Japan Tobacco to buy UK e-cigarette brand E-Lites

Japan Tobacco Inc has agreed to buy the maker of E-Lites, a leading brand of e-cigarettes in Britain, giving it entry into the fast-growing market for tobacco alternatives.
Japan Tobacco said on Wednesday that it had agreed to buy all outstanding shares of E-Lites' parent company Zandera, founded in 2009.
Financial terms were not disclosed, though the company said it would fund the purchase with existing cash and debt. It said the deal is expected to have a minor effect on its performance and cash flow in fiscal 2014.
As rates of smoking decline, big tobacco companies such as Philip Morris International, British American Tobacco and Imperial Tobacco Group have been jostling for position in the growing market for electronic cigarettes, which use nicotine-laced liquid.
Some analysts believe e-cigarettes will eventually outsell traditional cigarettes in some markets.
Japan Tobacco, the maker of Winston, Camel and Mild Seven, already sells outside the United States a smoking device called Ploom that heats, but does not burn, pods of tobacco. E-Lites, one of the leading brands in the UK, is the company's first tobacco alternative.
E-Lites' parent had revenue of about 16 million pounds ($26.87 million) in the fiscal year ended March 2014.

Competitive Edge for Reynolds-Lorillard?

"Unsure" seems to be the most accurate description of how convenience store operators feel about the potential acquisition of Lorillard Inc. by Reynolds American Inc. A new CSP tobacco survey shows retailers are divided in their support of such a deal (with 48% for, 39% against) and whether a merger between Reynolds and Lorillard would be good for retailers (37% said it would be good for business, 33% bad for business, 15% predicted no effect and 15% were unsure).
Respondents were equally unsure about what--if anything--this deal would mean for Lorillard's leading electronic cigarette brand, blu: a 43% majority of respondents believe a merger would have a "neutral" effect on blu's sales, while 33% predict it would accelerate sales, 24% that it would slow sales.
Those who said a merger would improve blu's status made the case that, because blu is already the solid No. 1 e-cigarette player, Reynolds would put its weight behind the brand--especially with Altria preparing to take MarkTen national.
"This would put Reynolds in an e-cig leadership position and potentially help drive this category," one retailer wrote.
"Blu will most likely be worked into the backbar presentation instead of being on the counter," added another respondent. "With Vuse and MarkTen launching, and then adding blu, there would be a very nice visual presentation on e-cigs. I think that will help blu, as they are the leader today and I do not see that changing."
Retailers who suspect a Reynolds acquisition would decelerate blu's growth pointed out that Reynolds has already invested heavily in its Vuse electronic cigarettes (recently announcing plans to bring production stateside).
"It will probably have a negative effect on blu because Reynolds has their own e-cig product that they will concentrate on more," said one such retailer.
"Neutral" respondents also cited uncertainty over how a combined company would handle dueling electronic cigarette brands.
"While I think Reynolds knows it's a popular brand, I think we are only beginning the phase of 'only the strong survive' in the e-cigarette category," wrote a responder. "We still need to see what Reynolds will do with their Vuse brand."
Others argued that having both blu and Vuse in its arsenal could catapult Reynolds to the top of the e-cigarette game--perhaps at the cost of smaller, independent electronic cigarette players.
"Vuse and blu combined would be very strong," read one response. "It might be anti-competitive for the e-cig category."
Less Competition for Cigarettes
The one area retailers expressed any certainty was how a deal between Reynolds and Lorillard would affect the cigarette segment: 54% of surveyed retailers said it would reduce competition. As one such retailer said, it's simply math: "less manufacturers equals less competition."
This would be especially true for menthol if Reynolds added Newport to its portfolio.
"Menthol for everyone else would be lost cause," wrote a respondent.
Still, 24% of respondents suggested that a combined Reynolds and Lorillard could provide Altria with a strong adversary, resulting in "two heavyweights fighting it out."
Others who believe the deal might increase competition in the cigarette segment said that smaller players, such as Commonwealth, could step up marketing efforts to move into the No. 3 currently occupied by Lorillard.
Another 22% of retailers expressed even more uncertainty about a potential merger having any effect on the cigarette segment.
"It will reduce competition within the tobacco industry, but will probably not make much difference to the category from a retail standpoint because both companies have some strong brands," an "unsure" retailer wrote.
"This would just add Lorillard's market share to Reynolds' market share," said another. "I don't see anyone changing brands because of this since most cigarette smokers are brand loyal."

Zambo City to clamp down on smokers starting May 31

Starting May 31, smokers puffing away in public places in Zamboanga City will face hefty fines or face community service, as the city government fully implements an ordinance regulating smoking in the city.

The city government said it started on Monday a "soft" implementation of Ordinance 413, with an information drive of the no-smoking policy that will last until World No-Tobacco Day on May 31.

"Records from the City Health Office show that smoking is one of the major causes of death in the city for several years now," it said on its Facebook page.

Ordinance 413, enacted in June 2013, prohibits smoking in centers of youth activity such as:

- playschools
- preparatory schools
- elementary schools
- high schools
- colleges and universities
- youth hostels
- recreational facilities for persons under 18 years old
- elevators and stairwells
- fire hazard locations such as gas stations and storage areas for flammable liquids, gas, explosives or combustible materials
- within buildings and premises of public and private hospitals, medical, dental and optical clinics, health centers, nursing homes, dispensaries and laboratories
- public conveyance and public facilities including airport and ship terminals, train and bus stations, restaurants and conference halls except for separate smoking areas and food preparation areas.

But the ordinance also provides for the designation of a smoking area in all enclosed places that are open to the general public, private work places and other places where smoking may expose a person to the other than the smoker.

Penalties

Smokers face a penalty of P500 or one-day community service for the first offense; P1,000 or two days' community service for the second offense; P2,000 or three days' community service for the third offense; and P5,000 without prejudice to the filing of any criminal case or at the discretion of the Court for fourth and subsequent offenses.

Establishments that allow smokers to smoke even in “no smoking” areas face a fine of P1,000 for the first offense; P2,000 for the second offense; P3,000 for the third offense and P5,000 for the fourth offense - along with the revocation or cancellation of their business permits.