Manufacturers, retailers, smokers hit hard in Korea

South Korea’s tobacco manufacturers, retailers and consumers woke up to a number of headaches yesterday, according to stories in The Korea Herald and The Korea Times.

Cigarette prices were increased sharply yesterday while public-places tobacco smoking bans were expanded and fines for those caught ignoring the bans were raised.

Largely because of a WON2,000 (about US$1.80) tax increase, the price of the average pack of cigarettes rose overnight by about 80 percent to WON4,500 (about $4.10) a pack.

Public places tobacco smoking bans, which previously had applied to about 150,000 facilities that were 100 square meters in size or bigger, now apply to about 600,000 smaller facilities nationwide.

However, smoking will still be allowed in those facilities with smoking areas separated completely from where food and drinks are served.

If anyone is caught smoking in a prohibited place, she will be liable to a fine of WON100,000 (about $90), while the owner of the facility in which the offence took place will face the prospect of a bigger fine, which was variously said to be WON1.7 million (about $1,550) or WON5.0 million (about $4,550).

Some observers were pessimistic about the outlook during 2015 for small retailers, some of whom earn 60 percent of their revenue from the sale of cigarettes. They point out that while retailers will earn more from each cigarette sale, the volume downturn will more than cancel out this advantage.

Others believed that while there would be a significant downturn in cigarette sales at the start of the year, business would probably pick up later.

Meanwhile, the Herald pointed out what it described as some price discrepancies in the early part of January.

Products from British American Tobacco Korea and Japan Tobacco International Korea were set to maintain their old prices until January 5. These two companies had registered their new prices with the Finance Ministry only on Monday, and new prices took effect six days after such registration.

Critics reportedly accused BAT Korea and JTI Korea of unfairly dodging the new regulations by delaying their registrations.

But BAT Korea and JTI Korea reportedly said they were playing a losing game because, while the prices of their products remained the same until January 5, they were subject to the higher taxes from January 1.