One of the requirements of their application to the court was to disclose financial information, including a forecast of their revenues for the next few weeks. This material was found as Exhibit DD in in Volume 4 of their application, which can be downloaded from the accountants managing the application. (It begins on page 176).
From this, we now know that the annualized anticipated gross revenue from sales will be about $1 billion, of which $575 million will be turned over to governments in the form of excise taxes and GST/HST. That leaves about $385 million in sales revenue net of consumer taxes for the year.
So far, so good. But it gets even more interesting.
 |
| JTI-Macdonald Cash Forecast 13 weeks, Spring 2019 |
Canada is a country which decades ago banned conventional tobacco advertising. Yet JTI-Macdonald anticipates spending about $100 million on "various marketing and promotional initiatives, such as inventory support programs and brand support programs. Initiatives are generally paid 30 days in arrears or via quarterly installments."
This, folks, is the amount they spend on paybacks to retailers. We have been told by retailers that they receive monthly payments from JTI in return for meeting their sales quota, but this is the first time that the amount has been made public. (Health Canada requires companies to report certain promotional expenditures but this is not among them.)
Elsewhere in the filing (in Volume 2), JTI mentions that it deals with 28,0000 retailers. If all of them get payments, it would add up to an average $3,495 each! As below the radar bonuses go, that's not too shabby.
Otherwise expressed, for every $1 in revenue that JTI-Macdonald generates from cigarette sales, it spends $0.25 on promotional support. Is this what a ban on tobacco promotion is supposed to look like?
