First off we need to understand what reconstituted tobacco is too fully understand the PR.
Definitions of reconstituted tobacco on the Web:
Paper-like sheets of tobacco comprised mainly of scrap and stems. Reconstituted tobacco is produced by a variety of methods, all of which have a single purpose: to allow cigarette manufacturers to make the most efficient use of their tobacco by utilizing scrap and stems instead of discarding...
Obviously they have already worked with Shandong Yishui Ruibosi Tobacco Ltd. (Ruibosi), a subsidiary of China Tobacco Shandong Industrial Co. Ltd.
Thus I believe they are paying a royalty which will integrate the process with their very own "waste scraps & stems" which would imply and make sense, since nobody else uses tobacco, cactus, honeysuckle, ginkgo and tea leaves. Thus using the process and their own ingrediants were indeed done inhouse with the cooperation of Shandong Tobacco LTD. Remember they had 110K & 45K in R & D in Q2 &Q3 and we were told it was tobacco related. It was me who thought it was for new cig product but obviously it wasn't.
From what I gather from the PR this will help improve the taste and what better way to improve the taste than add some original filler. The complaints I've heard was the cig was to weak. This would directly affect the taste and make it somewhat stronger.
As far as the in-house arrangement I think it would be safe to assume once they go to this technology and it proves itself they will go to this technology as new and improved.
Steve, I think you over-thought this but then again maybe I'm just wrong. With that being said I did buy an additional 3k today.
As far as cig sales up and down qtly it probably has more to do with filling new channels which would ultimately be higher initially until they estabplish a market.
This is all IMO, with my luck they do the put notice tomorrow but I doubt it very much.
Will continue to put my money where my mouth is until something changes fundamentally. Even with sales much lower than anticipated last Q everything appears to be intact.
I need Traderfan's opinion as he undoubtly will set me straight as I still have rosed colored glasses(LOL) and believe in fairy tales and their surely is still a story here.
AI
