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March, 2007

U.S. Tobacco Cooperative

Tobacco Asia Expo 2007
Finding a Niche in Asia’s Darkening Markets

By Heneage Mitchell

Despite mounting obstacles leading up to its inaugural exhibition, the first Tobacco Asia Expo achieved most of its aims and established itself as Asia’s most focused tobacco products industry show.

When it was first suggested some years ago that Tobacco Asia hold its own tobacco exhibition in Asia, the first order of business was to define what type of show the industry needed.

“We decided that since there already were tobacco machinery and supply shows in Asia — too many, in fact — that we would open the show up also to the tobacco products and accessories segment, and promote the show also to their customers — wholesalers, retailers, distributors, and others — something that had never been done before,” said Glenn A. John, publisher of Tobacco Asia, a sister publication of Tobacco International, both published by Lockwood Publications.

The second order of business was finding a suitable location to hold the show that, if not actually tobacco-friendly, at least offered a degree of tolerance to a private exhibition aimed only at industry professionals.

Hong Kong stood out as a prime candidate. It had, after all, hosted tobacco industry shows before, it is renowned as a leading business center and a regional hub for both mainland China and Southeast Asia, and the brand-new exhibition facilities at AsiaWorld-Expo, located adjacent to the airport, were surely an ideal location for overseas business people, convenient and user-friendly.

Mitigating factor
A mitigating factor arose with the discovery that Hong Kong’s legislature had been mulling further tobacco control legislation for quite some time (including a public smoking ban). However, not one of the dozens surveyed in the industry believed that the laws would be enacted anytime before the Jan. 17-19 time frame of Tobacco Asia Expo.

The die was cast, the dates set, the venue booked, and the contract with AsiaWorld-Expo, heretofore a smoke-free facility, included a first-ever clause in the Tobacco Asia Expo contract specifically allowing smoking at the show.

The response from the industry to the choice of Hong Kong as a venue was generally positive: booth sales were relatively brisk, despite competition from other regional and European exhibitions, and the show looked set for a smooth inauguration.

It came as a big surprise, therefore, on Oct. 31, 2006, when Hong Kong’s legislature surprisingly passed its new tobacco act, and set it to go into effect on Jan 1, 2007, only a few weeks before the show. Although to those on the street, the new law is generally regarded as only a public smoking ban, in actuality, the new law, 60 pages in length, tightened up just about everything to do with tobacco advertising, display, public smoking, labeling, etc.

The show’s organizers, upon learning of this, immediately contacted the exhibition hall’s management to clarify that the smoking-permitted clause in the contract remained in force, given that this was a private exhibition.

“The hall’s response, at least at first, was to shift our case to the legal department,” said John. This reaction was less than encouraging, and set the tone for the next few months.”

Tobacco Asia Expo contracted with a team of highly regarded lawyers to research the legal implications of the new legislation and to assess how these might affect the show.

There followed an expensive process that at times seemed to point variously to canceling, postponing, or moving the show. One thing was clear: Smoking within the hall itself was not going to be allowed, as this would be the topic on everyone’s mind in Hong Kong in early January, even though legal opinion suggested that under the circumstances a court of law might grant permission for smoking at the show given that the contract was signed before the legislation was passed, among other considerations. However, this would clearly have taken months, if not years, to achieve, and was therefore not a viable option.

Of greater concern were the questions of tobacco “display,” “advertising,” and “printed matter.” If the new legislation could apply the smoking ban to the private exhibition, would it also apply to all these elements too? Again, it took a while before a legal consensus could be reached, and behind the scenes fingernails were being chewed to the quick by the show organizers.

In the end, the advice from the lawyers, which rested upon an almost threadbare interpretation of the law, seemed to give the show the all-clear, depending on whose interpretation of the world “public” was used. Worryingly, the Tobacco Control Board’s “public” might apply to any exhibition held in Hong Kong, and they have the power to make summary judgments.

Meanwhile, the Hong Kong media had learned of the show, and Tobacco Asia’s office in Bangkok was besieged with phone calls and e-mails from various Hong Kong journalists seeking an angle on the smoking ban vs. the smoking show to be held.

“While the jangling phones of the press calling is sweet music to any organizer’s ears, we had to take the painful approach of saying ‘no comment’ to all journalists, pleading with them not to publish anything at all about the show, or else the anti-tobacco authorities would think we were trying to promote cigarettes to the general public or something,” said John.

Another fly in the ointment: China’s State Tobacco Monopoly Authority (STMA) suddenly announced in early January that a mandatory meeting for all top tobacco executives in the country would be held. The dates were Jan. 16-19.

“Of course, it wasn’t done on purpose — was it? — but forgive me for being paranoid because after Jan. 1, there were quite a few complications,” said John. Top executives from Wuhan Tobacco Group, Hongta Tobacco, and Chuanyu Tobacco, all exhibiting independently for the first time outside mainland China, had to cancel plans to join their colleagues at their booths to attend the meeting, as did many other visitors from mainland China.

Pressing ahead
Although it was the organizers’ interpretation that Hong Kong’s laws on display, advertising, and printed matter were not being contravened, it was equally clear that the Tobacco Control Board could make a summary judgment otherwise, and while a lengthy court case might prove them wrong, it was an impossible scenario given the time frame.

As it was clearly too late to postpone or cancel the event, it was decided to press ahead. A covered smoking section was established just outside the hall, which proved to be a highly popular area for visitors and exhibitors alike. The welcome reception of Jan. 17 was moved adjacent to this area so participants could smoke.

Local media that arrived at the show were prevented from entering the venue to ensure that negative reporting or exposure to the public was kept to a minimum. In fact, the few stories that did appear, especially in the South China Morning Post, Hong Kong’s largest daily newspaper, which was picked up worldwide in newspapers everywhere, were informative rather than accusatory, indicating that the approach adopted by the show’s management in dealing with their inquiries was the right one. The Tobacco Control Board didn’t make an appearance, and ultimately there were no untoward incidents.

First outing
With more than 50 exhibitors, Tobacco Asia Expo’s first outing proved that it is certainly an event the industry is prepared to support, and there is every reason to expect that the event will grow, with more exhibitors and visitors supporting it. Tobacco Asia Expo featured the most tobacco products exhibited at any show ever held in Asia outside mainland China thus far.

While there were some comments that the number of visitors was perhaps fewer than hoped for or expected, there was equal consensus that the quality of visitors was exceptional from some of those same people.

When asked early on the first afternoon of the show how it was going so far, Roger Penn of Mane, the Paris-based flavor and fragrance manufacturer, remarked that he had met more than 20 qualified visitors, many of them new prospects, before noon. This was the experience of most of the exhibitors, who also commented on the diversity of origins of the visitors.

Tobacco Asia Expo attracted tobacco industry professionals from no less than 50 countries, from as far away as South America, Africa, and Europe. There was even a delegation from North Korea.

Tobacco product manufacturers found satisfactory numbers of distributors and buyers visiting, and supply-side exhibitors were not short of manufacturers to present with manufacturing and distribution solutions.

As with any newly introduced event, there were some hitches — most of them internal as described above — but the overall consensus was that Tobacco Asia Expo was a satisfactory event, and for some exhibitors it achieved much more than they were expecting.

Product launches
Several exhibitors chose Tobacco Asia Expo as the venue to launch new products.

Among these was Bobst, which presented its Lemanic Delta gravure press for manufacturers that always wanted a Bobst Lemanic Riviera but have limited production volume.

German Tobacco Group took advantage of Tobacco Asia Expo to launch its new S.A.L.E. Golden California Blend cigarettes, and U.S. company ETOBACCO LLC introduced its patented tobacco products infused with special form analogs of vitamin E, which essentially reduces irritation from tobacco as smoked (cigarettes and cigars) or mouthed (wet snuff). Interestingly, for Asia, patents have been granted by China, Indonesia, Singapore, South Korea, Australia, and Eurasia, and others are pending in other Asian countries.

Cleary, Tobacco Asia Expo was perceived by these companies as an ideal springboard from which to launch new products, particularly those aimed at the Asia market, and, as Joe Russo, inventor of E cigarettes, said, the show provided surpassed all his expectations.

“We met many interesting and interested parties here at the show, and we were very happy with the response generated,” said Russo. “This was our first venture outside of the United States, and participating in Tobacco Asia Expo has opened a world of opportunity for us.”

Where to next?
So what does the future hold for Tobacco Asia Expo? Where and when will the event next be held?

The answers to these questions are not being revealed at this stage as the organizers, having been sorely tried over their experience in Hong Kong, are ensuring that whatever venue is chosen for the next Tobacco Asia Expo will not be introducing any anti-tobacco legislation that might interfere with the smooth operation of then show.

“Of course, we are looking for a venue that will allow smoking in the booths,” said John. “Clearly our experience in Hong Kong has taught us that one can never do enough due diligence when it comes to arranging a tobacco-related event. Equally clearly, the tobacco industry, faced with ever-darkening markets and fewer and fewer outlets to promote and share resources and products, is desperate for venues to present its products and services to interested and supportive parties. Where better than a dedicated tobacco industry show to meet distributors, suppliers and vendors, to learn more about trends and technological advancements and to discover new export and production opportunities than at a focused, regional trade show? We believe we have identified an ideal location for our next event, but we are not announcing it until and unless we are convinced that no subsequent legislation or anti-tobacco policies will be introduced between the time we sign a contract with an exhibition hall and the actual event takes place.”

So watch our web site at www.tobaccoasiaexpo.com and stay tuned for further updates on Tobacco Asia Expo, which, despite some unexpected and ultimately minor challenges, is set to grow into the leading tobacco event in Asia.



Tobacco International - March, 2007

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