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February 20, 2014

House of Enablers – Does Anything Now Go For Tobacco Control in the UK?

Shane_MacGuillAnalyst Insight by Shane MacGuill - Tobacco Analyst

After a public debate focusing on the well rehearsed themes of individual liberty and enforceability, on Monday, the UK Parliament adopted amendments to the 2013 Children and Families Bill which outlaw smoking in cars with children, the proxy purchasing of tobacco products for children and which also provide a basis for the statutory introduction of plain packaging in the UK. The greatest heat was generated by the proposal to ban smoking in cars with children - touching as it did on the great libertarian themes of personal responsibility and private space – but in truth the passing of this measure is (to coin the phrase of the week) more symbolic than material and the real significance of the vote lies elsewhere.

The ban on smoking in cars with children does represent the first incursion of the British state into the private spaces of its citizens with regard to tobacco use but beyond jibes about nanny-statism there was little serious appetite on the part of libertarians, and much less (if at any at all) on the part of the tobacco industry to argue for the positive right of people to deliver their kids from the school-run reeking of cigarette smoke.

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February 10, 2014

CVS’s Decision to Stop Selling Tobacco Will Have Minimal Industry Impact

 

CVS Caremark, the second largest pharmacy chain in the US, recently announced it would stop selling tobacco products in October 2014. Shane MacGuill, Tobacco Industry Analyst at Euromonitor, states that outside of a symbolic victory for tobacco control groups, this move will have little impact the tobacco market. Pharmacies only make up about three and a half percent of tobacco sales in the US, and CVS itself was responsible for only two percent of total US tobacco sales in 2012.

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February 6, 2014

CVS Decision To Cease Tobacco Sales A Confirmation of Long Existing Trends

Shane_MacGuillAnalyst Insight by Shane McGuill - Tobacco Analyst

It’s the kind of disruption to the status quo which - rather than startle - makes you shrug and wonder how the status quo got away with it for so long. On the 5th February the US’s second-largest pharmacy, CVS Caremark announced that it was to stop selling tobacco products from October 2014. It is a development with resonance, as the availability of distinctly unhealthy products such as booze and fags in US drugstores conjured an America of Midnight Cowboy, where tobacco was ubiquitous, culturally vital. But those days are gone. The US tobacco market is in secular decline and CVS seem to have accepted that the shelves of a healthcare provider are a contrary place to find cigarettes.

In other global markets the concept of drugstores/pharmacies selling cigarettes seems utterly anomalous so CVS’s decision, if it is followed by other pharmacy chains (which is by no means certain) would simply bring the US into line with wider international tobacco distribution norms. In this respect, and given the US’s broader dwindling enthusiasm for tobacco, this announcement amounts to a confirmation of existing trends rather than an indication of unfolding ones.  

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January 30, 2014

Changes to the Tobacco Products Directive are a Draw for the Industry and Regulators

Shane_MacGuillWith Shane MacGuill - Tobacco Analyst

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The European Union Trilogue, which consists of the Parliament, Council and Commission, recently agreed on a  final proposed draft of the revised Tobacco Products Directive with several key changes. Notably, all packs will carry a 65% graphic health warning, all flavouring, including menthol,  will be banned, e-cigarettes will be regulated more as tobacco products than as medicines and there will be no ban on slim cigarettes. The text must be finally approved by the EU Parliament and Council before it becomes law. Shane MacGuill, Tobacco Research Analyst states that the law is set to be a draw between tobacco companies and regulators. Although the tobacco market in the EU can’t afford any more restrictions, the failure to ban slim cigarettes is good news for the industry.

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January 23, 2014

Has Philip Morris Learned From the Mistakes of Heat-not-Burn Tobacco's Past?

Shane_MacGuillAnalyst Insight by Shane MacGuill - Tobacco Analyst

Reflecting on last week’s announcement of Philip Morris International’s investment of US$680 million in a heat-not-burn (HnB) cigarette manufacturing plant in Bologna Italy, I was reminded of F. Ross Johnson’s robust, succinct (and possibly apocryphal) encapsulation of the perils for tobacco manufacturers in developing reduced harm cigarettes: “We've spent 350 million dollars and we come up with a turd with a tip? … We put enough technology in this project to send a cigarette to the moon and we come up with one that tastes like it took a dump?” 

In today’s money, the sum looks remarkably similar to the amount that PMI are proposing to spend and F. Ross Johnson was speaking as the CEO of RJR Nabisco, at the moment of realisation that he had ploughed a king’s ransom into a product, Premier which was destined for the scrapheap. But Premier was a unique, and uniquely flawed product, so surely one can assume that major companies have learnt from a farrago that is now infamous for its disregard for the principles of product development, all of which are acute in the case of HnB tobacco products – cost, legislative restrictions, marketability and consumer acceptance. Surely? 

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December 17, 2013

Global Briefing: Pricing in the Global Tobacco Industry - The Flagship Concept Under Threat?

GB-sample-slide-final-tobacco

 

Pricing strength remains of paramount importance to the tobacco industry. But things are changing and the prognosis is for less bullish price growth than previously, due to less uptrading and reduced product mix improvement.

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Letting the Mad Men Take Over the Asylum: How Advertising Concerns Might Influence the Regulation of E-Cigarettes

Shane_MacGuillAnalyst Insight by Shane MacGuill - Analyst, Tobacco

In September, I contributed to a BBC radio programme on the vexed topic of the advertising of e-cigarettes. It was a successful venture on the whole (they left in my vaguely amusing reference to Harold Wilson’s pipe but removed my whimsical questioning-out-loud of my qualification, as an Irishman, for the task of speaking about the nature of the British psyche). This was not the first media request we had received on the topic of e-cigarette advertising and following it I was left with a sense of the conundrum which it poses for those who seek the specific regulation of e-cigarettes.

Regulating Advertising versus Regulating Product

The concerns expressed about e-cigarette advertising, particularly on television are twofold: firstly, that it may target children and secondly that a portion of this advertising (and likely increasingly more) is being done by large tobacco manufacturers. Of course in a conventional market ecosystem, guidelines for the advertising of any particular product would flow logically from its overarching regulatory framework. But these concerns mean, as its seems to me, that there is a real possibility that preferences about how (and perhaps by whom) the products should be advertised will, if not dictate, certainly inform how they are regulated. For some, in the world of e-cigarettes, it is not that the medium is the message but that the author itself is.

Continue reading "Letting the Mad Men Take Over the Asylum: How Advertising Concerns Might Influence the Regulation of E-Cigarettes" »

December 11, 2013

Plain Packaging Back in the Spotlight in the UK

Shane_MacGuillAnalyst Insight by Shane MacGuill, Analyst - Tobacco, Euromonitor International

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The proposed plain packaging law in the UK, previously turned down, is now back in play. An academic review of plain packaging has begun, examining Australia’s success with the law. Shane MacGuill, Tobacco Industry Analyst at Euromonitor, expects a similar law to be passed in the UK before the next election in 2015. Now that plain packs are back on the agenda in the country, worldwide discussion is expected to follow which could spell bad news for tobacco companies.

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November 15, 2013

Lorillard Leads E-Cigarettes in the US but Potential Collapse Looms

Don2Analyst Insight by Don Headley - Contributing Analyst

Lorillard is dependent on menthol cigarette sales in the US market for its growth and its profits but apocalypse could be imminent in the shape of legislation extending the US flavour ban into menthol cigarettes. The company has acquired the leading US e-cigarette company in blu but sales of e-cigarettes, as yet, represent a very small percentage of cigarette sales. And, should menthol be banned in cigarettes, will menthol smokers give up, switch to non-menthol or take the illicit route?

According to Lorillard in its third quarter results, blu e-cigs, acquired in 2012,  accounted for 49% of the US e-cigarettes market in the third quarter compared with 44% over the 9 month period, with sales to end September 2013 of US$117 million. Meanwhile, the company’s cigarette volumes rose 3.5% in the third quarter due to Newport, second in the market to Marlboro, delivering 4.9% growth.  The company, which operates only in the US market (apart from some sales in Puerto Rico and other US Possessions) in cigarettes, has wider ambitions in e-cigs having acquired SkyCig in the UK in October 2013.

Continue reading "Lorillard Leads E-Cigarettes in the US but Potential Collapse Looms" »

October 15, 2013

EU Revises Tobacco Products Directive

Ash tray

The European Union passed several tobacco regulations on October 8, 2013 banning menthol cigarettes and the use of words such as “light” and “organic” to describe cigarettes and requiring larger warnings on cigarette packaging. Shane MacGuill, Tobacco Industry Analyst at Euromonitor, describes the regulations in full, explaining whether the decisions are a win or loss for the tobacco industry

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Recent Posts

House of Enablers – Does Anything Now Go For Tobacco Control in the UK?

CVS’s Decision to Stop Selling Tobacco Will Have Minimal Industry Impact

CVS Decision To Cease Tobacco Sales A Confirmation of Long Existing Trends

Changes to the Tobacco Products Directive are a Draw for the Industry and Regulators

Has Philip Morris Learned From the Mistakes of Heat-not-Burn Tobacco's Past?

Global Briefing: Pricing in the Global Tobacco Industry - The Flagship Concept Under Threat?

Letting the Mad Men Take Over the Asylum: How Advertising Concerns Might Influence the Regulation of E-Cigarettes

Plain Packaging Back in the Spotlight in the UK

Lorillard Leads E-Cigarettes in the US but Potential Collapse Looms

EU Revises Tobacco Products Directive