Category: News This Week

PMI Urges Collaboration Against Illicit Trade

Photo: PMI
International collaboration, stringent regulation and enforcement are the cornerstones in the fight against illicit trade, according to Rodney van Dooren, head of illicit trade prevention at Philip Morris International.
Speaking at a trademark and brand protection conference, held in Delhi, July 23-24, van Dooren pointed out how prohibition has not been a viable option, while regulation and enforcement would be the solution to curb illicit trade.
“Approximately 12 percent of the global cigarettes consumed are illicit, which impacts governments across the globe to the tune of $40.5 billion in tax losses, van Dooren said.
“According to the Euromonitor report, one in four cigarettes consumed in India is illicit which translates to close to $2 billion in tax losses. There are various smuggling routes around the world for both counterfeit and contraband products, making this challenge not a domestic but a transnational issue that requires transnational solution.”
Van Dooren urged authorities to better leverage the existing free trade agreements and provisions within the World Trade Organization to raise awareness with transit and source countries.
“The next recommendation is to promote harmonization of existing gold standard regulations around ASEAN, supported by implementing rules, including the law enforcement agency that has jurisdiction and the related penalties,” he noted.
“The adoption of the regulation requires manufacturers and exporters to ensure that the goods being exported comply with the destination market regulation. Additionally, in transshipment, adopt regulation that allows for inspection of suspicious shipments and exercise jurisdiction by Customs or any appropriate law enforcement agency on IP-infringing violations. Lastly, strengthen domestic enforcement effectiveness by enhanced cooperation with the legal industry and inter-law enforcement agency cooperation.”
August 1, 2024
Sampoerna Profit Dips

Photo: Sampoerna
Sampoerna sold 39.9 billion cigarettes in the first semester of 2024, 3 percent less than in the comparable 2023 semester. Net income increased 3 percent to IDR57.8 trillion, but net profit was down 11.6 percent to IDR 3.3 trillion.
Sampoerna President Director Ivan Cahyadi cited a challenging operating environment. “Although economic growth is relatively stable, the purchasing power of adult consumers tends to weaken,” he said in a statement. “The challenges of the tobacco industry are also added by the pressure of double-digit excise rate increases far above the inflation rate, and the widening gap in excise rates between segments.”
Rising taxes combined with declining consumer purchasing power has prompted many Indonesian smokers to shift to lower-taxed cigarettes or illicit offerings. According to Sampoerna, the “Below Volume Tier 1” segment has doubled since 2017 to claim 44 percent of the cigarette market.
“Moving forward, we hope that the government continues to issue a multi-year tobacco excise policy based on clear economic parameters, like inflation rates, as well as considering adult consumers’ purchasing power, to create a conducive and sustainable business and investment climate combined with the continuous effort to combat illicit cigarettes,” said Cahyadi.
“In addition, the government is also hoped to continue implementing policies that will support the continuity of the labor-intensive segment such as hand-rolled kretek cigarette (SKT) and halt the acceleration of downtrading to optimize government revenue from tobacco excise.”
Cahyadi also emphasized the importance of a balanced excise policy based on risk profiles to support innovation in the tobacco industry.
In 2023, Sampoerna invested more than $300 million in smoke-free products factory in Karawang, West Java.
Earlier this year, the company opened third-party operator factories in Jaten, Central Java and Dander, East Java.
Throughout the first semester of 2024, Sampoerna employed, directly and indirectly, more than 90,000 people, of which around 90 percent are working in the labor-intensive SKT segment.
August 1, 2024
Altria Worried About Illicit Pouches

Photo: Tobacco Reporter archive
Altria Group is worried about growing illicit sales of modern oral products in the United States, reports Reuters. The company has shared data on illegal nicotine pouches with the U.S. Food and Drug Administration.
“This illicit market echoes the beginning of the illicit e-vapor market several years ago,” Altria CEO William Gifford told analysts during a financial update. “We believe it is critical that the FDA acts decisively to regain control of the oral nicotine pouch category to prevent another widespread illicit market from taking hold,” he added.
Altria said it had identified more than 350 unique illegal nicotine pouches on sale, with new brands launching every month.
Gifford said Altria had also observed an increase in illicit cigarettes, one survey of discarded packs in California finding that some 25 percent were non-U.S. brands, mostly originating from duty-free channels or China.
Last month, Philip Morris International said it had observed sales of its nicotine pouches intended for the Scandinavian market on sale in the United States.
Recently, British American Tobacco’s CEO expressed concern about the continued lack of enforcement against unauthorized single-use vapes in the U.S., which makes it difficult for authorized brands to compete in that market.
August 1, 2024
Indonesia Bans Single Stick Sales

Photos: Taco Tuinstra
Indonesia has banned the sale of individual cigarettes and raised the minimum purchase age to 21 from 18, reports Reuters. Its new rules also mandate restrictions on tobacco and e-cigarette marketing; large, pictorial warning labels on tobacco products; and bans on the sale of tobacco and e-cigarettes near schools and playgrounds. In addition, it includes new restrictions on social media sales.
Single stick sales make cigarettes more accessible to vulnerable populations, according to health activists.
The rules are intended to reduce smoking prevalence and prevent young people from taking up the habit. With 70 million smokers in a population of 270 million, Indonesia has one of the world’s highest smoking rates. The country also struggles with a high level of underage smoking. A 2023 survey revealed that 7.4 percent of smokers are between the ages of 10 to 18, with 15-19 being the age group with the most smokers.
Health Minister Budi Gunadi Sadikin emphasized that the new rules represent a significant step forward in strengthening Indonesia’s health infrastructure.
“We welcome the issuance of this regulation, which will serve as a foundation for us to jointly reform and build the health system down to the farthest corners of the country,” he was quoted as saying by Xinhua.
The Campaign for Tobacco-Free Kids too welcomed the new rules. In a statement, the organization urged the Indonesian government to dramatically raising tobacco prices, simplify the tobacco tax system and ban smoking indoor public places.
Henry Najoan of the cigarette factory association was quoted by news web site Kumparan as saying that the rules would destroy the tobacco industry.
According to the Ministry of Industry, Indonesia’s cigarette industry employs 5.98 million people, including 4.28 million workers in the manufacturing and distribution sector, and 1.7 million in tobacco cultivation.
Indonesia is one of the only countries in the world that has not signed the World Health Organization’s Framework Convention on Tobacco Control.
July 31, 2024
Top Court Upholds FDA Authority in Philippines

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The Supreme Court of the Philippines upheld its 2021 decision to grant the country’s Food and Drug Administration regulatory authority over the health aspects of tobacco products, reports the Inquirer.
“All products affecting health, including tobacco products, are covered by the FDA’s mandate to ensure the safety, efficacy, purity, and quality of health products,” the Supreme Court said.
“Thus, the inclusion of tobacco products in the implementing rules of the FDA Act is in accordance with the law,” it added.
The case stemmed from an attempt to stop the enforcement of the FDA implementing rules and regulations. In a case filed in 2011 before the Regional Trial Court of Las Pinas City, the Philippine Tobacco Institute (PTI) alleged that those rules improperly expanded Republic Act No. 9711 by classifying tobacco products as health products.
The PTI argued that under the Tobacco Regulation Act of 2003, the Inter-Agency Committee on Tobacco (IACT) had exclusive jurisdiction over tobacco products.
In 2012, the Las Pinas court ruled in favor of PTI and nullified the provisions of the FDA implementing rules and regulations relating to tobacco.
The Department of Health and the FDA then petitioned the Supreme Court for review, which overturned the Las Pinas court decision in 2021. The PTI then challenged the high tribunal’s ruling, but was rebuffed.
The denial of the motions for consideration means the IACT and the FDA will continue to share authority over tobacco, with each overseeing different aspects of the trade.
Under the Tobacco Regulation Act, the IACT is chaired by the trade secretary with the health secretary as vice chair and includes a representative of the tobacco industry as a member. The PTI previously held the position of representing the tobacco industry in the committee.
July 31, 2024
Altria Reports Results

Image: Altria Group
Altria Group reported net revenues of $6.21 billion for the second quarter of 2024, down 4.6 percent from the comparable 2023 quarter. Revenue net of excise taxes declined 3 percent to $5.28 billion.
The company attributed the decreases to lower net revenues in the smokeable products segment, partially offset by higher net revenues in the oral tobacco products segment.
“Altria’s momentum continues to build as we pursue our vision to responsibly lead the transition of adult smokers to a smoke-free future,” said Altria CEO Billy Gifford in a statement.
“In the second quarter, our companies’ innovative smoke-free products delivered strong share and volume performance, and we hit meaningful milestones that we believe set us up for future success. Njoy received the first and only marketing granted orders from the FDA for menthol e-vapor products, and we submitted PMTA applications to the FDA for next generation Njoy and On! products.
“Our traditional tobacco businesses also remained resilient, despite a challenging operating environment. Our highly cash generative businesses supported continued investments in our innovative product efforts, and we returned significant value to shareholders during the first half of the year, with more than $5.8 billion delivered to shareholders through share repurchases and dividends.”
July 31, 2024
New Zealand Reserves Funds for HTP Tax Cut

Photo: Rochu_2008
The government of New Zealand will set aside NZD216 million ($127.39 million) to pay for tax cuts on heated tobacco products (HTPs), reports Radio New Zealand.
Earlier this month, Associate Health Minister Casey Costello announced a 50 percent cut to HTP excise taxes, arguing that doing so would encourage cigarette smokers to migrate to less unhealthy nicotine products.
A paper released on the health ministry’s website shows the Cabinet agreed in May to set aside NZD216 million to cover the estimated lost revenue.
Philip Morris International, which owns the bestselling HTP product in New Zealand, has long argued that tax levels should reflect the relative risk levels of tobacco products.
However, the Cabinet paper noted it was unclear whether the tax break would be passed on to consumers due to the monopolistic nature of the market.
Costello said that she expected the industry to reduce the cost of its heating products. “I’m expecting the excise reduction to pass to consumers; this is what we were advised would happen by officials and it is something we will also be monitoring,” she was quoted as saying.
New Zealand tax authorities collected NZD3.62 million in 2022 and NZD5.97 million in 2023 from HTPs.
Earlier this year Costello scrapped laws that would have slashed the number of tobacco retailers, removed 95 percent of the nicotine from cigarettes and aimed to create a smoke-free generation by banning sales to those born after 2009.
Critics have expressed concern about links between the tobacco industry and Costello’s New Zealand First party. Two senior corporate communication positions at PMI are held by people who previously held senior roles in the New Zealand First.
July 30, 2024
Cigarette Prices up in Kenya

Photo: Taco Tuinstra
Tobacco companies in Kenya have increased cigarette prices even after the government withdrew a proposed excise tax increase, reports The Star.
Following price hikes of between 20 percent and 33 percent, the price of a single cigarette has increased by an average of KES5 ($0.03) at the retail market. Sportsman, one of the most common brands, now costs KES20 per stick with a packet retailing at an average KES400.
Originally, the government had planned to increase cigarette taxes to KES4,100 per 1,000 sticks from KES4,067.03 per 1,000 sticks. However, following countrywide protest (which also targeted other tax hikes), President William Ruto declined to sign the legislation into law.
The tobacco companies who since increased the prices earlier opposed the treasury’s proposals, arguing that the measure would stifle the formal industry and boost illicit trade.
BAT Kenya attributed the price hikes to rising production costs.
“Over the past year and into 2024, there has been a significant and sustained rise in our cost of production, occasioned by economic turbulence across both our domestic and export markets, arising from global and domestic geopolitical disruptions, currency fluctuations and rising interest rates, which has adversely impacted our trading environment,” the firm told The Star.
The price increase, it said, was necessary for the business to navigate an increasingly challenging operating environment and enable the company to continue to meet its business obligations, including supporting the livelihoods of over 80,000 Kenyans in its value chain.
BAT Kenya’s profits declined 19.2 percent to KES5.57 billion in 2023 due to higher operating cost and lower sales volumes.
July 30, 2024
PMI and KT&G to Partner on Submissions

Photo: KT&G
Philip Morris International and KT&G will collaborate on regulatory submissions for KT&G heat-not-burn products in the United States. The companies have signed a memorandum of understanding.
On Jan. 30, 2023, PMI obtained exclusive rights to commercialize KT&G’s smoke-free products outside South Korea.
KT&G’s new platform products are expected to be launched first outside the U.S. Thereafter, the partners plan to work on a premarket tobacco product application submission for review by the U.S. Food and Drug Administration.
“We want every adult smoker who does not quit smoking to switch to a science-backed, better alternative for the benefit of their own and public health,” said PMI CEO Jacek Olczak in a statement.
“The heat-not-burn category, with different tiers of FDA-authorized products, has a pivotal role to play in making cigarettes obsolete in the U.S.”
KT&G “is currently pursuing global expansion and structural transformation centered on its three core businesses—next-generation products, overseas cigarettes, and health supplements,” said KT&G President Bang Kyung-man in a statement.
“We will do our utmost to achieve our future vision of becoming global top-tier by leveraging innovative NGP products and scientific R&D capabilities that will be introduced to overseas markets.”
July 30, 2024
Taiwan: No ENDS Approved Yet

Image: tang90246
Taiwan’s Health Promotion Administration (HPA) has reminded suppliers and consumers that it has not approved any e-cigarettes or heated-tobacco products (HTPs), reports Taipei Times.
The warning came after security footage showed a lawmaker using an HTP in the legislature’s corridors.
Novel tobacco and nicotine products require government approval in Taiwan. To date, the HPA has received applications for authorization for HTPs from 12 companies. It has rejected the applications of eight while two of the remaining four have been asked to furnish additional information.
The HPA has a panel of toxicology, public health and addiction experts to assess requests for authorized use of HTPs. The panel has so far convened 30 meetings.
Taiwanese law punishes the manufacture, import, sale, supply, display or advertisement of unauthorized novel tobacco products by a maximum penalty of TWD5 million ($152,263) while users may be fined TWD10,000.
July 30, 2024