Cigarette maker spends big to fight per-pack tax

Supporters of a proposed $1-per-pack tax on cigarettes argue lives and billions of dollars could be saved by the ballot measure. But they are being outspent by a cigarette company that has mobilized to fight the campaign.
Backers of the California Cancer Research Campaign briefed lawmakers and staff last week, unveiling research showing that the ballot measure, if passed, could cut state health spending and the burden of cigarette-related illness.

The measure could raise $855 million in its first full year, with about half the funding going to cancer research and the rest to campaigns to cut tobacco use and prevent illegal cigarette sales, according to the nonpartisan [PDF] Legislative Analyst's Office. Voters could get a chance to cast ballots on the measure [PDF] next year, or as soon as June if Gov. Jerry Brown succeeds in getting a special election set to extend some taxes.
University of California researchers predict the cigarette tax could lead to an 11 percent decline in the number of smokers in the state, studies show. Without the measure, the current smoking rate of 12.9 percent could rise by 9 percent by 2016, researchers say.
The measure might save the lives of 4,174 Californians between 2012 and 2016, researchers concluded. Health cost savings might range from $3.3 to $28.2 billion, they said.
Researchers warn that cuts in California smoking and lung cancer rates may begin to reverse if smoking prevention efforts don't see sustained support.
The findings add a dollars-and-cents argument in favor of the ballot measure that already has the support of sports icon and cancer survivor Lance Armstrong and former California Senate Pro Tem and cancer survivor Don Perata, who is co-chairing the ballot committee with Armstrong.
Working against the measure is a group called Taxpayers Against Out-of-Control Spending, which is almost solely funded by the Altria Group, which owns the Philip Morris cigarette company.
The group's website lists other supporters and says "we all believe cancer research is important." But the group criticizes the per-pack tax, citing concerns about funds being spent out of state and accountability to taxpayers.
David Sutton, a spokesman for Altria, wrote in an e-mail that "we oppose additional targeted taxes on tobacco" and funded the group to "evaluate our options regarding this measure."
During the first three months of this year, opponents outspent supporters by more than a 2-to-1 margin. Altria spent $1.2 million, far more than the supporters’ $424,000.
Cigarette-maker money went to pollsters, campaign consultants and a prominent political attorney.
Also working against the measure is a current raid on other funds derived from cigarette taxes. Motivated by the deep budget shortfall, Gov. Brown is dipping into $1 billion in Proposition 10 funds, which taxpayers approved in a 1998 ballot measure meant for early childhood education and health programs. The budget raid wipes out about half of county funds for such efforts.
Rhys Williams, a spokesman for the California Cancer Research Act campaign, said supporters “would oppose” any effort to move the funds to solve state budget crises.
“The ultimate goal of CCRA is to end smoking so at some point in the future we hope we don’t get any revenue from CCRA, because no one’s smoking anymore,” Williams said.
The legislative analyst raises another point that quashes one favorable financial argument: While some health costs may be saved in the short term, the state may pay more for long-term care if people live longer. The state analyst office did not account for the intangible benefits or boost in productivity related to Californians living longer, healthier lives.
California has among the lowest smoking rates in the U.S. at 12.9 percent, compared to the highest rates of 25 percent in Kentucky and West Virginia, according to 2009 Centers for Disease Control data. The added tax is expected to increase cigarette prices to about $6 to $7 per pack, depending on the brand and vendor.

Careless disposal of cigarette blamed for $3m Boston harbor fire

A worker who tossed a lit cigarette from a second-floor deck sparked a three-alarm fire that destroyed a Commercial Wharf office building perched on wooden pilings in Boston Harbor, the fire department said this afternoon. Damage was estimated at $3 million.

Five firefighters were injured fighting the blaze that required the use of the department’s fire boat and about a dozen rescue divers, who got into the harbor so they could direct fire hoses onto the burning wooden pilings underneath the building, said department spokesman Steve MacDonald.
“The employee was working late into the night and would go out onto the second floor balcony for a cigarette break,’’ MacDonald said, summarizing what the unidentified worker told fire investigators.

MacDonald said investigators reached the conclusion that cigarette disposal was to blame after studying the burn pattern of the property and eliminating all other possibilities, such as malfunctioning utility systems.

“The cause was careless disposal of the cigarette,’’ MacDonald said.

He said it was not clear if the fire was started by improper disposal of just one cigarette, or multiple cigarettes. However he said, a single, still-burning cigarette could easily be responsible for the fire and the building's destruction.

“The place is a total loss and the property owners are going to have to make some decisions about the building itself,’’ said MacDonald.

MacDonald said the first alarm was struck around 5:15 a.m. and the arriving companies immediately struck a second alarm. A third alarm quickly followed, he said. The five firefighters suffered minor injuries.

With the noise of smoke alarms still sounding in the background, attorney Steve Lyons described how he learned his office was destroyed, taking with it the files and mementos he had amassed over a 31-year legal career.

“I live nearby and this morning I woke up and looked out from my balcony and saw my office in flames,’’ Lyons said in a calm but sad voice. “So I came down here, unfortunately to find my office totally engulfed and all the offices around it in flames.’’

"What I found out is that everything appears to be a total loss, 31 years of work. But everybody is safe and no one was hurt. That’s what I found out," he said.

The main occupant of the building was the Sarrouf Corso law firm, according to MacDonald.

Lyons said his goal is to rebuild his professional life.

“My plan is to salvage what I can and to save what I can of my clients' records, and rebuild,’’ he said. “But unfortunately, it looks like it’s not going to be an easy task.’’

Cheaper cigarettes Lucky Strike and Pall Mall

British American Tobacco (BAT) announced today decision to lower price of cigarettes Lucky Strike and Pall Mall. New prices will take effect on Wednesday, April 13th 2011.

Lucky Strike entire portfolio will be cheaper 20 dinars, except Lucky Strike 100's which will be cheaper 10 dinars. The new price of Lucky Strike is 130 dinars, except Lucky Strike 100’s which will cost 140 dinars.

At the same time, the entire Pall Mall portfolio will be cheaper for 10 dinars and will be 110 dinars instead so far 120 dinars.

As stated in BAT statement, cheaoer portofolio is result of recent changes in business environment and inadequate excise structure to which the representatives of BAT had warned when it was past at the end of last year.

On the Call: Reynolds American CEO Delen

Reynolds American Inc., the second-biggest U.S. cigarette company, has aggressively promoted its Pall Mall brand in recent quarters as a longer-lasting, more affordable cigarette as smokers weather the weak economy and high unemployment.

The company says that half the smokers who try the brand continue using it.

Pall Mall sales are growing despite industrywide declines in the number of cigarettes sold as taxes, smoking bans, health concerns and social stigma all increase.

Reynolds sold 16 percent more Pall Mall cigarettes in the first quarter even as the Winston-Salem, N.C., company's overall volume fell 5.2 percent. Reynolds American said Pall Mall gained 2 points of U.S. retail market share to hold 8.5 percent in the quarter.

In a conference call with analysts regarding the company's first-quarter earnings, CEO Daniel Delen discussed Pall Mall.

QUESTION: The brand has experienced very good growth and the equity of the brand seems pretty resilient. How do you think about the price positioning of the brand and whether you can look forward to raising the profitability of the brand going forward?

RESPONSE: Pall Mall has had a great run more recently, but I would just remind everyone that Pall Mall was growing already even prior to this downturn over the last couple of years. ... I'm very, very pleased with the brand. It is contributing significantly to profitability. And over the last year and a bit, we've been able to actually increase profitability over and above the marketplace. We continue to look for opportunities like that to make sure that the growth isn't just a volume and market share growth.

Earnings Preview: Lorillard

Lorillard Inc., the nation's third-biggest cigarette maker, reports its first-quarter results before the stock market opens Tuesday.

WHAT TO WATCH FOR: Whether smokers bought more of Lorillard's top-selling Newport menthol brand and its Maverick discount brand.

While cigarette sales have declined industrywide in recent quarters in the face of tax increases, smoking bans, health concerns and social stigma, Lorillard, based in Greensboro, N.C., has sold more cigarettes in recent quarters. That compares with declines for the two bigger U.S. tobacco companies -- No. 1 Philip Morris USA, the maker of Marlboro and owned by Altria Group Inc., and No. 2 Reynolds American Inc., the maker of Pall Mall Blue and Camel.

The weak economy and high unemployment have caused some smokers to trade down to cheaper brands during the recession in a bid to save money. Lorillard's Maverick and Reynolds American Inc.'s Pall Mall brands have been among the beneficiaries.

In addition, the market for menthol cigarettes, which Lorillard dominates, is still growing.

Lorillard is battling to keep its roughly 35 percent share of the U.S. market. Newport saw its volumes increase 2.2 percent last quarter, but its top competitors have ramped up efforts to grab some of the menthol market.

Lorillard, the oldest continuously operating U.S. tobacco company, spun off from Loews Corp. in 2008.

It is the last of the country's top tobacco companies to report its first-quarter results. Altria said the number of cigarettes it sold fell 6.4 percent to 31.9 billion cigarettes, while Reynolds said its cigarette volumes fell 5.2 percent to 17.2 billion cigarettes during the quarter.

Analysts also will be looking at how the nonmenthol version of Newport released in November has performed.

WHY IT MATTERS: Continued strong performance by Maverick could mean smokers are still switching to cheaper brands to save money because they have less discretionary income, and that those who tried the brand during the recession are remaining loyal.

A rebound in overall cigarette volumes could signal consumers are adjusting to higher prices on cigarettes following federal and state tax hikes. Other companies are selling fewer cigarettes, but their revenue has risen with higher prices.

Pall Mall event celebrates Tennessee cultural arts and heritage

Art, music, food and history are all part of the Sgt. York Cultural Arts and Heritage Celebration, a free event May 7 at the Sgt. Alvin C. York State Historic Park.

Sponsored by the non-profit Sergeant York Patriotic Foundation and funded in part by an Arts Build Communities grant from the Tennessee Arts Commission, the event features craftsmen and artisans demonstrating skills utilized throughout the Wolf River Valley and Cumberland Plateau during Sgt. Alvin C. York’s lifetime.

Among the artists demonstrating are Mary Curren, who spins llama hair into wearable creations; Natali and Paul Devine, a husband and wife team who make colorful hand-dyed baskets using reeds and white oak; and Julie Styer, whose talents include wood burning and painting among others.

In addition to the arts, the celebration will offer World War I displays of artifacts, interpreters in period attire, a live, online genealogical research booth, book signings by local authors and tours of Sgt. York’s home, farm, mill, Bible School, nature trail and burial site.

Retailer fumes about new cigarette packaging laws

THE owner of the Cobbitty General Store has condemned the federal government's plan to implement plain packaging for all cigarettes.
Debbie Zarbalis said the new laws, to be implemented on January 1 next year, would slow down customer service times and make the job more confusing.

"Nearly every second or third person (we serve) buys cigarettes," Mrs Zarbalis said.

"Our cigarettes aren't on display but we get asked all the time if we sell them."

Mrs Zarbalis said there was the possibility her business's reputation for fast service could be affected by the amount of time it could take to serve cigarette customers once plain packaging is introduced.

"Our customers work long hours and they only get a short time for lunch," she said.

"If it takes a long time to serve we will need to employ more staff."

An employee at the Cobbitty General Store, Vicki Thick, said the new packaging would make it difficult to find the brand customers were after.

"None of us smoke so we don't know what cigarettes are 4mg and what are 12mg," Mrs Thick said.

"It is going to be more time consuming to sell cigarettes."

Federal health minister Nicola Roxon said the plain packaging was part of the government's attempt to reduce the toll smoking took on Australians.

"Plain packaging will help to reduce the number of people who start smoking, particularly young people, and it will save lives," Ms Roxon said.

"Research shows that branding and packaging design can mislead about the safety of tobacco, reduce the effectiveness of graphic health warnings and increase the appeal of tobacco to young people."

Ms Roxon said the federal government would not back down in the face of the campaign against the laws being run by the tobacco companies.

"I think this is just the beginning of a large and co-ordinated campaign by big tobacco," she said.

"But, we will fight back. We have won these fights in the past and we will win again."

Doctor Ross Mckay, from the Camden Medical Centre, said smoking had "a very deleterious effect on anyone who smokes".

"A lot of smokers enjoy it and will not quit until they make up their minds to do so," Dr Mckay said.