Altria profit up but cigarette volumes shrivel

Altria Group Inc. said Thursday that its fourth quarter earnings rose 7% even as cigarette volumes continued to shrivel, and the tobacco titan said the business outlook for 2010 remains challenging.
Altria (MO 20.01, +0.02, +0.10%) earned $725 million, or 35 cents a share, in the quarter ended , from $679 million, or 33 cents a share, a year earlier.
Revenue at the Richmond, Va.-based maker of Marlboro cigarettes rose 29% to $6.01 billion from $4.65 billion.
On an adjusted basis, the company said it would have earned 39 cents a share in the latest quarter.
The average estimate of analysts polled by FactSet Research had been for the company to earn 40 cents a share on revenue of $4.17 billion.
The company said the business environment for 2010 is likely to remain challenging, as adult consumers remain under economic pressure and face high unemployment.
Its tobacco operating companies also continue to see competitive promotional activity. It also expects that continuing state budget issues may lead to excise tax increase proposals in many states in 2010.
Altria forecast that its 2010 profit to be $1.78 to $1.82 a share, including estimated charges of 7 cents a share related to exit, integration and implementation costs, UST-acquisition related costs and SABMiller (UK:SAB 1,706, +14.00, +0.83%) special items.
Excluding items, profit is forecast to be $1.85 to $1.89 a share.
Altria spun off Philip Morris International (PM 46.21, -0.43, -0.92%) at the end of March 2008 in a move designed to separate the fast-growing overseas cigarette business from a U.S. unit hobbled by litigation worries, huge payments to states and seemingly inexorable year-on-year volume declines.
About a year ago, it closed on the acquisition of smokeless tobacco and wine maker UST.
During the period, Philip Morris USA's domestic cigarette shipment was down 11.4% while its flagship Marlboro brand's retail share was down 0.4 percentage point to 41.7%.
On the brighter side, smokeless tobacco brands Copenhagen and Skoal's combined volume rose 7.8% versus the prior-year period, driven by the successful launch of Copenhagen Long Cut Wintergreen "Marlboro displayed resiliency in an intensely competitive promotional environment, and we are also pleased with the strong retail share and volume growth of Copenhagen in the fourth quarter of 2009," said Michael Szymanczyk, chief executive, in the earnings report.
Shares of Altria rose 20 cents to $20.01

Supreme Court sides with online cigarette vendor

New York City may not use federal racketeering laws to sue out-of-state tobacco vendors, the U.S. Supreme Court ruled 5-3 Monday.
Hemi Group, of New Mexico, appealed a decision by the U.S. Court of Appeals for the 2nd Circuit that said it could be sued under federal racketeering statutes. The City says the online seller of cigarettes has intentionall defrauded it of tax revenues, and that constituted wire and mail fraud.
Chief Justice John Roberts wrote the opinion. He wrote Hemi had no obligation to collect, remit or pay the lost taxes.
"This Court has interpreted (the Racketeer Influenced Corrupt Organizations Act) broadly, consistent with its terms, but we have also held that its reach is limited by the 'requirement of a direct causal connection' between the predicate wrong and the harm," Roberts wrote.
"The City's injuries here were not caused directly by the alleged fraud, and thus were not caused 'by reason of' it. The City, therefore, has no RICO claim."
Justice Sonia Sotomayor did not take part in the case.
Joining Roberts in the majority were justices Ruth Bader Ginsburg, Antonin Scalia, Clarence Thomas and Samuel Alito.
Dissenting were John Paul Stevens, Anthony Kennedy and Stephen Breyer.
Breyer wrote that Hemi's failure to provide New York State with the names and addresses of its New York City customers caused the City to lose tax revenue.

Smash-and-grab nets cigarettes in S. Attleboro

Police say two people smashed a South Attleboro gas station's windows and stole cigarettes early Sunday.
The incident happened at Getty, 947 Newport Ave. (Route 1A), about 1 a.m.
The suspects smashed the storefront's glass windows to get inside, police said. A light-colored sedan with Rhode Island license plates may have been involved, police said.

FDA to unveil ingredients in cigarettes

The Food and Drug Administration is working to lift the smokescreen from the ingredients used in cigarettes and other tobacco products.
In June, tobacco companies must tell the FDA their formulas for the first time, as drugmakers have for decades. Manufacturers also will have to turn over studies they have done on the effects of the ingredients.
It's an early step for an agency starting to flex muscles granted to it by a law that took effect in June 2009 that gives it broad power to regulate tobacco beyond the warnings now on packs — short of banning it.
Companies have long acknowledged using cocoa, coffee, menthol and other additives to make tobacco taste better. The new information will help the FDA determine which ingredients might also make tobacco more harmful or addictive. It will use the data to develop standards for tobacco products and could ban some ingredients or combinations.
"Tobacco products today are really the only human-consumed product that we don't know what's in them," said Lawrence Deyton, a physician and the director of the FDA's new Center for Tobacco Products.
Although the FDA must keep much of the data confidential under trade-secret laws, it will publish a list of harmful and potentially harmful ingredients, listed by quantity in each brand, by June 2011.
Some tobacco companies have listed product ingredients online in recent years but not with the specificity they must give the FDA, said Matt Myers, president of the Campaign for Tobacco-Free Kids.
For example, Altria Group Inc., the parent company of the nation's largest tobacco maker, Philip Morris USA, has posted general ingredients on its Web site since at least 1999.
Makers say their products contain tobacco, water, sugar and flavorings, along with chemicals such as diammonium phosphate, meant to improve burn rate and taste, and ammonium hydroxide, to improve taste. Studies suggest those chemicals also could make the body more easily absorb nicotine.
The Centers for Disease Control and Prevention says about 443,000 people in the U.S. die each year from diseases linked to smoking.

As smoking bans multiply elsewhere, Las Vegas is holding strong

Walking through most Las Vegas casinos, cigarette smoke billows, stinging the eyes, nose and tongue. The acrid smell seems more prevalent than ever. Some people shuffle with purpose to tables and slot machines in areas where smokers aren’t hanging out.
Maybe more smokers really are flocking to Las Vegas, as some casino guests speculate. After all, the Strip is among the last great refuges for smokers to congregate.
California has restricted indoor smoking for more than a decade, and some cities have extended bans to outdoor areas. The number of states with some form of smoking regulation far exceeds the number of states without. With a tobacco-producing state like North Carolina recently instituting a ban of its own, how long can Vegas hold out?
While the number of nonsmoking areas along the Strip is noticeably growing, so too are the spaces where indoor smoking is allowed as new resorts open there.
That’s not to say the city and its developers aren’t facing major pushback. The American Cancer Society in Nevada sued the state, health officials and the Las Vegas Convention and Visitors Authority in response to a state law allowing smoking at some trade shows.
The policies came under scrutiny again weeks later when a small fire at the Stratosphere casino was tentatively blamed on careless smoking.
And last month, the giant CityCenter project opened on the Strip to protests from nonsmokers. The 18-million-square-foot complex of hotels, condos and shops is expansive and architecturally progressive. But even this new development doesn’t dictate a no-smoking policy.
CityCenter’s Aria casino, with its coffee-brown-colored carpeting and decor, high ceilings and scented air, hasn’t succumb to the overwhelming stench that plagues older Las Vegas installations. Blackjack dealers at Aria are protected by air curtains at the table area that blast a wall of fresh air to neutralize smoke from players.
Most casinos lack the innovative safeguards of the CityCenter. Casino floors are ground zero for the proliferation of smoke, I found in recent visits to Las Vegas.
While having to take it outside in most other cities she visits, Margie Martinez, an accountant from San Francisco, takes full advantage of the opportunity to smoke in the casinos.
Puffing on a cigarette one evening at the MGM Grand, Martinez placidly discussed the perks of the lax rules. “I forget sometimes and then go, ‘Oh! I can smoke!’”
Nonsmokers say they’re sick of it. “I’m bothered by it,” said Brandon Ohm, a nonsmoker from Yuma, Wash. “If someone starts smoking, I’ll just get up and go somewhere that’s not so cloudy.”
Ohm’s friend, James Lang, a mechanic from Bothell, Wash., added, ”I’ll wake up feeling sick the next morning and my clothes smell.”
Even occasional smokers are bothered by the prevalence of smoke in casinos. Frenchie Evans, a retired Air Force technical sergeant from Oakland, said he’ll sometimes light up a cigar, prompting some nearby folks to give him “the eye.”
Despite enjoying the infrequent cigar himself, Evans gets annoyed with Vegas’ excessive smoke at times. “If I don’t like it, I’ll move,” Evans said.
Vocal nonsmokers in Vegas are pushing another idea: Move the cigarettes outside.

On Your Side: E-Cigarettes fuels fierce debate between users, medical community

Nich Wallace is smoking a vaporized version of nicotine. No tobacco. No cigarette smoke. An e-cigarette is a battery-operated device.
"All you're getting exposed to is a fog, a glycerine fog."
Also foggy -- the debate over the product's safety. Manufacturers say they are safer and healthier than regular cigarettes. It's an argument that's gotten the attention of the medical community.
"I am not going to say it is as dangerous as a cigarette. It is dangerous," said MCG Dr. Janie Heath.
Even if it's not the same as cigarettes, Dr. Heath still doesn't recommend it for people trying to quit smoking.
FDA studies found the vapor includes a chemical found in antifreeze and some amounts of carcinogens. But the FDA admits they've done just limited testing.
A federal court judge issued an injunction against the FDA on Thursday, ordering them to stop detaining imports of e-cigarettes that cross into the United States. The decision said the products could not be defined as a drug-device and are for therapeutic purposes. The FDA has been trying to regulate the drug by calling it a drug-device for its supposed similarities to cigarettes.
"We need more science to be able to say, yes it's OK, this is better to consume in a cigarette -- that there are 4800 toxins in one cigarette," said Heath.
Because it's not classified as a drug there are no mandated health warnings. Some retailers have them anyway -- to keep young people away.
"It's really appealing to youth, because it's cool looking, it's high tech, and it smells good," Heath added.
"When I was in school, you didn't want to bring in grape-flavored cigarettes either, you wanted Marlboro reds," Wallace said. "If you're doing it for that cool factor, this is not marketed towards them, not intended for them, and they probably wouldn't like it if they could get their hands on it."
Smoking of any kind is illegal under the age of 18.
Wallace supports enforcement, just not regulation that he says could take e-cigarettes out of his hands.
Adds Wallace: "The old quit or die attitude the government is pushing isn't going to work, and people are going to finally say, look this is safer, and I can do this, and I think we're going to win out on that."

N.J. puts limits on sale of electronic cigarettes

TRENTON -- New Jersey has enacted restrictions on the sale and use of electronic cigarettes.
Gov. Jon Corzine on Monday signed into law legislation that prohibits the use of electronic smoking devices in workplaces and other indoor public places and prohibits their sale to minors.Electronic cigarettes look like the real thing but don't contain tobacco. Instead, they employ a metal tube with a battery that heats up a liquid nicotine solution. Users inhale and exhale the resulting water vapor.
The bill's sponsor, Assemblywoman Nancy Munoz, a Republican from Summit, said the restrictions are a matter of erring on the side of caution because the health risks associated with e-cigarettes have not been fully determined.

Montana health officials discourage use of e-cigarettes to avoid Clean Indoor Air Act

Some smokers have turned to electronic cigarettes to get their nicotine fix now that the Clean Indoor Air Act applies to bars and casinos.
State health officials warn against it, saying the products aren't regulated and emit carcinogens, but acknowledge they can't stop it under state law.
"We, at this point, don't feel that we can go into a place and say, 'You're using e-cigarettes. That's a violation of the Clean Indoor Air Act,'" said Linda Lee, supervisor with the Montana Tobacco Use Prevention Program in the state Department of Public Health and Human Services.
Electronic cigarettes contain a solution in a cartridge that is drawn through a battery-operated vaporizer to simulate inhaling smoke. The Food and Drug Administration has tested some of the more popular brands and has found they emit carcinogens. The FDA is seeking to regulate the electronic cigarettes, as it does tobacco products under a bill signed by President Barack Obama in June.
Lee said e-cigarettes can contain varied amounts of nicotine.
"They're made in various places, a bunch of them are made in China," Lee said. "There's no regulation at all as far as nicotine content and whatever else is delivered. We're very concerned about it."
Robyn DeMasi, manager of the tobacco shop chain Smoker Friendly in Bozeman, said there has been an increase in sales of electronic cigarettes since the clean air act was expanded to bars and casinos on Oct. 1.
"People are looking for an alternative way to 'smoke' where they can't now," she said.
Jeremy Weiner, the Denver-based sales and marketing manager for Smoker Friendly, said the corporation began selling them a year ago and in most markets is doing very well.
Lee cautions that e-cigarettes, sometimes marketed as a safer alternative to cigarettes, are nothing of the sort.
"There is no real reason to use an unregulated product that could be dangerous," Lee said.
FDA-approved products such as patches, gum and lozenges are already available, she said.Lee said the state Clean Indoor Air Act doesn't address e-cigarettes because lawmakers didn't know about them in 2005, when the act passed.
"We'd never even heard about them at that point," she said.

St. Paul man arrested in theft of cigarettes at West St. Paul tobacco shop

West St. Paul police have arrested a suspect in connection with at least one of the two "smash-and-grab" thefts that have occurred in the past six weeks at a Robert Street tobacco store.
William Erwin Williams, 30, was arrested Tuesday at his St. Paul home on suspicion of burglary. He was being held at the Dakota County Jail in Hastings pending possible charges.
"We received a number of tips based on some video footage that was out in the press. Ninety percent said it was this one individual," West St. Paul police Lt. Brian Sturgeon said of Williams. "He has a lengthy criminal history."
Police have investigated three break-ins at Joseph's Tobacco Sales since mid-November.
On Nov. 16, a man rammed a vehicle through the shop's front window, then fled with 60 cartons of Marlboro cigarettes, according to the storeowner.
On Nov. 28, multiple would-be burglars broke into an adjoining vacant storefront and tried to enter the tobacco shop by punching a hole through the wall in a back restroom. They ran off empty-handed.
And on Dec. 23, a pickup truck again rammed the storefront, and a man can be seen on security video grabbing 70 cartons of Marlboro cigarettes.
Williams has been charged in at least 26 criminal cases since 1997, according to court records. Charges include traffic infractions, burglary, criminal damage to property, motor vehicle theft, trespassing and possession of a police scanner.
St. Paul police are investigating whether a smash-and-grab burglary at a St. Paul gas station early Wednesday is connected to the cases in West St. Paul and elsewhere, said Sgt. Paul Schnell, St. Paul police spokesman.
Police officers, called shortly after 3 a.m. to the Holiday station at 1400 Arcade St., found "fairly substantial damage to the front of the store," Schnell said.
It appeared a vehicle "had been used to smash through the front entry of the store," he said. An ATM near the front door had been knocked over, its cash stolen, he said. The gas station was closed at the time.
A General Motors pickup truck apparently was used, based on evidence at the scene, Schnell said.
Police were reviewing surveillance video from the store. A description of the burglar or burglars wasn't available.

Menthol Cigarettes More Addictive to U.S. Minorities

Menthol cigarettes appear to be more addictive for black and Hispanic smokers than regular cigarettes, a U.S. study has found.
Researchers from the School of Public Health at the University of Medicine and Dentistry of New Jersey (UMDNJ) analyzed data on 7,815 current and former smokers who'd reported at least one attempt to quit. The information came from the 2005 National Health Interview Survey.
Among adults who smoked menthol cigarettes, just 44 percent of blacks and 48 percent of Hispanics were able to kick the habit. But blacks and Hispanics who smoked regular cigarettes had higher quit rates -- 62 percent and 61 percent, respectively. Those rates were similar to quit rates for white adults.
The data also showed that non-whites tended to smoke fewer cigarettes a day and were about three times more likely than whites to smoke menthol cigarettes, the study authors noted.
"Historically, tobacco companies have targeted minority populations when marketing menthol cigarettes," study co-author Cristine Delnevo, director of the Center for Tobacco Surveillance and Evaluation Research at UMDNJ, said in a university news release.
"Although whites and non-whites have similar smoking prevalence rates, the fact that non-whites are more likely to smoke menthols, and those who smoke menthols are less likely to quit, could explain why minority populations continue to suffer disproportionately from tobacco-caused disease and death," she said.
Study author Daniel Gundersen said in the news release that "with the substantial number of smokers smoking menthol cigarettes, particularly among minorities, this is serious cause for concern."