More Evidence Secondhand Smoke Bad for Kids’ Mental Health

Children and adolescents in the United States exposed to secondhand smoke (SHS) are at risk of developing major depressive disorder (MDD), generalized anxiety disorder (GAD), attention-deficit/hyperactivity disorder (ADHD), and conduct disorder, new research suggests.
In a national survey study of more than 2000 nonsmokers between the ages of 8 and 15 years, investigators found that serum cotinine levels, signifying SHS exposure, were positively associated with symptoms of all these disorders — and were especially correlated for boys.

“Our results have important public health implications,” write Frank C. Bandiera, MPH, from the Department of Epidemiology and Public Health, Miller School of Medicine at the University of Miami, Florida, and colleagues.

“Given the critical developmental period of childhood and adolescence, the effects of policy to reduce or ban smoking in public places and in the home may help prevent or reduce the progression of illness in at-risk individuals and alleviate the heavy burden…attributable not only to tobacco use but also to mental disorders,” they write.

Although the findings are in line with previous research showing a link between mental health outcomes and SHS exposure, the investigators note that this study did not “establish the biological or psychological mechanisms of association.”

Still, the investigators note that this new research does provide “critical and much-needed data.”

The study is published in the April issue of Archives of Pediatrics and Adolescent Medicine.

High Rate of Exposure

According to the researchers, 66% of all children between the ages of 3 and 11 years have been exposed to SHS.

“Because many mental disorders have an onset in youth at a time when SHS exposure is high, it is critical to consider how SHS may be affecting the mental health of children and adolescents so that appropriate preventive measures can be implemented,” they write.

In a recent study reported by Medscape Medical News, investigators from the United Kingdom found that a higher level of salivary cotinine was significantly associated with hyperactivity and conduct disorder in adolescents participating in the Scottish Health Survey. That study, which was published online first December 6 in Archives of Pediatrics and Adolescent Medicine, is also published in the journal’s current print issue.

For this study, investigators evaluated data on 2901 nonsmoking US adolescents (51% male; 61.9% non-Hispanic white; 14.8% non-Hispanic black; 12.2% Mexican American; 11.1 other races/ethnicities) who participated in the National Health and Nutrition Examination Survey between 2001 and 2004.

Symptoms of MDD, GAD, panic disorder, ADHD, and conduct disorder were assessed during 12 months using the National Institute of Mental Health’s Diagnostic Interview Schedule for Children Version IV.

Results showed that the participants had a mean of 4.93 MDD symptoms, 3.94 ADHD symptoms, 2.86 GAD symptoms, 1.34 conduct disorder symptoms, and 0.29 panic disorder symptoms.

When looking at associations among all participants, investigators found that serum cotinine levels were significantly correlated with symptoms of MDD, GAD, ADHD, and conduct disorder — but not with panic disorder.

“After adjusting for all covariates, serum cotinine level was most strongly associated with ADHD symptoms,” report the researchers. Although not quite as strong, the association remained significant for symptoms of MDD, conduct disorder, and GAD after adjustment.

Although there was a significant association in males between cotinine level and MDD, GAD, ADHD, and conduct disorder symptoms, the association for females was only significant with symptoms of GAD.

Finally, a significant association between SHS and MDD, GAD, and ADHD was found for white participants, but only with conduct disorder for the Mexican American group. There were no statistically significant associations with any of the disorders in black participants.

Need to Butt Out

The investigators note that only 26 states currently ban smoking in all public places.

“Efforts to ban smoking in places where children and adolescents are present, including all child care settings and schools, should continue, as well as increased efforts to develop interventions targeted directly at parents and designed to prevent SHS exposure in the homes of children and adolescents,” they write.

“To date, there has been little parallel research; thus, the findings of this new study cannot be placed into a larger body of literature to gauge consistency,” writes Jonathan M. Samet, MD, from the Department of Preventive Medicine in the Keck School of Medicine, Institute for Global Health, at the University of Southern California, Los Angeles, in an accompanying editorial.

“Consequently, the provocative findings of Bandiera and colleagues need replication and an expanded foundation of mechanistic understanding. Further research on exposure to SHS might also provide insights into neurodevelopmental effects of inhaled pollutants, a topic of rising interest,” adds Dr. Samet.

He notes that longitudinal data are needed “to bolster arguments for potential causality, to separately assess maternal smoking during pregnancy and SHS exposure after pregnancy, and to characterize the relationship between exposure at various ages and risk.”

With that said, Dr. Samet writes that there is now sufficient evidence of an association with poor health outcomes to “mandate reduction” of SHS exposure in public places.

However, because these bans do not cover homes, clinicians “should motivate parents to protect their children, beginning with prenatal care and continuing during childhood,” he opines.

“Pediatricians and other healthcare providers can help eliminate exposure of infants and children to SHS, even while the evidence on mental health continues to evolve,” concludes Dr. Samet.

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Posted in: ban smoking,cheapest cigarettes online,secondhand smoke,tobacco use

Money Never Sleeps

I recently attended a presentation by British American Tobacco (BAT), the second largest listed company on the JSE by market money tobaccocapitalisation (R551bn) after BHP Billiton. I can honestly say it was the best presentation I have attended in at least the past decade and came close to the seminal presentation given by then-SAB CEO Meyer Kahn (now chairman of SABMiller) in Braamfontein in the late 1990s.

What made this presentation so special, apart from the superb delivery of Head of Investor Relations Ralph Edmondson, was the fact that it was a global update on BAT’s activities, rather than just a bog standard results presentation. Edmondson kept the large audience on the edge of their seats and answered all questions with aplomb.
Although BAT is not a constituent of the JSE ALL-Share Index due to the fact that it is classified as an inward listing, it is an extremely widely held stock in South Africa. It is estimated that the South African share register contain 55 000 shareholders. And it’s not surprising that most shareholders like this stock as it has been a great dividend payer on the back of gradually improving earnings.

What is perhaps surprising for the uninitiated is that a tobacco company should be experiencing growing earnings while demand for its products is declining globally. Even more surprising has been its consistent out-performance of the FTSE-100 index (the Footsie) over the past five years. In the decade since 2000, total return to shareholders has averaged in excess of 20% per annum.

To understand why this is happening, it is necessary to “get under the skin” of what drives tobacco companies in this day and age. Firstly, some people think that tobacco is recession-proof. It’s not but it is recession resistant. What this means, effectively, is that cigarette smokers will do everything in their power to keep on smoking their favourite brands unless and until economic necessity forces them to either quit altogether or to switch to cheaper, sometimes smuggled brands. Smokers are exceptionally brand conscious and exceptionally brand loyal, so to keep a competitive edge, tobacco companies must maintain a diversified and balanced brand portfolio. In other words, they have to maintain a balance between premium, mid and low priced segments. Interestingly, BAT’s so-called “global drive brands”-Lucky Strike, Dunhill, Kent and Pall Mall-have maintained their strong growth trajectories despite the recession.

And while smoking in the developed world carries a certain amount of stigma, that is not necessarily the same in many developing countries. Hence tobacco companies generally mitigate their risk by having a wide geographical diversity. BAT’s top five markets are Canada, Brazil, South Africa, Russia and Australia-all commodity based economies with reasonably stable currencies. Collectively, they account for 40% of profits.

Take the Asia-Pacific region for example. Last year, volume grew by 2%, revenue rose by 15% and profit was up by 16%. And this, of course, doesn’t include China, the world’s biggest tobacco market, where the China National Tobacco Corporation (CNTC) enjoys a near-monopoly situation. But the rest of the Asia-pacific region is seen as a growth area by all of the major tobacco companies and hence they all put in a lot of marketing effort in this area.

At the other end of the spectrum, western Europe saw an 8% volume decline, a 12% drop in revenue but, thanks to significant margin improvements, a 6% rise in profits. Eastern Europe didn’t fare so well though, with a 3% volume decline and a 12% fall in profits. Smuggling of illicit cigarettes was a big factor here, especially in Romania. Africa and the middle east was the star performer; on a 2% volume decline, revenue rose by 11% and profit soared by 19%.

BAT’s basic business model is fairly straightforward. Typically, the group would expect to see 1 to 1.5% growth in volumes, which would translate into revenue growth of about 3 to % which in turn should result in profit growth of 6 to 7%. But even where things don’t go totally to plan, as they have in recent years with declining volumes, there is ample latitude to compensate. For example, in 2010, organic volume growth (before the impact of any acquisitions) was -3%. But, thanks to excise increases, revenue grew by 3%. “We like modest excise increases which can be anticipated by the consumer”, said Edmondson. This is a very important point and one which is not necessarily fully understood by the market. Someone in the audience asked why consumers didn’t baulk at excise increases to which Edmondson replied “what choice do they have?”. He’s right of course. The only real choices they have, as stated earlier, are to quit altogether (which many smokers invariably do, and regularly) or switch to cheaper or smuggled brands. Anyway, that 3% revenue growth translated into 6% profit growth and 15% earnings growth. Admittedly, the weak British pound played a big (approximately 5%) part in this, as BAT’s profits are measured in Sterling but nevertheless it’s not a bad performance in a year when volumes went backwards and demonstrates the resilience of tobacco companies.

Edmondson also demonstrated some of the innovations that have kept BAT ahead of their competitors in recent times. For example, its “Reloc” pack, which keeps cigarettes fresher after the pack has been opened, helped Dunhill to go from a tiny 2% market share in the Gulf states to almost 11% in a remarkably short period of time.
In Japan, menthol cigarettes are popular and BAT capitalised on this with its capsule technology. Basically this means that the cigarette contains a small menthol capsule in the filter tip which, when squeezed, releases a burst of menthol. It was introduced successfully in the Kent, Kool and Lucky Strike brands.

BAT sees potential for improving its operating profit margin from an already impressive 33.5% to 35% by next year. It believes that its cost base is too high and that this is the main reason its operating profit margin is well below that of its competitors. If recent history is anything to go by, it should be successful in this endeavour. Between 2003 and 2007, it achieved annualised cost savings of GBP1bn. By concentrating on shared services and smarter operating platforms, BAT reckons that 35% margin can be met by next financial year.

Whatever one’s views on the morality or otherwise of smoking, it is hard to deny that tobacco companies are great investments. They all generate huge cash flows, as there is only minimal capital expenditure required in their businesses. Balance sheets are usually in excellent shape and share buybacks and generous dividends are the order of the day.

One of the few negatives affecting tobacco companies is the incidence of smuggling of illicit products. In jurisdictions where this is acute, tobacco companies sometimes work together with governments to limit the impact. Excise duty derived from tobacco is a meaningful part of any government’s coffers so it makes sense for them to combat the illicit trade, which pays no taxes.

BAT recently demonstrated great innovation by flighting a series of radio advertisements suggesting that , by smoking smuggled cigarettes, smokers were indirectly and inadvertently helping to support many other nefarious activities such as gun-running and murder.

Even in environments where their activities are hamstrung by government legislation, such as advertising bans for example, tobacco companies still manage to get their products to those consumers who crave them. For as long as the craving persists, tobacco companies will thrive.

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Posted in: British American Tobacco (BAT),cigarette smokers,tobacco companies

Ukraine cigarettes remain among the cheapest in the world

In March 2009, parliament discussed proposals to increase tobacco excise tax from Hr 1 to Hr 2 per pack of 20 cigarettes.
Representatives of transnational tobacco companies were very critical about the proposals and alleged that Ukrainians would not smoke less, but would just switch to cheaper smuggled cigarettes while government revenues would decline.
Since that time, the excise tax rate was increased even more and, at present, the average excise tax is more than Hr 3 per pack. The figures show what eventually has happened.
In 2007, when the tax rate was just Hr 0.5 per pack, the government collected Hr 2.5 billion from excise tobacco taxes. Then the rate was raised several times and the revenues increased to Hr 3.5 billion in 2008, to Hr 9 billion in 2009, and to Hr 13 billion in 2010, more than five-fold in three years.
In neighboring Russia, tax rates were also raised in those years, but not so fast as in Ukraine, and the revenues also increased, but only twice: from 50 billion rubles in 2007 to 108 billion rubles in 2010.
Tobacco consumption trends are even more indicative. In the mid-2000s, daily smoking prevalence in Russia and Ukraine was very similar – about 35 percent. In 2009, the Global Adult Tobacco Survey was conducted in both countries and daily smoking prevalence was 33.8 percent in Russia and 25.5 percent in Ukraine.

Ukrainians smoke less, a main reason why cigarette production in Ukraine decreased from 129 billion in 2007 to 102 billion in 2010.
It is worth mentioning that, in 2001, only 70 billion cigarettes were produced in Ukraine and the sharp production increase was mainly pushed by the huge smuggling of Ukrainian cigarettes to the neighboring countries where cigarette prices were higher.
British member of parliament Charles Tannock stated that, out of 80 billion cigarettes illegally smuggled into the European Union in 2008, 30 billion came from Ukraine. The World Customs Organization issued a report on customs and tobacco with data on large (more than 100,000 cigarettes each) seizures.
The country of cigarette departure was identified for 2,688 such seizures, and in 1,020 cases it was Ukraine. However, in 2008, there were 573 seizures of Ukrainian cigarettes and only 447 in 2009, while seizures of Russian cigarettes increased from 48 to 84.
So while Ukraine keeps the position as a world leader in cigarette smuggling, smuggling became less profitable after the tobacco tax increases and it is on the decline. This is the second reason why cigarette production in Ukraine decreased in recent years.
The tobacco industry tries to create the impression that cigarette smuggling into Ukraine is more important than smuggling out of Ukraine. Indeed, currently prices of cheap cigarette brands are higher in Ukraine than in Moldova and Russia (while Marlboro cigarettes is still more expensive in Moscow compared to Kyiv).
To measure consumption of smuggled cigarettes in Ukraine during the Global Adult Tobacco Survey, smokers were asked to show the pack.
Only 1.5 percent of them smoked Moldavian or Russian cigarettes. It means that, in 2009, about 1 billion smuggled cigarettes were consumed in Ukraine, while more than 30 billion cigarettes were produced in Ukraine just to be smuggled out of it.
The recent tobacco taxation policy was really a success in Ukraine. Tax rates increased by six times and this caused a five-fold increase in revenues. Cigarette production declined by 21 percent due to the decrease of both tobacco consumption and smuggling out of the country.
However, currently the average price of Ukrainian cigarettes is just Hr 8 per pack, while in Poland it is 9 zlotys – three times higher.
In 2011, Russia increased the tobacco tax rate much higher than Ukraine. Since April 2011, cigarette tax rates in Moldova will be raised by 50 percent. These are all reasons that justify continuing with a successful policy and increasing tobacco taxes in Ukraine again.

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Posted in: cheapest cigarettes online,cigarette production in Ukraine,Marlboro cigarettes,tobacco,tobacco companies