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May, 2009
SMOKE Magazine - Cigars, Pipes, and life's other desires

Russia may lay claim to ownership of Bulgartabac
Sofia - The Southeast European Times is reporting that Russia has laid plans to “take back” a number of companies abroad that were once the property of the former Soviet Union, including Bulgarian cigarette maker Bulgartabac. The story quoted Vladimir Kozhin, head of Russia's Presidential Property Management Department.

Bulgartabac is a Bulgarian tobacco holding company and one of the leading tobacco products producers in Central and Eastern Europe, as well as a major European cigarette producer. Established in 1947 and based in Sofia, it includes 22 joint-stock subsidiary companies in the tobacco-growing regions of the country.

Bulgartabac produces more than 50 cigarette brands and subbrands in its modernizsd factories in Sofia, Plovdiv, Blagoevgrad and Stara Zagora, using both domestic and imported tobacco. Among the company's brands are Victory, Femina, Prestige, Slims, Bulgartabac, MM, Melnik, Seven Hills, Global, Bridge, Tresor, BT, Charlie, Nevada, Orient Express and Country.

"We are investigating … and if we find out that the company was once ours, but in a not very legal way has come into foreign hands, we will launch a procedure for its return," Kozhin said.

Russia has repeatedly raised the question of Bulgartabac's ownership. The Soviet Union acquired it as reparations after World War II.

Japan Tobacco takes a hit after speculation of smoking ban
Tokyo - Japan Tobacco Inc., the world's third-largest publicly traded cigarette maker, took a huge hit in Tokyo trading after the nation's health ministry said it was considering public smoking bans.

The maker of Camel and Mild Seven cigarettes, which is 50% government owned, fell as much as 3.8% to 235,700 yen, as of the end of March. The hit happened after Japan's health ministry announced it was considering smoking bans in designated public areas. Public broadcaster NHK earlier reported the health ministry may ban smoking in hospitals, schools and government offices.

"Most public facilities in Japan, like hospitals, public transport and schools, have their own smoking bans already so a government decision won't make much difference," Tokushi Yamasaki, a Tokyo-based analyst at Daiwa Institute of Research, said. "Still, any moves by the government to increase restrictions on smoking are negative for Japan Tobacco."

The ministry will advise local governments where the bans should apply by May at the earliest, Takahashi said. Tokyo-based Japan Tobacco was invited by the health ministry to discuss measures to reduce second-hand smoke in November, spokesman Ryohei Sugata said.

The percentage of Japanese men who smoke has fallen by about half during the past 40 years to 40% because of an increase in health consciousness. In 2002, Tokyo's Chiyoda ward became the nation's first local government to introduce a ban on smoking in public areas covering about one-third of the ward.

In December, the government abandoned a plan to raise tobacco taxes after opposition from some lawmakers and a campaign by Japan Tobacco, which argued it would destroy the nation's tobacco industry.

United Kingdom
BAT sees some customers trading down
London - British American Tobacco, the world’s second-biggest cigarette maker, admitted this morning that it has been hit by some customers downtrading to cheaper brands according to a recent report from the London Times.

The company, whose brands include Dunhill, Kent, Lucky Strike, and Pall Mall cigarettes, said general trading conditions had become “tougher” during the first three months - with signs that in some markets, particularly in central and eastern Europe, consumers were downtrading to illicit tobacco. It said this was as a result of excise increases.

BAT sold 27.1 bn cigarettes in Eastern Europe during the first three months of 2009 - down from 29.1 bn in the same period last year. Despite this, Paul Adams, chief executive, insisted BAT had made a good start to the year, highlighting an average 7% increase in sales volumes of the London company’s top four ‘drive’ brands. Pall Mall was the top performer, achieving an 11% rise in sales volumes, while Dunhill rose by 8%.

United States
Camel Dip to be test marketed
Winston-Salem - Reynolds American Inc.'s bid to make Camel a comprehensive tobacco brand has placed the manufacturer between the cheek and gum of users. The company will launch Camel Dip, a premium moist smokeless product, in test markets in Colorado and Florida beginning in mid-June.

Camel Dip will be distributed through Reynolds' Conwood Co. subsidiary, making it the first time that the manufacturer has marketed a Camel product outside R.J. Reynolds Tobacco Co.

Camel Dip, which is expected to sell at retail for $4.50 to $5 a tin, will compete with Conwood's Kodiak and Philip Morris USA's Copenhagen and Skoal brands. It will make its debut in two styles: Dark Milled, a traditional, fine-cut product, and Wintergreen Wide Cut.

Dip is the latest smokeless spin-off for Camel, which includes a snus product in national distribution and three dissolvable smokeless products in test markets. It also represents another potential major rival in the increasingly competitive moist smokeless category.

Skoal, Copenhagen, and Grizzly all have between 22% and 24% US market share. Reynolds is staking its future on smokeless tobacco products, investing resources into innovation and pushing hard for language creating a niche for tobacco products with potential reduced health risk in any potential federal regulation of the industry. Smoking bans and health concerns have led to declines in US cigarette sales of between 3% and 4% a year. By comparison, US smokeless-tobacco sales are growing by about 4.5% a year.

PM USA sues retailer for selling counterfeit cigarettes
New York - Philip Morris USA filed a lawsuit against New York State-based Tammy's Smoke Shop for selling counterfeit versions of the company's Marlboro brand cigarettes. The lawsuit is aimed at stopping the sale of counterfeit cigarettes and the unauthorized use of PM USA's trademarks. As the economy turns downward and taxes are continually raised, many US smokers are trading down to cheaper brands or being fooled by cheaper brand-name fakes.
In the April Issue of TI, the profile of BAT suggested that BAT had acquired Skandinavisk Tobakskompagni A/S (ST) with all its cigarette, snus, and RYO interests. While, ST in July 2008 did sell the subsidiaries House of Prince, J.L. Tiedemanns and Fiedler & Lundgren to BAT (meaning all the cigarette activities and certain RYO and snus activities), the mother company itself, Skandinavisk Tobakskompagni (since then changed name to Scandinavian Tobacco Group (www.st-group.com) is very much still existing on its own as the world’s largest player in the area of pipe tobacco as well as Europe’s largest (and the world’s third largest ) in regards to cigars. We regret the error.

Tobacco International - May, 2009
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