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The world's third largest tobacco company is offering entertainment perks to parliamentary researchers as legislation that will ban the display of cigarettes is before peers and MPs.
Japan Tobacco, the firm behind brands such as Benson & Hedges, Silk Cut, Camel and Winston, offered a "fun evening" watching the Strictly Come Dancing tour at the 02 Arena at the Millennium Dome in London.
The company invited at least two MPs' aides, including the researcher for Norman Lamb, the Liberal Democrat health spokesman.
The aides turned down the chance to see Holby City star Tom Chambers, this year's winner, the entertainer Julian Clary, presenter Gethin Jones and former rugby player Kenny Logan.
With tickets still on sale for £47.25, the offer is not the most lavish hospitality offered by the cigarette industry, but its timing will raise eyebrows when parliament is due to debate a health bill that will clamp down on the sale of cigarettes. . . .
The offer to the researchers was made by Nick Harris, the corporate affairs manager of Gallagher, the British subsidiary of Japan Tobacco.
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More than 15,000 small shops could go under if the government’s proposals to hide tobacco under the counter become law.
In a worst-case scenario, it could leave 75,000 people unemployed – two-and-a-half times the jobs lost when Woolworths closed.
That’s the stark warning from Japan Tobacco International, formerly Gallaher, which has given its damning verdict on the proposals as they reached the Lords this week.
JTI said the figure had been estimated using data from Canada where a display ban was already in place. There, 30% of smaller independents were at risk of closure, and if this was translated to the UK, it put 15,000 indies in jeopardy.
Sales would be displaced to the illicit trade which, JTI estimated, could rise to 30% of all tobacco smoked.
"Silk Cut Squares" is set to hit independent and convenience retailers across the UK as Gallaher launches an innovative campaign in the lead up to Christmas for Silk Cut.
The campaign will see retailers bagging thousands of pounds in prizes.
This month, Galleher also released price marked Sterling packs for retailers.
Commencing November 3rd, a Silk Cut Squares kiosk will tour tobacco rooms in over 40 cash & carries throughout November offering retailers the opportunity to win over £80,000 in prizes, with one lucky retailer winning a guaranteed prize of £10,000.
Other prizes available include Sony TVs, Digital Cameras and MP3 players as well as cash prizes.
Every retailer who purchases an outer of Silk Cut in participating depots will get the chance to play the Silk Cut Squares game in the kiosk.
An avid art collector, also owns other camel paintings by Chinese contemporary artist Zhou Tiehai, including Joe Camel as Mona Lisa which hangs in his private dining room.
But it is the sly subversion of the iconic Marlboro image in his office that best hints at the scale of Pierre de Labouchere’s ambitions for Japan Tobacco, the world’s third-biggest publicly listed cigarette maker.
“Our goal is to overtake PMI as the industry’s number one,” says Mr de Labouchere with a laugh. “So yes, I guess you can say there’s a subliminal message there [in the painting].”
As the head of a division that has been the main driver of profit growth for JT over the past four years, the 54-year old Frenchman has reasons to be ebullient.
JT, which also owns food and pharmaceuticals businesses, still has some way to go before it topples PMI . . .
But the challenge for Mr de Labouchere will be whether he can internationalise any of Gallaher’s brands – most of which are relatively local in nature - in the same way he has with Winston.
No less important is how trading in Russia - now its largest market by volume and second-largest by profit - will be affected by the fallout from the market turmoil.
In the longer term, JTI still faces gaps in its portfolio, notably in Asia and Africa, and particularly in Latin America - a situation Mr de Labouchere says he would like to remedy.
“At the moment our priority is to combine Gallaher into JTI’s existing operations,”
Since a series of press exposés in 2000-2001 documented the tobacco industry's extensive history of smuggling, the industry has seemingly retreated from the practice. Yet for Britain's largest cigarette manufacturer, Gallaher Tobacco, the smuggling may have continued. According to lawsuits brought by former Gallaher distributor Ptolomeos Tlais, the company used companies like his to funnel large quantities of cigarettes to developing countries with no real market -- and then smuggle them back into the European Union.
Here are some of the key documents related to the lawsuits:
The Affidavit -- Former Gallaher executive Norman Jack reveals how the company set up its smuggling strategy.
The Verdict -- A British judge rejected Tlais's breach of contract suit against Gallaher, but found the company's practices "gave rise to a risk of smuggling."
The Dirty Deal -- Gallaher arranged with Tlais to dump tons of moldy cigarettes overseas, while U.K. customs officials signed off on the deal.
The Moratorium -- When Japan Tobacco International bought Gallaher in 2007, it also got a two-year moratorium on European Union enforcement of smuggling laws against Gallaher.
In 2004, Cyprus-based tobacco distributor Tlais Enterprises Limited (TEL) was told it had received a "red card" from British customs, a warning that the company was suspected of cigarette smuggling.
TEL's owner, Ptolomeos Tlais, was surprised. Born in Lebanon to a wealthy trading family, Tlais was doing, he said, exactly what his supplier, Gallaher Tobacco, had told him to do: quickly dumping large amounts of cigarettes onto developing countries. Everyone involved, he insists, knew that some of these smokes -- especially their low-end Sovereign brand -- would find their way back to the U.K., where avoidance of high tobacco taxes guaranteed smugglers a windfall.
In fact, Tlais had even signed a unique deal with both Gallaher -- the U.K.'s largest cigarette manufacturer -- and the U.K. customs service, giving them unprecedented access to his shipping records. In the deal, Tlais agreed to unload tens of millions of moldy cigarettes by mixing them with new cigarettes and selling them overseas. If anyone deserved a red card, Tlais felt, it was Gallaher for coming up with the plan. . . .
Gallaher has denied any impropriety. Last April, in fact, the company prevailed in its U.K. legal dispute with TEL when Judge Christopher Clarke ruled that Gallaher had sufficient cause to cancel its contract with the distributor, and had, in fact, attempted to clean up its record on smuggling. Indeed, the judge fingered TEL, not Gallaher, for indiscriminately selling cigarettes to known smugglers.
Judge Clarke, however, did not let Gallaher off the hook. In his 326-page ruling, he took the company to task for its past involvement in smuggling, and noted that the company's later practices "gave rise to a risk of smuggling" -- including Gallaher's supplying of a distributor without "any due diligence," goods that "were shipped to Cyprus and not to their ultimate destination," and export of cigarette packs with health warnings only in English, not in local languages.
Tobacco companies are targeting financially vulnerable consumers with the launch of cheap cigarettes. The move by Imperial Tobacco and Gallaher comes in the wake of a government consultation that could restrict the promotional activity of tobacco giants.
Imperial Tobacco, which makes brands such as Lambert & Butler, will launch a new brand called JPS Silver next month at a price of £4.21 for a pack of 20.
Meanwhile, Gallaher, which makes Benson & Hedges and Silk Cut, will reduce prices on its budget brand Sterling by 7% to £4.20 a pack.
Smokers on a budget are emerging as the latest battleground between the UK’s two largest cigarette companies.
As the slowdown in consumer spending deepens, Imperial Tobacco and Gallaher are chasing the low end of the market with price cuts and cheaper brands.
Imperial, which controls 46 per cent of the market with brands such as Lambert & Butler, is set to fire the first shot next month with the launch of JPS Silver, a new low-price brand that retails for £4.21 for a pack of 20.
In response, Gallaher, now owned by Japan Tobacco, is planning to slash prices on Sterling, its budget brand, by 7 per cent from £4.50 to £4.20 a pack.
Lobby group, Action on Smoking and Health research manager, Amanda Sandford, has slammed the move by the tobacco companies. "Whenever the price of cigarettes falls, there is an impact on consumption – that hits poor people the hardest. This is bad news," she says.
Tobacco brands are putting packaging design at the heart of their marketing strategies as the government continues to clamp down on the promotion of their products.
Gallaher-owned Benson & Hedges is rolling out five limited-edition packs of its Gold range of cigarettes.
Imperial Tobacco has refreshed the identity of its Golden Virginia and Windsor Blue brands . . .
The Department of Health (DoH) is proposing plain packaging and a bigger minimum pack size to deter children from taking up the habit. Brand names would be required to be printed in a standard font, colour and size. The DoH is also recommending that cigarette displays and vending machines be banned.
John Noble, director of the British Brands Group, claimed the proposals would restrict brand-building. 'Making all products look the same will reduce consumer choice and weaken competition,' he said.
Cigarette manufacturer Gallaher recorded a €30.9 million profit last year for its Irish operation and showed a 3 per cent increase in turnover, despite a declining market. Gallaher (Dublin) Limited, based in Cookstown, reported that its turnover had risen to €714.8 million in the year ending December 31, 2007, up from €693.7 million a year earlier.
The company, which sells the Benson & Hedges and Silk Cut brands of cigarettes, recorded a €30.9 million profit, down from €32.2 million in 2006. . . .
The firm’s directors noted that the Irish cigarette market, which accounts for the bulk of its revenues, declined by 4.4 per cent during 2007, which it attributed to excise increases ahead of the rate of inflation.
It also blamed the shrinking market size on the increase of non-Irish duty paid cigarettes coming into the domestic market.
Supermarkets must pay a multimillion pound fine for ripping off smokers in collusion with Gallaher, the tobacco company, it was announced yesterday.
Asda and Somerfield have admitted fixing the price of cigarettes and overcharging customers under a secret deal with the manufacturer of brands including Benson & Hedges and Silk Cut. The Office of Fair Trading said that a total of £173.3 million in fines and costs had been agreed in one of the biggest settlements of its kind.
Other firms that admitted colluding in the pricing scam include the owner of Threshers, the off-licence chain, and One Stop convenience stores, which must contribute towards the settlement. But the lion’s share of the fine — £93 million — will be paid by Gallaher, owned by Japan Tobacco.
A tobacco manufacturer and five retailers agreed to pay the biggest collective penalty handed down by the UK’s competition watchdog on Friday for price-rigging after admitting their role in efforts to boost the cost of cigarettes.
The six companies agreed to pay £132m to settle the charges with Gallaher, one of two tobacco manufacturers involved in the case, shouldering the lion’s share of the burden after agreeing to pay £93m.
Asda, First Quench, One Stop Stores, Somerfield and TM Retail have also signed so-called “early resolution” agreements with the OFT in exchange for a significant reduction in the fine that would otherwise have been imposed at the conclusion of the probe.
Six retailers and tobacco firms have agreed to pay a maximum of £173.3m in combined fines after admitting unlawful tobacco pricing practices.
The news comes after the Office of Fair Trading (OFT) in April accused a number of retailers and tobacco companies of anti-competitive retail pricing.
Asda, Somerfield, First Quench, TM Retail, One Stop Stores and tobacco firm Gallaher have agreed to the fines.
The OFT is continuing its investigation into a further six firms.
They are Imperial Tobacco, Tesco, Shell, the Co-operative Group, Morrisons and Somerfield. . . .
The OFT alleged that the retailers and tobacco groups arranged to swap information on future pricing.
A separate allegation is that there was an understanding that the price of some brands would be linked to rival brands.
Japan Tobacco Inc., the world's third- largest publicly traded cigarette maker, said full-year profit rose 13 percent after the takeover of Gallaher Group Plc helped increase overseas sales.
Net income was 239 billion yen ($2.3 billion) in the 12 months through March from 211 billion yen a year earlier, Japan Tobacco said in a statement to Tokyo's stock exchange today.
The maker of Camel and Mild Seven cigarettes purchased U.K.-based Gallaher last year to increase tobacco sales in Europe and Russia as smoker numbers fall in its home market. The contribution of overseas cigarette sales to total revenue doubled to 41 percent over the past year. . . .
Tobacco sales in Japan fell 1.6 percent to 3.36 trillion yen as an increase in health consciousness reduces the smoking rate. The percentage of Japanese men that smoke has fallen by half over the past 40 years to about 40 percent.