Tobacco companies face packaging dispute in Australia

Source: www.thirdage.com Author: Caitlin Bronson The Australian tobacco industry is fighting to retain their rights to advertise on their own packaging in response to legislation slated to be introduced in Parliament in July. The new law would allow the Australian government to replace the currently bright packaging of cigarette packs with a uniform olive green color, along with health warnings and full-color images of the consequences of smoking. The brand name of the cigarette would appear in small print underneath the depictions of things like mouth cancer or gangrenous toes. The logic behind the dull and disturbing packaging is simple—if smoking is presented in an unattractive light, more Australians will quit smoking and less young people will pick up the habit. However, the country does not have a precedent to look to in this matter, as none other has tried it. And the tobacco industry is warning against it. The Associated Press reports that the uniform packaging required by the hypothetical law would be easy to counterfeit, allowing for illegal Asian tobacco, on which tax is not paid, to enter the Australian market. To compete against the illegal product, companies like British American Tobacco Australia Ltd. (BATA) have said they would cut prices for cigarettes. This could backfire on the government, causing more Australians to take up the habit. “If they keep pushing us down this path with this experimental piece of legislation, unfortunately it’s going to end up in court, and it’s likely to cost millions of dollars, and [...]

Reynolds Tobacco Claims Show Litigation Discount (Update2)

Source: Bloomberg.com Author: William McQuillen Reynolds American Inc., which escaped a $145 billion class-action verdict against the tobacco industry two years ago, may see its market value cut by more than $2 billion as thousands of the same smokers press individual claims. Several victories among the 8,000 Florida plaintiffs may reduce the second-largest tobacco company's $15 billion value as much as 15 percent, said Brian Barish, who runs the Cambiar Aggressive Value Fund. That would equal a $2.3 billion decline. The revival of large-scale litigation may mean the return of the discount that plagued shares of tobacco companies after a jury trial in Miami led to the historic punitive-damages award in July 2000. ``If the tobacco companies were to start to lose cases, the market would wake up to this issue,'' said Timothy Ghriskey, chief investment officer at Solaris Asset Management, who oversees $2 billion. His Bedford Hills, New York, firm owns no stock in the companies named in the suit, he said. Reynolds fell $1.22, or 2.3 percent, to $50.99 in New York Stock Exchange composite trading, tracking the slide in Standard & Poor's 500 shares. Reynolds has declined 23 percent this year. Besides Reynolds, cigarette makers named in the latest round of Florida suits include Richmond, Virginia-based Altria Group Inc., the nation's biggest tobacco company, and Greensboro, North Carolina-based Lorillard Inc., the third- largest. Lorillard fell $2.62, or 3.8 percent, to $66.99. Altria dropped 40 cents, or 1.9 percent, to $20.81. Market `Distractions' Altria might fall 20 percent [...]

Go to Top