Entries from April 2008 ↓

Hat’s off to World Tobacco for their Show and good organization held in Puerto Vallarta Mexico April 16/17.

The Hotel and arrangements were well chosen and it was noted this was the first exhibition in Latin America - an important tobacco region -mostly ignored by show organizers.

The show itself was small and more significantly lightly attended. It will be hard to see how exhibitors recouped their costs.

Why is this?

Most obviously is the saturation level of “global” tobacco exhibitions - there are just too many shows and insufficient time in between to have anything new.

So what next?

The Tobacco Reporter show, planned for Sao Paulo Brazil in October will be moved to Rio (same dates) and its format modified.

There will not be a show, and the event will be more networking  and discussion / debate oriented. There are many significant topics for debate. At the same time there will be ample opportunitiy for peer meetings and business.

We applaud Tobacco Reporter’s pro-active approach.   

The “city that never sleeps” once again hosts a show that I have personally always looked forward to attending as a tobacco buyer & marketer. The Tobacco Plus Expo once only permitted tobacco shop owners admittance but today it welcomes all channels of trade.

I once again look forward to attending the show. I encourage those who sell tobacco products to attend this show. Please make sure you look for Chris & I at the show. The lineup of speakers looks impressive! And it will be interesting to attend the “Exhibitor Presentation Theater”. I can’t wait to see what’s new! 

The best part of this show I believe is always THE PEOPLE!

Well, if your not going to the show you will most likely miss something! I hear there are some very interesting developments in the industry that will be unveiled at the show!

 Give us your thoughts? Why are you going? Why aren’t you going?

What did you like? What did you not like?

What you think of the seminars? What you think of Exhibitor Presentation Theater?

Anything really impress you?

Share your thoughts.

Well, Chris & I hope to see you!

A study by the joint International Agency for Research on Cancer (IARC) and the World Health Organization’s (WHO) TobReg group seeks a new strategy to regulate cigarettes based on product performance measures with the goal of moving away from current measures involving the quantity of the smoke generated and the use of Tar, Nicotine and Carbon Monoxide values as measures of human exposure. Instead it recommends establishing median levels for 9 identified toxicants per mg nicotine in existing cigarettes and prohibiting the sale or import of cigarette brands that have yields above these levels (Tobacco Control April 1, 2008). But the authors acknowledge that no science exists to validate their choice of the 9 toxicants identified out of the 4,000 in cigarette smoke and that eliminating these 9 may increase the presence of others that may be more harmful. According to Prof. Michael Siegel of Boston University’s School of Public Health a regulatory approach that acknowledges that it is unclear whether it will make cigarettes safer or more harmful, “is too baffling… to comprehend” and the only way to describe it is “insanity.” Siegel noted that there is no evidence that the approach would even lower actual exposure to the regulated constituents, and it might even raise the risks of smoking by increasing the levels of non-regulated toxicants. He writes that the tobacco control movement is now admitting to “making recommendations that are not based on any science.” “TobReg wants to regulate cigarettes merely for the sake of regulating cigarettes, not because that regulation will make cigarettes safer,” he writes. He concludes that if this scheme is implemented, it would mislead the public about the risks of cigarettes on the market and transfer the “fraud that the cigarette companies have been found guilty of committing (by marketing “light” cigarettes as being safer alternatives) over to the federal government,” (tobaccoanalysis.blogspot.com 4/3)

Cigarette manufacturing profit margins are just about to get squeezed again in the developing Fire-safe cigarette debacle.

To start; fire-safe paper - aka LIP paper - costs 6-9 times as much as regular cigarette paper. This means in the range of $60 - $90 per bobbin. This assumes you can find a source.

Next comes the testing required to demonstrate compliance with regulations - Laboratory testing can run $8,000 and if your product doesn’t pass - the exercise needs to be repeated.

Last, and this one will become a major issue for the smaller independents, is annual registration and compliance fees levied by each State.

These fees vary considerably. Some are levied by brand others by SKU and are $250 - $3,000 per brand / SKU - depending on the State. For now this cost is around $500,000 if you have 4-5 brands and register them in those states requiring FSC cigarettes.

You can expect these fees to increase and become more consistent between States.  This will increase to several million dollars a year in registration fees.

The fees will increase the fixed cost of compliance and registration. Operating margins will be hit and for smaller operations this may be beyond their means - ultimately contributing to their demise or consolidation.

Fair? What do you think? What about competition?