Tobacco.org

• Roll-ups burn a hole in cigarette sales  

Roll-ups are making a comeback, as recession-hit smokers switch from expensive cigarettes to cheaper hand-rolled tobacco.

Customs officials cleared 159,605kg of rolling tobacco for distribution in the first nine months of this year, a 38% increase on 2008. They attributed the surge to a rise in the use of roll-your-own tobacco by smokers striving to cut costs.

A survey published last week found that Irish people are smoking more than ever, with one third of the population still lighting up, the highest rate in 11 years.

Despite hikes in tobacco tax, the ban on smoking in the workplace and a law against shops displaying cigarettes for sale, the number of smokers has risen since 2007, when 29% of the population smoked, the EU’s Help campaign found.

A 25g pack of rolling tobacco costs €8.74 but, according to Vincent Jennings, chief executive of the Convenience Stores and Newsagents Association, a thrifty smoker could roll as many as 150 cigarettes from it. Twenty cigarettes cost €8.45, though a preliminary ruling from the European Court of Justice last week found that Ireland’s policy of setting a minimum price for tobacco products distorts competition.

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Rolling Papers vs. Court Documents 

BBK Tobacco & Foods, doing business as HBI International, has filed a federal lawsuit seeking to overturn the U.S. Food & Drug Administration's ban on flavored cigarette rolling papers that are sold in separate packages, according to the most recent issue of NATO E-News from the National Association of Tobacco Outlets.

"HBI is only seeking to protect its brands, namely Juicy Jays and Skunk," a company representative told NATO.

In late September, Moorpark, Calif.-based Kretek International Inc., importer and distributor of Djarum clove cigars, filed a request for declaratory judgment against the FDA in federal district court in Washington, D.C. The Kretek filing, the company said, "comes after the FDA signaled its intention to exceed its legislative authority to regulate flavored cigarettes in order to ban other tobacco products as well." (Click here for previous CSP Daily News coverage.)

In its lawsuit, BBK Tobacco & Foods argued that while the new FDA law bans flavored cigarettes and the components parts of a flavored cigarette, such as the tobacco, paper and filter, the law does not mention that the ban extends to flavored cigarette rolling papers packaged separately.

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• Lawyer denies shop makes cigarettes 

The state says a Brookline business that sells loose tobacco to customers who roll their own cigarettes on machines inside the shop is a cigarette manufacturer and is obligated to pay into a tobacco settlement fund.

But an attorney for North of the Border Tobacco, which operates under the name Tobacco Haven, told a Merrimack County Superior Court judge Tuesday that his client isn't manufacturing cigarettes and should not be obligated to pay.

Judge Larry Smukler heard arguments in the case and will issue a ruling in the next 30 to 60 days. In August, the New Hampshire attorney general's office cited the small business for possible violation of state laws, saying a violation might put the state at risk of losing millions of dollars in tobacco settlement funds.

Assistant Attorney General David Rienzo, who works for the consumer protection and antitrust bureau, said the case was the first in the state and possibly the country.

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• Roll-up cigarettes’ popularity on the rise with women, report reveals 

More than one in four adult smokers now use pouch tobacco and roll-up cigarettes, with a particularly sharp rise in the proportion of women users, research shows.

Analysis of smoking habits in England suggests a cultural shift in the use of tobacco, with one in five white-collar professionals who smoke now using roll-ups rather than conventional cigarettes.

While roll-ups may once have been the habit of the working man and the spit and sawdust pub, their use among women has risen sharply in recent years.

In 1990 just one in 50 female smokers used hand-rolled tobacco, compared with one in five in 2007.

The trend, revealed in Statistics on Smoking in England 2009, was described as partly a cultural shift -- with roll-up smoking less stigmatised and more "hip" among the middle-classes -- and partly economic, with rolling tobacco significantly cheaper as it has not been subject to severe tax rises placed on other forms of smoking.

Some famous smokers of roll-ups include the actresses Kate Winslet, Emma Thompson and Helena Bonham-Carter.

The report, compiled by the NHS Information Centre and published yesterday, also shows that the number of people aged 35 and over admitted to hospital for smoking-related diseases has risen by a fifth since 1997, from 1.2 million to 1.4 million.

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More tax money going up in smoke  

Specialty tobacco retailers in Hawai'i are bracing for the ignition of a new state law on Wednesday that dramatically increases taxes on cigars, pipe tobacco and smokeless tobacco.

The tax hike, passed by the Legislature in May, will result in state taxes accounting for half or more than half the wholesale price of such tobacco products, with consumers paying for the hike in retail purchases.

The move comes on the heals of a federal tobacco tax increase that took effect in April, and was intended to increase revenue to the state in an effort to help balance its budget.

But the higher taxes are also expected to hurt sales for retailers already suffering in the bad economy by curbing smoking for some consumers or leading them to buy tobacco elsewhere.

"It's going to kill us," said Diane Chow, manager of Kipuka Smoke Shop in Hilo.

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Smoking tax burns hole in wallets 

Governor Jodi Rell didn't sign the budget that passed in the General Assembly last week. But, it still became law today. And part of that budget increased taxes on cigarettes.

Democrats and Republicans alike jumped on the cigarette tax as a way to balance the budget in a cash-strapped year. The habit will bring in $500,000 to our state coffers.

But it will cost one-billion dollars in health-related costs. So some say we're being penny-wise and pound-foolish. And smokers, well, they're just fed-up with being a target.

"It's gonna cost me a lot of money, I won't pay it," said Leah Charney of Milford.

Charney is a woman on a mission.

She's buying tobacco, rolling papers and a machine. She plans to roll her own from here on out; an act of defiance against yet another tax increase on cigarettes.

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Roll-your-own tobacco sales rocket 

SALES of roll-your-own tobacco have rocketed so far this year, with an increase of around 60 per cent seen across Spain.

This is partly thought to be due to people's perception that loose tobacco is less harmful than cigarettes, but mainly because it is cheaper.

Others say roll-your-own cigarettes are less habit-forming, since people are less likely to smoke them if they have to spend time making them up rather than simply reaching automatically for a cigarette from a packet.

Although a pouch of tobacco, together with the rolling papers and filters required, can cost 4.50 euros, it contains enough to make 60 cigarettes, compared to a packet of 20 ready-made cigarettes at an average of three euros. . . .

Roll-your-own tobacco now represents 15 per cent of all sales, with the rest being cigarettes in packets.

This trend is more popular amongst the young, and mainly men, although a significant number of female smokers have now switched to tobacco and rolling papers.

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• Much at stake in roll-your-own suit 

Customers from near and far line up daily at the Route 13 smoke shop with the roll-your-own cigarette machines that can spit out 200 cigarettes in 10 minutes. They buy by the carton, for less than half the price of many name brands.

But state officials say the machines are making an end run around the landmark 1998 settlement with major tobacco companies, which were required to pay yearly contributions to the states. In a lawsuit filed last week, New Hampshire's attorney general contends Tobacco Haven's cigarette machines violate terms of the agreement and could jeopardize the $50 million in settlement money New Hampshire receives each year.

"At $50 million a year, we have a rather inescapable incentive here,'' said David Rienzo, an assistant attorney general.

Rienzo, along with smoking industry specialists and antismoking groups, say that higher cigarette taxes have spurred a burgeoning roll-your-own market. But until now, it has been largely confined to individuals who buy small, hand-operated rolling machines for personal use. The machines at Tobacco Haven, by contrast, are more akin to high-powered vending machines that spit out cartons of cigarettes in a matter of minutes. Such machines have cropped up across the country, and in New Hampshire prosecutors worried that they could emerge as powerful competitors to commercial cigarettes.

New Hampshire's suit, believed to be the first of its kind, argues that Tobacco Haven is essentially manufacturing cigarettes and therefore should be making contributions to the state. Tobacco Haven counters that they are strictly a retail outfit and that customers are paying to use the machines for personal use.

State officials say that by allowing a shop to make cigarettes without contributing some proceeds, they risk lawsuits from competing manufacturers angry over unequal treatment.

"At face value, this tobacco shop is in the business of making cigarettes,'' Rienzo said. "It's roughly a pack a minute, so it's not an insignificant number of cigarettes, and it really could cause us some heartburn.''

Under state law, Tobacco Haven would have to contribute about 2 cents for each cigarette sold to a set-aside fund, he said.

This week, the state ordered the shop to shut down the machines, but the two machines rolled on as usual on a recent morning, with a lengthy line of smokers from New Hampshire, and Massachusetts. . . .

Sweda had never heard of a similar lawsuit, but Burd said there are plenty of other shops that have machines like Tobacco Haven's.

Doug Kennedy, editor of Roll Your Own Magazine, which caters to custom-made cigarette smokers, said the publication has "aggressively recommended shops to walk away from making cigarettes for their customers.''

"You make a cigarette for someone, then sell it to them, you are a tobacco manufacturer,'' he said.

Kevin O'Flaherty, director of advocacy in the Northeast for the Campaign for Tobacco-Free Kids, said many states are fueling the growth of roll-your-own cigarettes by taxing loose tobacco at a lower rate than store-bought cigarettes.

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Tobacco shop will dispute claim that it's manufacturing 

Tobacco Haven isn't a cigarette manufacturer despite claims by the state, says the attorney for the small tobacco shop in Brookline facing an unusual legal action against its use of roll-your-own cigarette machines.

Acting Attorney General Orville "Bud" Fitch filed a lawsuit Tuesday against the tobacco shop in Merrimack County Superior Court, alleging that the operation sidesteps the federal settlement between tobacco manufacturers and the state.

The company has a pair of 4-foot tall "roll your own" machines in its store. Customers buy one of three types of loose tobacco and paper tubes with filters, then use the machines to turn them into cigarettes at about half the cost of name-brand cigarettes.

Jeffrey Burd, of Cincinnati, one of several lawyers who will represent Tobacco Haven in court, said this business doesn't make Tobacco Haven a manufacturer."Tobacco Haven rents its machine to customers. They can buy or rent," said Burd. He contrasted the shop's operation with a hypothetical cigarette manufacturer in North Carolina that can produce several hundred cigarettes in seconds, while it takes minutes to roll the same number at a tobacco shop.

Burd will make his case in Merrimack County Superior Court at 11 a.m. Oct. 13, when the state brings its case against the tobacco shop.

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• DIY cigarettes? Some smokers start growing tobacco  

In urban lots and on rural acres, smokers and smokeless tobacco users are planting Virginia Gold, Goose Creek Red, Yellow Twist Bud and dozens of other tobacco varieties.

Although most people still buy from big tobacco, the movement took off in April when the tax on cigarettes went up 62 cents to $1.01 a pack. Large tax increases were also imposed on other tobacco products, and tobacco companies upped prices even more to compensate for lost sales.

Some seed suppliers have reported a tenfold increase in sales as some of the country's 43.3 million smokers look for a cheaper way to get their nicotine fix in a down economy. Cigarettes cost an average of $4.35 a pack, home growers can make that amount for about 30 cents.

It's the latest do-it-yourself movement as others repair their own cars, swap used clothes and cancel yard work services to save money.

"Cigarette smokers say, 'Yeah, we're going to die of cancer, but do we have to die of poverty as well?'" said Jack Basharan, who operates The Tobacco Seed Co. Ltd. in Essex, England. Virtually all of his increased tobacco seed sales have been in the U.S., he said.

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• Tobacco sales fall by -19.3% 

In the first quarter of 2009, global duty free and travel retail tobacco sales slumped by -19.3% compared with the same quarter in 2008 - according to the TREND Tobacco Index which is based on actual audits of retail sales among a panel of locations worldwide.

"This is probably the worst quarter ever recorded for the tobacco business which has been battered in travel retail and elsewhere", says Yngve Bia, President Generation Research. "Sales were especially poor onboard airlines with a sales decline of -26.5%. Also airport sales were down steeply by -24.0%".

Sales in Asia Pacific and the Middle East held up relatively well in 1Q 2009 whilst significant drops were recorded in Europe (-21.2%) and the Americas (-12.3%). In Europe it is especially intra-EU duty-paid sales that have suffered, down by -21.6% in Euros and equal to a drop of -31.5% in US dollars. . . .

Amidst concerns of dramatically falling sales numbers, the tobacco industry is also faced with the challenging fact that many governments around the world - and particularly some in Asia - are considering supporting a ban on duty free cigarettes as part of the Framework Convention on Tobacco Control (FCTC).

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FLORY: Loopholes affect all people, not just the wealthy  

Back in April, the federal government slapped a huge tax increase on bulk tobacco, raising the tax from $1.10 to $24.78 a pound.

Few people would tolerate a 2,200-percent increase on any tax. Cigarette rollers must have weak lobbyists.

Thanks to this tax, the out-the-door price of tobacco jumped from about $20 to $45 a pound. But then a loophole was born.

Visit a tobacco store today and you will discover the roll-your-own crowd still buys for $20 a pound, with one slight difference.

Tobacco sold today is a little chunkier and it is labeled as pipe tobacco. Producers figured out the tax increase does not apply to pipe tobacco, so that's what they call it now.

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• Blazing a New Tobacco Road 

In this special report featuring exclusive interviews with retailers and executives from Altria Group -- the industry's largest tobacco supplier -- Convenience Store News analyzes how recent tobacco supplier consolidation will affect retailers' sets; the current challenges facing the tobacco category in convenience stores; what these hurdles mean to the future of the tobacco category; and whether or not the demise of tobacco has been pronounced prematurely.

Putting aside the issues of onerous taxation and FDA regulation for the moment (see CSNews' Tobacco Roundtable coverage for more on those topics, page 31), consolidation of suppliers could be one of the biggest retailer concerns. . . .

Moving forward, the main goal for Altria Sales & Distribution is to roll out the new trade program and freshness system. "The retailers benefit when we implement such programs," Paoli said. "I'm providing direction to the sales force that selling the program should be among their top priorities for August. With that will come improved business performance for the retailer."

Retailers can also expect more new products from the three Altria tobacco companies. PM USA is testing L&M roll-your-own tobacco in Michigan and Maine, while it also unveiled Marlboro No. 54 -- a menthol cigarette line extension in King and 100s sizes. John Middleton will also release line extensions for its Black & Mild brand of machine-made large cigars. In addition, USTTC's Red Seal, a value-positioned moist snuff, will see its distribution expanded to new markets.

Future new products will address "pure consumer expectations and needs," which is a benefit to retailers, since they won't carry an item that won't sell. Meanwhile, Altria can put more effort into its new products, knowing they will sell, according to Paoli.

And Altria's research and technology facility, which opened in 2007 and operates under Altria Client Services, will facilitate research for all three tobacco companies.

The multitude of changes to Altria's businesses as a result of these acquisitions will have an impact on the tobacco category in convenience stores. Paoli said it will improve attention paid to the category, especially to cigars and moist snuff, which will ultimately drive additional sales and profits as the space at retail becomes more organized.

Convenience store retailers, however, don't all agree.

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Lobbyists want pricier tobacco  

Tobacco companies have been warned they are treading a fine line after reports of price wars.

The Health Ministry began investigating cigarette pricing structures after The Timaru Herald reported last month that tobacco giant British American Tobacco New Zealand had issued a new price list to retailers, recommending a drop in price for some of their brands.

Associate health minister Tariana Turia said she was expecting feedback by the end of this month after launching an inquiry into why British American Tobacco and Imperial had cut prices.

"It is outrageous that on one hand, the government is spending millions of taxpayers' money to stop smoking addiction and on the other hand, these companies are enticing smokers to consume more.

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Factory ciggies better than rollies - study 

A new study has shown that factory-rolled cigarettes maybe the lesser of two evils.

The Christchurch-based study compared people smoking factory-rolled cigarettes to those smoking roll-your-owns and found that smokers tended to suck rollies more intensively, more often and more efficiently, making them at least as deadly as factory-rolled cigarettes.

The study, led by public health specialist Dr Murray Laugesen , is the first to use people rather than smoking machines to compare the two types of cigarettes.

It compared 26 men who smoked rollies with 22 who smoked factory-rolled. Each smoked a filtered cigarette every half hour over two hours, according to usual habit.

Cravings and exhaled carbon monoxide were measured before and after each cigarette smoked.

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