for the Obama Administration to condemn the U.S. Chamber for supporting Big Tobacco, and let the world know that these entities do not speak for the United States. But so far the only righteous stand has come from CVS, which resigned its membership from the USCOC for trafficking in death. Until more corporations send that message, little will change.

Its domestic political influence has waned in recent years. Even when Donohue argues for the right things – such as immigration reform – House Republicans ignore him.

It remains very effective, however, in making money for its corporate partners, even when as wanders into ethical-dead zones under the pretense of “protecting intellectual property.”

But it is time the U.S. Chamber got out of the tobacco business and stopped prioritizing death over profit. And its 100 affiliates worldwide – including the one in New Jersey – should decry its policy of peddling poison.

 

Australia, CVS Pharmacy, Plain packaging, U.S. Chamber of Commerce, Uncategorized, World Health Organization, world tobacco use

CVS quits U.S. Chamber of Commerce over CoC’s campaign against anti-smoking laws

U.S. chamber graphic

Great story, I loved this.

CVS Health, which gained notoriety  in recent months for removing all tobacco products from its chain of drug stores, has now left the U.S. Chamber of Commerce because that organization is embroiled in a lobbying campaign worldwide against anti-smoking laws.

This is a growing issue in the battle against the spread of tobacco worldwide. Something that I didn’t pay that much attention to until John Oliver did an epic 18-minute rant about it on his show earlier this year.

Big Tobacco has in many ways given up fighting anti-smoking laws in the U.S. and much of the West. However, it is taking the fight to the Third World, where smaller countries don’t have the financial resources to hold their own against Big Tobacco. The tobacco is fighting laws against tobacco marketing and packaging in countries ranging from Australia to Uruguay. While Australia kicked Big Tobacco’s butt (pun intended) over the issue of plain packaging of tobacco products, little countries like Uruguay and Togo which are trying to restrict tobacco marketing in their countries simply can’t go up against the tobacco industry’s wealth.

CVS Health

Enter the U.S. Chamber of Commerce, which has become an increasingly right-wing entity over the past several years. The Chamber and its president Thomas Donohue are also fighting these small countries on behalf of Big Tobacco. Here is a list of some of the letters they have written supporting the tobacco industry to countries such as Ireland, Uruguay and New Zealand.

From a New York Times article:

We were surprised to read recent press reports concerning the U.S. Chamber of Commerce’s position on tobacco products outside the United States,” David R. Palombi, a senior vice president at the company, said in a statement. “CVS Health’s purpose is to help people on their path to better health, and we fundamentally believe tobacco use is in direct conflict with this purpose.”

In its defence, the Chamber responded:

“It’s unfortunate that a concerted misinformation campaign about the U.S. Chamber’s position on smoking has resulted in a company leaving our organization.

“To be clear, the chamber does not support smoking and wants people to quit. At the same time, we support protecting the intellectual property and trademarks of all legal products in all industries and oppose singling out certain industries for discriminatory treatment.”

However, if the Chamber is just trying to protect trademarks of tobacco companies, then why is it fighting smoking bans? That’s got nothing to do with trademarks.

According to the New York Times:

The chamber has not said why it has opposed public health steps like restricting smoking in public places, which it called an “extreme” measure when it was proposed in Moldova.

CVS is not the only entity taking the Chamber to task. Others include Sens. Al Franken and Elizabeth Warren, billionaire Richard Branson and the World Health Organization.

From the Times:

Last week, seven Senate Democrats, including Richard Blumenthal, Al Franken and Elizabeth Warren, called the chamber’s tobacco lobbying “craven and unconscionable,” adding that “member companies should be concerned that their good name is sullied in efforts to strike down public health protections worldwide.”

Richard Branson, the billionaire British entrepreneur, said on Twitter that the chamber was on “the wrong side of history.” And on Tuesday, the head of the W.H.O. weighed in, assailing the chamber over its lobbying practices.

“By lobbying against well-established, widely accepted and evidence-based tobacco control public health policies, the U.S. Chamber of Commerce undermines its own credibility on other issues,” Dr. Margaret Chan, the director general of the W.H.O., said in a statement on Tuesday. “So long as tobacco companies continue to be influential members of the chamber, legitimate businesses will be tarred with the same brush.”

Good on you, CVS, for highlighting what the U.S. Chamber of Commerce is doing and putting the spotlight on its sleazy lobbying on behalf of the tobacco industry.

Australia, Cigarette labels, John Oliver, Ukraine, world tobacco use, World Trade Organization

Ukraine bails on ridiculous challenge to Australian plain packaging laws

342903-cigarette-packs
Plain packaging

Here is an update on John Oliver’s excellent rant about the tactics of Big Tobacco in fighting regulations against their products worldwide.

This is complicated and I’m not 100 percent confident I will explain it right, but I will try:

Ukraine had been convinced (no doubt by Big Tobacco lobbying efforts) to file a World Trade Organization challenge against Australia over Australia’s plain packaging laws. Per Australian law, tobacco companies cannot put their logos on cigarette packs. Only graphic anti-smoking warnings are allowed and a small amount of text saying what the actual brand of the cigarettes are.

Tobacco companies filed suit and recently, the Australian Supreme Court ruled in favour of the government. So, Big Tobacco (or should I say Big World Tobacco) lost that round.

ukraine-wheat-fields
They grow wheat in Ukraine, not tobacco

However, Big World Tobacco also went the WTO route (John Oliver did a great piece on this), saying Australia’s strict rules affected trade with other countries and violated international trade agreements. For some mystifying reason, Ukraine got involved, even though Ukraine is not a major tobacco-growing nation and does not export any tobacco to Australia. (Like I said, I smell money — LOTS of money — exchanging hands here between tobacco interests and Ukrainian government officials.)

From the Reuters article:

Health campaigners were perplexed by Ukraine’s WTO suit because it is also a party to the U.N.’s Framework Convention on Tobacco Control and was one of the countries that backed guidelines on how to implement the treaty, including enforcing plain packaging.

British American Tobacco has previously said it was helping meet Ukraine’s legal costs in the WTO case against Australia. Individual companies cannot pursue litigation via the WTO.

Well, there you go: BAT was paying Ukraine’s legal fees.

The issue isn’t over, but Ukraine was the biggest country involved in fighting the Australian plain packaging rules. Other nations challenging the plain packaging rules are Cuba, Honduras, Indonesia and the Dominican Republic (all tobacco-growing nations).

 

 

British-American Tobacco, Lorillard, Philip Morris, world smoking rates, world tobacco use

Higher taxes? Smoking bans? Lawsuits? The tobacco industry continues to thrive, thank you

Tobacco

A sobering story from Business Cheat Sheet, but one I was aware of.

In John Oliver’s recent epic rant about the tobacco industry, he touched on this issue (more on that in a subsequent post).

Yes, the tobacco industry has taken some big hits in the past 30 years. A sharply declining smoking rate, from over 50 percent in the 1960s to approximately 18 percent today; the massive $280 billion Master Settlement Agreement in 1998; the Engle judgements out of Florida; and higher taxes in most states over the past 15 years.

However, from the Business Cheat Sheet story.

Then came the good news. According to a Credit Suisse research report released last week, tobacco is America’s most successful industry. The report states that the average returns from a company listed on the stock exchange was about 10% per year from the period between 1900 and 2010. Tobacco stocks, however, produced annualized returns of 14.6% during the same period. In terms of hard cash, this means that a single dollar invested in tobacco stocks was worth $6.3 million by 2010, while a dollar invested in a stock market index would only be worth $38,255.

However, as Business Cheat Sheet points out, the tobacco industry has simply rolled with the changes. There’s a reason the average cost of cigarettes has gone from $1.50 a pack in 1990 to $5.50 a pack in 2015. All those added costs — taxes and settlements — have simply been passed on to cigarette consumers.

According to this article, the $280 billion MSA and other litigation raised the cost of cigarettes by 10.9 cents a pack in the late 1990s. However, the price of cigarettes increased by an average of 14 cents a pack. The industry simply kept the change. When your customers are addicted to nicotine, there’s nowhere else to go.

Business Cheat Sheet also points out that the tobacco industry is an oligopoly — a large industry basically controlled by a very small number of companies. In the U.S., there’s really only four major tobacco companies — Philip Morris, RJ Reynolds, Lorillard and British-American Tobacco. And when the merger of RJ Reynolds and Lorillard is complete, that number will be down to three (BAT, which is big internationally, has a tiny share of the market in the U.S.). In fact, get this, there has not been a new major tobacco company formed in 56 years.

Worldwide, a mere five major companies — Philip Morris, BAT, Japan Tobacco International, Reemsta and Altadis — control 45 percent of the market. A huge percentage of the rest of the world market is in state-controlled in China.

To quote from the article:

As a result, competition within the industry is rare and the incentive to innovate on products and prices is low.

To add to that, cigarettes have an inelastic demand curve. This means that demand stays constant, even in times of recession. Thus, the tobacco industry manages to make profits because product margins improve, even if the overall product volume sold decreases.

smokes460x276
The tobacco industry is booming in developing nations.

The third reason the industry continues to thrive — burgeoning markets in the Asia and Africa.

The smoking rate has not only declined dramatically in the U.S., but through most of the Western World. This was historically where the tobacco industry made the bulk of its revenues. But, as John Oliver pointed out last week, the developing world is completely different, where there is not as much education about the dangers of smoking and frankly for a lot of people, living conditions are so poor, there’s a level of apathy toward the dangers of smoking even when they are known. U.S. tobacco companies simply drool over these huge markets in Brazil, Africa, India, Indonesia the Philippines. (They’d be going after China, too, but China won’t allow it).

It can seem a daunting task fighting an industry that continues to thrive despite losing so many regulatory, legal and PR battles. Killing the industry won’t happen tomorrow and won’t happen next year or in the next decade. It’s definitely a process of chipping away at it.

 

Australia, John Oliver, Uruguay, world tobacco use

John Oliver — Meet “Jeff the Diseased Lung” takedown of tobacco companies

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jeff the diseased lung

This is really brilliant. John Oliver on HBO dedicated an 18-minute segment to ripping into the tobacco companies for attacking small nations trying to implement anti-tobacco laws.

Oliver makes some good points, some I knew about, others I didn’t. We all know the tobacco industry is in full-fledged decline in the West because frankly people are tired of watching their loved ones die of COPD and lung cancer … and governments are tired of the billions of dollars of medical costs draining their economies. The smoking rate in the West is less than one-half of what it was 50 years ago.

Well, the tobacco industry has responded by aggressively marketing its products overseas, especially in Africa and Asia. These poorer nations as a rule don’t have strong regulations regarding tobacco and smoking rates are exceedingly high in some of these countries (According to Oliver, Indonesia’s smoking rate is 67 percent among men.).

Oliver’s takedown begins with Australia, which has been one of the most aggressive nations in the world in combating tobacco. Australia passed a law requiring plain packaging, which Philip Morris International, obviously a subsidiary of Philip Morris, took to court. The case went all the way to the Australian Supreme Court, which ruled in favour of the government.

PMI then filed a trademark lawsuit against Australia to the World Court, saying Australia’s refusal to allow tobacco branding violated a trade agreement with Hong Kong, where PMI is headquartered.

Oliver also brings up lawsuits filed by tobacco companies against tiny countries like Uruguay, Togo and the Solomon Islands for attempting to restrict tobacco branding.

jeff the diseased lung billboard
Actual Last Week with John Oliver “Jeff the Diseased Lung” billboard in Uruguay,

 

Oliver’s show, Last Week with John Oliver, then came up with a brilliant idea. Create a tobacco brand for these poor countries trying to limit tobacco branding. And they came up with Jeff the Diseased Lung.

Last Week with John Oliver then took out billboard ads in Uruguay and sent t-shirts to Togo with the Jeff the Diseased Lung logo, telling the tobacco companies, ‘it’s all yours. The brand is there, you can use it, our lawyers won’t sue you.”

Very subversive and very funny. (Hopefully YouTube doesn’t take this down after a week.)