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March, 2009

KBH&C sets up Joint Venture with Ethnic Tobacco India Ltd.
Guntur - On February 8th, 2009, KBH&C formed a joint venture with Ethnic Tobacco India Limited and constituted the company “KBH&C Ethnic Tobacco India Private Limited.” In this joint venture, Ethnic holds 70% and KBH&C 30%. The latter will be responsible for marketing and exporting all tobaccos from India whereas Ethnic is responsible in supplying the green tobaccos. Both companies already excel in these fields and this union will bring a valuable option for the cigarette manufacturers around the world.

To attain the export target and to meet the quality standards required by its customers around the world, Ethnic will build a factory on an existing area of 94,000 square meters with a new GLT with a capacity of packing 36 mn kgs per year schedule to be operational towards 2010. The commercial operations have already initiated with the varieties Traditional and NLS.

China's tobacco industry grew steadily in 2008
Beijing - The growth of China’s tobacco industry had a trend of steady growth during the course of 2008, characterized by increases in marketing, production, maintenance of inventories, structural improvement of products, stable growth of efficiency, fine market performance of key cigarette brands, and obvious strengthening of overall competitiveness

In 2008, a total of 2,205.9 bn cigarettes were produced, (44.118 mn cases), an increase of 80.2 bn cigarettes (1.604 mn cases), rounding out to 3.8%, over the 2,125.7 bn cigarettes (42.514 mn cases) in 2007.

A total of 2,180.5 bn cigarettes (43.61 mn cases) were sold during 2008, an increase of 56.15 bn cigarettes (1.123 mn cases), or 2.6%, over the 2,124.35 bn cigarettes (42.487 mn cases) in 2007.

Average monthly sales reached 181.7 bn cigarettes (3.634 mn cases), and the proportions of grades One, Two, and Three increased 1.3%, 3.5%, and 1.8% respectively, while grades Three and Four decreased 1.8% and 4.8%.

590.15 bn low-grade cigarettes (11.803 mn cases) were sold during 2008, increasing 9.65 bn cigarettes (193,000 cases) over the sales of 2007.

2,119.61 bn (42.392 mn cases) of the cigarettes sold during 2008 were brands that made up the Top 100 Chinese cigarette brands, an increase of 4.1% over 2007, making up 97.2% of nationwide sales.

The Top 10 brands reached sales of 863.8 bn cigarettes (17.276 mn cases), making up 39.6% of the total sales nationwide.

The total number of cigarette brands that are produced in China decreased during 2008 from 175 to 155, and the average single-brand output was 14.25 bn cigarettes (285,000 cases), up 2.1 bn cigarettes (42,000 cases), or 17.3 percent, over the level 12.15 bn cigarettes (243,000 cases) in 2007.

Filtrona launches new Chinese language website
Beijing - Filtrona Filter Products, one of the world’s leading suppliers of specialist filters to the tobacco industry, has launched a new Chinese language website at www.filtronafilters.cn.

This new website will offer customers assistance in designing cigarette concepts and filter selection to help them meet the challenges they face, such as tar reduction and selective filtration of elements including phenols, carbon monoxide, hydrogen cyanide, and croton aldehyde. In addition, the new Filtrona website will also provide customers with a forum for the exchange of technical information with representatives from Filtrona.

In regards to the new site, Paul Morris, Filtrona’s Sales Director for China, said “By expanding the language base of our website we can keep our Chinese speaking colleagues in the tobacco industry up to date with current developments within Filtrona Filter Products. This, combined with the possibilities for technical exchange that the website provides, means we can build even stronger relationships with our customers.”

In addition to news about upcoming and current developments at Filtrona, the website aims to provide customers with detailed and comprehensive information about the 12 current ranges of cigarette filters at Filtrona, including all 46 filter types as well as shaped filters designed to minimize the risk of brand counterfeiting.

PT Sreekumar, Managing Director, said, “Filtrona’s business has been built upon four cornerstones: quality, partnership, innovation and knowledge and it is Filtrona’s ability to offer all of the benefits associated with these cornerstones that sets them apart from the rest of the market. The new website is a great example of these benefits in practice, and particularly demonstrates our commitment to working in partnership with our customers and the importance we place on sharing the kind of knowledge that can provide them with a market advantage.”

The website will be regularly updated with news and information about the latest developments, research papers, and services. Information about the company’s latest developments is also available via the newsletter which can be subscribed to on the website.

German Tobacco Group seeks strategic investors and partners
Frankfurt - German Tobacco Group, a three year old tobacco holding company seeks strategic investors and partners for completion of its first two acquisitions of German cigarette manufactures and the international launch of its S.A.L.E. brand. Successfully introduced to Austrian and German markets in 2007, S.A.L.E. focuses on the dynamically growing “International Value Brand” segment in Europe. Germany, Europe's key tobacco market still allows national billboard advertising and just recently loosened smoking restrictions in bars and restaurants. With a market volume of 95 bn cigarettes, 20 mn adult smokers, increased consumer down-trading from premium to value brands and a predictable tobacco taxation policy the third largest economy in the world is still a paradise for tobacco.

German Tobacco has established retail relationships with all key retailers who benefit from S.A.L.E.'s highest industry margin. The brand competes directly with former premium brands such as JPS, PallMall, L&M, and Winston now downgraded by their respective brand owners to accommodate smoker's growing price sensitivity. GTG describes itself as an innovative bottom-up, low-cost/high-profit microplayer in a changing industry where cost, technology, speed and sensitive response to retailer's and consumer's needs are becoming ever so important. GTG plans to grow its business and international footprint through opportunistic acquisitions and by aligning with like-minded tobacco companies and investors.

Tobacco industry still strong despite bad quarter
Tokyo - Though the anti-smoking movement has made strong moves in Japan over the course of 2008, the industry is still strong, with over 50% of Japanese men and 15% of Japanese women still smoking.

Despite this, Japan Tobacco Co.’s reported profits were down 30% last quarter, even after its purchase of the UK tobacco company Gallaher Group PLC.

With approximately 30 mn smokers, Japan remains Asia’s largest tobacco market with an estimated quarter of the population smoking every day.

Hiroshi Kimura, President and Chief Executive at Japan Tobacco, said, "even in the midst of this recession and the foreign-exchange fluctuations, our international tobacco business continues to be a growth engine of the JT Group."

United States
Madern Group opens new facility
Pennsauken - The Madern Group, headquartered in Vlaardingen, The Netherlands, recently announced the start up of a new facility that will focus primarily on the production of folding rotary carton tooling.

This new plant will operate under the name Xynatech LLC and will produce dual knife pressure and crush cutting tools in plate and solid rotary etched configurations. Located nearby the Evers International site, another Madern Group company, the new plant has been designed with the latest environmental protection protocols in mind.

Rotary etching, the newest manufacturing process for rotary tooling, was developed by Xynatech and offers shorter lead times as compared with conventional machining.

“This investment further confirms Madern’s commitment to offering the best solution for any carton converting application,” said a recent Madern Group company statement. “The Madern Group product range includes fully and partially segmented tools for ultra long life, solid tools either conventionally machined or rotary etched for long runs and etched plates when long die life is not required. Evers, long a leader in rotary dies for liquid packaging can machine the blanks for rotary etched tools as well as gears and bearing blocks. This concentration of rotary tooling technology is unmatched in the industry and will provide great synergy.”

Tobacco International - March, 2009

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