Author: Taco Tuinstra

  • Pakistan Tobacco Sales Plunge After Tax Hike

    Pakistan Tobacco Sales Plunge After Tax Hike

    Image: Skórzewiak

    Cigarette consumption in Pakistan dropped by 20 billion sticks following an unprecedented increase in the country’s federal excise duty (FED), reports the Associated Press of Pakistan, citing figures from Capital Calling.

    In February 2023, the government hiked the FED by 146 percent, following several years of comparatively small increases.

    In its study, Capital Calling found that the tax hike prompted 14 percent of smokers to quit, which caused cigarette consumption to decline by 11 billion sticks. Ten percent of smokers reduced their intake, which drove consumption down by an additional 9 billion cigarettes, according to the study.

    In 2022, Pakistan’s total cigarette consumption was estimated between 72 billion and 80 billion sticks, a figure that includes officially declared production, smuggled cigarettes, counterfeit products and cigarettes for which duties have not been paid.

    According to the new study, the volume now stands at around 62 to 64 billion sticks.

    Capital Calling expects the Federal Board of Revenue to collect between PKR230 billion ($809.87 million) and PKR240 billion in cigarette duties this year. In 2018, the figure was PKR87 billion.

  • Briefing Explores THR for the Homeless

    Briefing Explores THR for the Homeless

    Image: jaceksphotos

    A new briefing paper from the Global State of Tobacco Harm Reduction (GSTHR), a project from U.K.-based public health agency Knowledge Action Change (KAC), examines the significant potential of the approach to help people experiencing homelessness.

    Surveys consistently estimate that between 76 and 85 percent of U.K. homeless people smoke—six or seven times the smoking prevalence seen in the general population, which is now at an historic low of 12.9 percent. On average, U.K. homeless men die at 44 years of age, compared to 76 in the general population and homeless women at 42 years, compared to 81 in the overall population.

    Tobacco harm reduction helps people quit smoking by giving them the choice to switch to safer nicotine products. A 2019 study found that at least two thirds of rough sleepers who smoked would be willing to switch to vaping if a device was freely available, and would take up smoking cessation support offered at their homelessness service.

    Tobacco harm reduction initiatives developed in London, Manchester and Edinburgh included the provision of free vape starter kits to homeless people. As well as the longer term health improvements offered by switching, the leaders of those projects also noticed more immediate benefits; Covid-19 infection risks associated with sharing or smoking discarded cigarettes were reduced, along with the risk of eviction by breaking no smoking policies, and the risk of breaking lockdown to go out and purchase—or look for discarded—cigarettes.

    “Homeless populations have long been disproportionately impacted by smoking, and therefore stand to gain enormously from effective and pragmatic harm reduction routes to quitting tobacco,” said KAC Director David MacKintosh in a statement.

    “The sustainability of this type of intervention must be approached carefully, but there is real potential here and it should be explored. On average, homeless people in the U.K. live half a life compared to the general population. Reducing their high rates of smoking is one way to start addressing this tragedy.”

  • BAT Investigated for Fraud After Write Down

    BAT Investigated for Fraud After Write Down

    Image: BAT

    Investors have asked Pomerantz Law Firm to investigate British American Tobacco for securities fraud after the company announced it would take an impairment charge of approximately $31.5 billion after reassessing the value of certain of the company’s U.S. cigarette brands. On this news, BAT’s stock price fell sharply during intraday trading on Dec. 6, 2023.

    The company said the charge—one of the biggest corporate write-downs in recent years—mainly relates to U.S. brands it acquired, as it assesses their carrying value and economic usefulness in the years to come. The brands being written down include Newport, Pall Mall, Camel and Natural American Spirit.

    The decline in U.S. cigarette sales has been driven not only by growing health awareness and mounting regulations but also by economic challenges, with consumers downtrading to cheaper brands or illicit products. These trends prompted BAT to adjust the way some of its U.S. brands are treated on its balance sheet, shifting their value to a finite lifetime of 30 years.

    Chief Executive Tadeu Marroco described the move as “accounting catching up with reality.”

    While he does not believe cigarettes will disappear in 30 years, he said it was no longer possible to justify an indefinite value for those brands equating to around $80 billion on BAT’s balance sheet.

    BAT added that it would start amortizing the remaining value of its U.S. combustibles brands in 2024, making it the first of the major cigarette players to acknowledge that its tobacco brands’ value had an expiry date.

  • The Big Issues

    The Big Issues

    Photo courtesy of BAT

    Biodiversity in the tobacco and nicotine industry

    By Eirini Vlanti

    While biodiversity is quickly becoming the new climate change in terms of the growing recognition of and urgency around this topic, it presents significant challenges for companies whose business relies on nature.

    According to the 2023 Global Risks report by the World Economic Forum, biodiversity loss and ecosystem collapse are the main risks that will appear in a 10-year horizon. With half the world’s GDP highly dependent on nature, we can now see the same trend of goals, target-setting and regulations that were created to address climate change happening to address nature loss but much faster.

    Because climate change and biodiversity are highly interconnected, it is difficult to address climate change without taking biodiversity into consideration. Any company relying on agricultural production strongly depends on nature resources and ecosystem services. Discussing how to halt and reverse nature loss is key to securing a resilient supply chain.

    Investors are also paying ever greater attention to biodiversity in terms of their assessment of a company’s ESG risks. Investors have different levels of understanding and ambition when it comes to nature. BAT aspires to shape the narrative together with investors, utilizing the available supporting tools, frameworks and data.

    In addition, biodiversity-related reporting requirements are growing, demanding that companies dedicate significant resources to this. In 2023, for example, BAT plans to start disclosures aligned with the Taskforce for Nature Related Disclosure while working through water and land guidance for target-setting aligned with the Science Based Target Network. Both frameworks are important tools to standardize the way companies report and enable companies and investors to have greater insights.

    Both these frameworks are currently voluntary, but they are already starting to feed into standards, and we are seeing the first signs of these approaches being encapsulated in law, for example through the EU’s Corporate Sustainability Reporting Directive. The EU has started engaging with the main workstreams around this, and its laws are likely to influence legislation in other jurisdictions.

    The proliferation in sustainability requirements can also contribute to potential ESG reporting “fatigue.” My view is that biodiversity is nothing new; it is a way to address existing climate change commitments and environmental risks. Since the external environment shows biodiversity is an emerging topic to follow, companies need to decide whether they wait for regulations to enter into force or get ahead by exploring and understanding the topic before that happens.

    At BAT, as with any other material topic as identified through our double materiality assessment, we define what “good” looks like, set our ambition and then resource it accordingly. Sustainability is such a wide topic that each company needs to continuously and ruthlessly prioritize its focus area and create a roadmap to deliver against it. Biodiversity is no different.

    We began with assessing the materiality of biodiversity loss by conducting a Biodiversity Footprint Analysis as well as Geospatial Biodiversity Risk Assessment in 2022, combining different aspects of biodiversity to classify the farms of our directly contracted farmers as low risk, medium risk or high risk to biodiversity. This exercise supported us on designing and implementing more than 700 Biodiversity Management Plans together with our farmers for the farms that were classified as high risk. This has been a great educational tool for the farmers and our field technicians, and at the same time it provided guidance, based on data, as to where we should be putting more efforts.

    There are major differences, however, in terms of how we adapt our approach to the varied challenges in each region. Unlike climate change, where the ultimate metric is greenhouse gas emissions, there is no equivalent metric to measure biodiversity. Challenges in nature are location-specific, and an adverse action for biodiversity can have different impacts depending on the location and the significance of the ecosystem. Nature is not only our home but also the home of countless plants, trees, animals and insects.

    When we started looking at biodiversity in this way, it became clear to us the importance of working with local stakeholders, communities and experts to make the most out of every initiative. In the case of forests and biodiversity, we have a long history of community-based afforestation programs. Here, our role has been to transform those initiatives to demonstrate that they are far more than just “corporate engagement.” For example, Bonayan in Bangladesh, a program spanning more than 40 years, supplied over 100 million saplings to the local communities during that period. The program, which currently has 18 afforestation, biodiversity and conservation initiatives in 13 countries, is now moving into Bonayan 2.0 to expand its impact on nature.

    Through our integrated production system, we have been working with the farmers to protect biodiversity and forest resources, training them on sustainable agricultural practices and monitoring the sustainability of the wood used for curing.

    BAT is making progress, though we anticipate much more work ahead to address biodiversity challenges. I predict soil conservation—marked on Dec. 5 each year by the United Nations’ World Soil Day—will become a key area of importance in biodiversity. The millions of organisms that live within soil support habitats for all species and life forms. The mindset that biodiversity is a philanthropic activity needs to change—biodiversity is not a “nice to have”; it is a “must have” to achieve prosperity in the future for the environment and society and to continue supporting our needs in the years to come. Simplification and alignment of metrics is also necessary; we cannot improve something we cannot measure.

    Eirini Vlanti is head of sustainability and business development at BAT and holds a Master of Science degree in supply chain and logistics as well as completed a further business sustainability management course at Cambridge. She is heading the agribusiness sustainability department at BAT that engages with approximately 200,000 farmers annually in about 30 countries.
  • No Sweet Spot

    No Sweet Spot

    Image: Erik

    The battle against youth vaping will not be won by a flavor ban.

    By Robert Burton

    Banning flavors is not the answer to curbing youth vaping. As history tells us, prohibition drives the black market and in this case also risks jeopardizing the transition journey of millions of adult smokers that rely on flavored vapes to quit, posing an obstacle to ending the smoking epidemic. A sensitive topic in a hugely sensitive and emotive sector, the solution may be more nuanced; flavors that are particularly appealing to children—such as confectionary flavors—should be restricted, together with improved enforcement of existing regulations that prevent those under 18 having access to vaping products.

    The public consultation on youth vaping launched by the U.K. government eight weeks ago as part of its ambition to create a “smoke-free generation” closed this week, marking another step forward in the science and policy development of harm reduction and reduced-risk products. We at Plxsur, the world’s largest independent group of vaping companies, welcomed the opportunity to voice our views to help shape the future of vaping and save the lives of those impacted by smoking.

    Our proposal reflects our commitment to preventing youth access, offering clear-cut recommendations and considerations in line with our own practices.

    Flavors should be described factually, and the use of images, illustrations or cartoons on packaging that appeal to children or those under the age of 18 should be restricted. The use of confectionary, candy-related terms or fictional characters to describe flavors ought to be prohibited. In the same vein, it’s important that restrictions on flavors and packaging not limit the ability for vaping businesses to communicate on the packaging of vapes as long as this does not include imagery that appeals to those under the age of 18.

    Responsibility Flows Both Ways

    There needs to be stronger focus on proper enforcement of regulation and education of retailers and, subsequently, consumers. Examples of this include enforcing age verification for online sales, educating shopkeepers or vape education programs in stores. Fixed penalty notices can be an effective tool as well, in addition to which all shops selling vapes should require a license. Those shops should be monitored, and if they breach the law, they should be banned from selling tobacco products and vapes, losing their license altogether. This will ensure that the penalty is sufficient enough to act as a deterrent, increasing the effectiveness of the regulation.

    Enforcement of age restrictions at sale points that prohibit access to under 18s is the single most effective way to prevent youth vaping—particularly when combined with appropriate restrictions on marketing and packaging.

    Vapes are a powerful tool for smokers who wish to move to potentially safer alternatives. Restricting flavors has the potential to harm the route for the millions wanting to make the transition. According to Public Health England, vapes are 95 percent less harmful to health than normal cigarettes, and studies indicate that restricting flavors can ultimately harm smokers trying to quit. It is statistically proven in many studies and more recently in research by The Truth Initiative, America’s largest nonprofit public health organization, that flavor bans push vapers toward the black market, which poses a bigger threat given lack of regulation on ingredients.

    At Plxsur, we are driven by a clear purpose—to empower adult smokers to make positive choices and make the transition to reduced-risk alternatives. As part of this, we know that adult smokers can enjoy flavors—and that flavors may be one of many factors that support smokers to move completely to vaping. Banning flavors may appear to be an “easy win,” but Plxsur believes that the way to drive real change is by improved enforcement of existing regulation, which includes age restrictions at sale points and responsible marketing and packaging rules.

    Robert Burton is group scientific and regulatory director at Plxsur.
  • White House Postpones Menthol Ban Decision

    White House Postpones Menthol Ban Decision

    Image: Marisela

    The White House has delayed its decision about whether to ban menthol cigarettes in the wake of fierce opposition from tobacco companies, retailers and other groups, reports The New York Times. The administration had originally planned to have the rule finalized by August 2023 and, later, signaled that the rule would come before the end of 2023. The government’s most recent Unified Agenda—a regulatory “to-do” list—suggests the final menthol rule is now expected in March 2024.

    The Food and Drug Administration officially announced its plan to ban menthol cigarettes in April 2022, citing public health concerns. Researchers say the cooling sensation of the menthol flavor makes it easier to start smoking and harder to quit. The FDA estimates that the menthol ban could reduce smoking by 15 percent in 40 years. Studies project that as many as 650,000 smoking-related deaths could be avoided.

    In recent months, dozens of groups have met with administration officials to discuss the proposal. Among other concerns, opponents of the measure cite job losses and aggressive police targeting of Black smokers, who tend to favor menthol cigarettes in the United States. An estimated 85 percent of U.S. Black smokers prefer menthol brands, according to market data.

    Critics, however, contend that tobacco companies are financing and fueling those fears. “They’re peddling stories—Big Tobacco is—that we’re going to go out and arrest African Americans if they use menthol cigarettes. But that’s not the case at all,” said Senator Richard J. Durbin. The FDA has said that the ban will be enforced at the manufacturers’ level, and not against individuals.

    Menthols account for about one-third of the U.S. cigarette market, according to the Federal Trade Commission. Reynolds American Inc. (RAI), which makes the market-leading Newport brand, earns about $7 billion from menthol cigarette sales a year, research by Goldman Sachs shows. RAI has vowed to fight the ban all the way to the Supreme Court, a battle that could postpone implementation of the final prohibition rule for years.

    Convenience store, gas station and wholesaler groups predict a loss of $34 billion in sales from menthol cigarettes and snacks and drinks purchased by customers. Some House Republicans have sent letters to the administration warning that the ban could have a disastrous effect on small businesses and that it could encourage cigarette smuggling that would benefit terrorist groups.

    Altria spokesman David Sutton said the company was also concerned about illicit sales as well as lost tax revenue and jobs.

    “We believe equitable harm reduction, not prohibition, is the better path forward and that the FDA should authorize smoke-free products and encourage adult smokers to transition to a smoke-free future,” Sutton said in an email to The New York Times.

    Public health groups were dismayed by the delay of the menthol ban. “This delay not only puts the rules at risk of never being finalized but also represents a significant victory for Big Tobacco’s well-documented exploitative practices, all at the expense of our nation’s public health,” said Kathy Crosby, CEO and president of Truth Initiative, in a statement.

    Public opinion polls have shown that about 60 percent of Americans favor banning menthol cigarettes.

  • U.K. Backtracking on Generational Ban

    U.K. Backtracking on Generational Ban

    Image: methaphum

    The U.K. government may be backtracking on its plans to implement a generational tobacco ban, reports Tobacco Insider. According to the website, Britain may settle instead for raising the legal smoking age from 18 to 21.

    Under the proposed legislation, children who turn 14 or younger in 2023 would never be able to legally purchase a cigarette. A public consultation on the plans closed Dec. 6.

    Tobacco companies have reportedly been engaging heavily with lawmakers. Earlier this month, Philip Morris International held roundtable events with members of parliament as part of its efforts to ensure that heated-tobacco products are exempt from any future smoking ban.

    BAT was reportedly also scheduled to hold a private event on the plans to phase out smoking.

    Many libertarian Members of Parliament are said to dislike the idea of government limiting people’s choices.

    In November, New Zealand and Malaysia scrapped plans for similar generational tobacco bans.

  • Australia Adds Vape Graphic Warnings

    Australia Adds Vape Graphic Warnings

    Potential new graphic health warnings as envisioned by Australia’s Department of Health and Aged Care

    Australia will extend the requirement for manufacturers to print graphic health warnings on tobacco products to e-cigarettes, according to reports by CityNews and News. Manufacturers have until April 1, 2024, to roll out “repulsive” new health warnings on cigarette and vape packets. Retailers will be given a further three months to update their stock as new warning labels are gradually rolled out.

    On Dec. 7, the country’s federal parliament passed a law with measures to discourage smoking and vaping. Among other provisions, the legislation updates the health warnings on cigarette packages, standardizes the design and appearance of cigarette filters and applies tobacco advertising restrictions to vapor products.

    Earlier, Australia had announced a ban on single-use vapes that will take effect at the start of 2024. Starting in March, it will also be illegal to import or supply vapes that don’t comply with standards from the medical regulator. Doctors and nurses would still be able to prescribe therapeutic vapes as a tool to help smokers quit.

    Health Minister Mark Butler said the new smoking laws would save lives.

    “Tobacco has caused immeasurable harm and cost us countless lives in this country,” he told parliament. “We can’t stand by and allow another generation of people to be lured into addiction and suffer the enormous health, economic and social consequences.”

    About 20 percent of Australian 18-year-olds to 24-year-olds vape while about one in seven 14-year-olds to 17-year-olds use the product.

  • Tobacco Content Up on Social Media

    Tobacco Content Up on Social Media

    Image: ronstik

    Tobacco-related content on social media increased significantly in recent years, according to a new study led by Julia Vassey, a health behavior researcher in the Department of Population and Public Health Sciences at the Keck School of Medicine of the University of Southern California, and Harvard Medical School researcher Chris J. Kennedy.

    The researchers used a form of artificial intelligence known as computer vision to track the prevalence of various tobacco-related objects on social media, finding that some content increased as much as 100 percent between 2019 and 2022.

    While previous computer vision studies that analyzed e-cigarettes in social media posts looked broadly at e-cigarette-related content (including user-generated and promotional content), the present study is the first to focus specifically on influencer posts on TikTok, Vassey explained in a press note.

    Vassey and her colleagues started by building a computer vision model, which uses AI to identify specific features in visual data, such as photos or videos. Using a dataset of 6,999 images from Instagram, they trained the algorithm to recognize objects related to e-cigarette use.

    The model was trained to differentiate between objects in eight different categories: mod or pod devices, e-juice containers, packaging boxes, nicotine warning labels, e-juice flavors, e-cigarette brand names and smoke clouds. By training the model to distinguish between various types of tobacco content, the researchers are able to drill down into the specific types of e-cigarette products being promoted.

    Once the model was trained to recognize tobacco-related objects, Vassey and her team used it to analyze 14,072 TikTok videos posted from “micro-influencers.” These users have between 1,000 and 100,000 followers and get a high number of likes and comments on their posts.

    The researchers found that the prevalence of pod devices increased by 33 percent between 2021 and 2022 while the prevalence of e-juice flavor names and e-cigarette brand names increased by about 100 percent between 2019 and 2022. Nicotine warning labels also increased in prevalence over time, showing up in 3 percent of TikTok videos analyzed from 2019 and 9 percent of videos analyzed from 2022.

  • Young Kiwis Support Generational Ban: Study

    Young Kiwis Support Generational Ban: Study

    Image: Nikolay

    Most young New Zealanders support the law to progressively ban smoking, which was recently abandoned, reports RNZ, citing the results of an international study.

    The new coalition government plans to repeal changes to the Smokefree Environments and Regulated Products Act that would have barred the sale of cigarettes to anyone born after 2009, among other measures.

    A Canadian-based international study shows 79 percent of New Zealanders aged 16 to 29 favored the ban.

    A similar share supported a reduction in the number of shops that could sell tobacco while 68 percent wanted manufacturers to have to take nicotine out of cigarettes.

    The International Tobacco Control Policy Evaluation Project investigates attitudes to smoking across several countries. The most recent research was supposed to provide a baseline for New Zealand before the law came into effect.

    “Our overseas colleagues are incredibly disappointed and devastated as we are because the tobacco research world has been really looking to New Zealand,” said co-author Jude Ball from Otago University.

    By contrast, the Coalition of Asia Pacific Harm Reduction Advocates (CAPHRA) expressed its support for the decision to repeal the generational tobacco ban.

    “CAPHRA applauds the government’s decision to prioritize harm reduction strategies,” said the group’s executive coordinator, Nancy Loucas. “We believe that vaping and other harm reduction tools can play a significant role in helping smokers quit, and we are pleased to see the government recognizing this.”

    The organization said it also shares the government’s concerns about the potential for a black market to develop if the sale of tobacco is overly restricted. 

    “A regulated market is always preferable to an unregulated one, where product safety cannot be guaranteed,” Loucas added.