Tabinfo 2005
Tabinfo 2005


Tobacco facilities sold for Euro 605 million
Serbia said on Monday it would sell two tobacco factories for a total Euro 605 million (US$ 684.1 million), above expectations, to Philip Morris Holland B.V. and the Serbian unit of British American Tobacco. The government in April offered for sale majority stakes in Duvanska Industrija Nis (DIN) and Duvanska Industrija Vranje (DIV), which together with the Beopetrol fuel chain have been planned as Serbia's three main privatisation deals this year. Philip Morris Holland, a unit of US-based Altria, offered to pay Euro 518 million for a 66.45 percent stake in DIN, finance minister Bozidar Djelic told a news conference. BAT offered to buy 67.81 per cent of the smaller DIV plant for Euro 87 million, he added. Mr Djelic said negotiations to finalise the deals would be completed within 30 days. Philip Morris won the bidding for DIN over Croatia's Tvornica Duhana Rovinj. BAT was the only bidder for DIV. The sale of the two plants, with a combined annual capacity of 12,541 tonnes of cigarettes, will be the first major privatisations in Serbia since it sold three cement plants to foreign buyers in early 2001. DIN was set up in 1930. With 2,459 workers, it produced 10,826 tonnes of cigarettes in 2001. Its 2001 net profit amounted to Euro 4.126 million. DIV, founded in 1885, has 586 workers. It produced 1,715 tonnes of cigarettes in 2001, ending the year with a Euro 1.098 million profit. The money from the sale of the two plants will help boost Serbia's budget, after finance minister Bozidar Djelic recently said belt-tightening was inevitable. (pi)

Sicpa sells packaging inks division to Siegwerk
Sicpa Holding, with its world Headquarters in Lausanne, Switzerland, has today announced plans to divest its packaging inks division to the Siegwerk group based near Cologne, Germany with completion expected within six to eight weeks pending regulatory approvals. Sicpa will focus on security inks and systems in the future. With this strategic repositioning Sicpa, already the global leader in inks for banknotes and documents of value, says it will focus on its highly successful security inks and systems businesses for governments and industry. (ci)

Gallaher said to be in talks to acquire Cita Tobacco
UK cigarette manufacturer Gallaher is believed to be in talks to acquire Cita, the joint venture between Franco-Spanish cigarette company Altadis and the Canary Islands' Zamorano family, the Financial Times reports. Gallaher has been regularly linked with Cita and is now thought to be weeks from signing an agreement. While Cita accounts for about 3 per cent of the Spanish cigarette market, its location on the Canary Islands, a popular destination for UK tourists, is believed to be one of the reasons why it is attractive to Gallaher. One analyst, while querying the rationale for the agreement given Cita's falling market share and the potential difficulty of achieving synergies from rationalisation, said it could provide Gallaher with a launch pad in Spain, where it has only 1.7 per cent of the market, compared with UK rival Imperial's 4.5 per cent share. (ft)

Larry Palombo new senior director of Altadis USA
Altadis USA, headquartered in Fort Lauderdale, Florida, has appointed Larry Palombo as senior director of tobacco. Mr Palombo has more than 30 years of experience in the tobacco industry, including 22 years with General Cigar and nine years with US Tobacco.
 He will team up with George Gershel, senior vice president of tobacco, and Nick van Olden, vice president of tobacco, of the Altadis USA leaf division, to continue providing the company with high-quality tobacco leaf. Mr Palombo will work from the Altadis USA facility in Tampa, Florida. (pi)

ATF seizes contraband cigarettes in California
The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) announced today that three search warrants were executed in Glendale, California, yesterday in connection with an investigation into a cigarette trafficking ring that cost California more than US$ 2 million in tax revenue.
The operation was a result of year-long investigation of a group of individuals trafficking cigarettes from Raleigh, NC, to Glendale. During the course of the investigation, the suspects shipped more than 230,000 cartons of cigarettes and defrauded California of more than US$ 2 million.
ATF special agents, along with officers from the California State Board of Equalisation, executed three search warrants on the suspects in the Los Angeles area. Seized were 266 master cases of cigarettes, many of which had counterfeit tax stamps on them. Sheets of counterfeit tax stamps were also recovered. Additionally, one vehicle was seized when it was found to contain cigarettes with counterfeit tax stamps. (pi)

New managing director for Hertz & Selck
German flavour manufacturer Hertz & Selck has announced the appointment of Lutz Dörning as managing director. He will team up with Felix Schiffer, the managing partner. Mr Lutz Dörning will assume responsibility for sales and marketing operations. He succeeds Jan Hertz who has stepped down from this position to take on new responsibilities. (ci)

National standard for cigarette ignition propensity introduced
Canada's health minister Ujjal Dosanjh today announced the enactment of regulations intended to reduce the risk of fire caused by lit cigarettes. Canada is the first country to have a national standard to reduce the fire risk of cigarettes.
"Reduced ignition propensity does not mean fire-safe; a burning object is never completely fire safe," said minister Dosanjh. "These regulations are yet another example of Canada being a world leader in tobacco control. I am pleased to see them come to fruition."
Under the Cigarette Ignition Propensity Regulations, all cigarettes manufactured or imported for sale in Canada on or after 1 October 2005 must meet an ignition propensity standard intended to reduce fire risks.
Smokers' materials reportedly are the leading cause of residential fire-related fatalities and loss in Canada each year. The Canadian Association of Fire Chiefs reported for the period 1995-1999 that at least 14,030 fires were started by smokers' materials. (pi)

Justice to probe tobacco trial complaint
At the urging of Democratic lawmakers, the justice department agreed to look into whether political interference influenced the government's decision to lower a potential penalty in the trial against major cigarette makers. The department's inspector general, Glenn A. Fine, said Monday that the requests of six senators and two House members fell outside the jurisdiction of his office. He said H. Marshall Jarrett, the head of the department's office of professional responsibility, agreed to look into the lawmakers' allegations.
The lawmakers, including Frank Lautenberg, D-NJ, questioned how prosecutors decided to slash the US$ 130 billion, 25-year national stop-smoking programme suggested by one of their own witnesses, University of Wisconsin medical professor Michael C. Fiore. As the trial came to a close last week, government lawyers proposed a US$ 10 billion, five-year programme.
In a civil racketeering lawsuit filed in 1999, the government alleged major cigarette makers conspired for decades to mislead the public about the health risks of smoking. After an appeals court in February barred the government from seeking US$ 280 billion in allegedly ill-gotten tobacco profits, Mr Fiore's proposal carried the largest price tag in the nearly nine-month trial. Prosecutors said they revised Mr Fiore's plan to focus on tobacco companies' future wrongdoing and to better meet the strict standards of the racketeering law.
Mr Lautenberg's letter -- also signed by Sens. Edward Kennedy, D-Mass, Richard Durbin, D-Ill, Tom Harkin, D-Iowa, Bill Nelson, D-Fla, and Ron Wyden, D-Ore -- asked Mr Fine to investigate whether "improper influence by political appointees" had pushed prosecutors to propose the smaller programme. The letter cited news reports that Associate Attorney General Robert McCallum, a political appointee, had played a role in the decision. (pi)

Reemtsma-Kyiv to export 3 billion cigarettes in 2005
The Reemtsma-Kyiv cigarette making plant is planning to make 20.5 billion cigarettes by the end of 2005, 10 per cent more year-on-year, the company’s CEO Nikolay Penner told the local press. 90 per cent of the output is meant for the local market, and 2.5 to 3 billion cigarettes are to be exported, almost twice as much as over the previous twelve months. Among Reemtsma’s basic importers are CIS countries, Iran, Taiwan, Malaysia and the Emirates. Reemtsma exports all brands made by its Kyiv facility, including Prima, West and R1, reports Ukranian Tobacco news agency. (vt)

JTI acquires CRES Neva processing facility
JT International (JTI) announced today the acquisition of St Petersburg-based CRES Neva Ltd, a Russian company previously owned by Standard Commercial Tobacco of the USA. Located approximately 15 km from JTI’s factory Petro, CRES Neva supplies cut rolled expanded stems (CRES), a key component in the manufacture of finished cigarettes, to JTI in Russia and Ukraine. JT International is investing approximately US$ 14 million in the transaction.
"SCT’s decision to divest their interests was timely for us,” said Gary Wilson, vice president, manufacturing CIS and Baltics, and general director of Petro.
The supply agreement already existing between the two entities will remain in effect. Sales and logistics departments at CRES Neva will continue to service clients normally, as they have been up to now. Rick Caufield, vice president and general director for JTI Russia, expressed his satisfaction with the deal. "I am pleased with this strategic acquisition and what it means for the evolution of our business in Russia,” he said. "Despite the recent challenges that we have faced on tax matters, today’s announcement further confirms our deep commitment to the future of JTI Russia, and our renewed confidence in Russia’s investment climate.”

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