Category: News This Week

  • Tax Hike Diverted Cigarette Sales: LUMS

    Tax Hike Diverted Cigarette Sales: LUMS

    Image: alexlmx

    Pakistan’s 2023 federal excise duty (FED) hike on tobacco products has diverted rather than reduced cigarette consumption, reports The News International, citing recent research.

    In 2023, the government announced a significant cigarette tax hike, prompting tobacco companies to more than double their cigarette prices.

    The fiscal measure aimed to boost revenue and discourage smoking. However, a recent study conducted by the Lahore University of Management Sciences (LUMS), suggests it has achieved neither objective.

    Instead of lowering smoking rates, the increased prices have prompted consumers to source their cigarettes from informal sources, a development that will likely cause the government to miss PKR300 billion ($1.08 billion) in tax earnings this year, according to LUMS.

    The LUMS study found that the share of duty-paid cigarettes shrank to 42 percent over the past two years.

    “Government has implemented various initiatives to address the extent of illicit sector to bring more companies and illicit sector under tax net,” said LUMS Associate Professor of Economics Kashif Zaheer Malik. “These, however, have not been successful in reducing illicit trade in Pakistan.”

    In light of Pakistani smokers’ profound price sensitivity, the LUMS report urged the government to reconsider its excise tiers. It also said the success of Pakistan’s track-and-trace system would depend on an all-encompassing rollout and consistent enforcement.

    Only a handful of Pakistan’s cigarette manufacturers have implemented the new system.

    In related news, the government of Pakistan’s Khyber Pakhtunkhwa (KP) province announced a 400 percent tobacco tax increase.

    Civil society groups welcomed the measure. “This substantial increase is projected to generate over PKR2 billion annually, which will be dedicated to enhancing health facilities across KP,” Blue Veins and the Provincial Alliance for Sustainable Tobacco Control wrote in joint statement.

    Tobacco growers warned the tax hike would destroy the sector. “The farmers can’t afford this and will stop growing tobacco,” Pakistan Tobacco Board member Rustam Khan was quoted as saying by The News International.

    “Tobacco crop is the only cash crop of the province. And around 1.2 million people in the province depended on it,” said Khan, adding that more than 75,000 farmers were involved in tobacco cultivation.

    Tobacco taxation has been a contentious topic in Pakistan recently. In May, market leader Pakistan Tobacco Co. threatened to cease operations in the country if the government further increases cigarette taxes.

  • Vietnam Trade Ministry Supports Vapes Ban

    Vietnam Trade Ministry Supports Vapes Ban

    Photo: Holger

    Vietnam’s Ministry of Industry and Trade supports a ban on e-cigarettes, reports The VN Express

    The ministry has requested the government to halt the review of its proposed bill on regulating e-cigarettes after the health ministry officially published a report highlighting their negative effects.

    “The Ministry of Industry and Trade supports making changes in the law to ban e-cigarettes as the Ministry of Health has affirmed that they are harmful,” Trader Minister Nguyen Hong Dien told lawmakers on June 5.

    No business have been licensed to trade e-cigarettes in Vietnam.

    The share of Vietnamese aged 13-15 using e-cigarettes has increased from 3.5 percent in 2022 to 8 percent in 2023, official data shows.

  • BAT Expects Lower First-Half Profit

    BAT Expects Lower First-Half Profit

    Photo: BAT

    Declining sales of cigarettes and growing competition from illegal vapes in the U.S. will likely dent British American Tobacco’s 2024 earnings, the tobacco manufacturer said in a pre-close trading update on June 4.

    Analysts estimate BAT will make £27.60 billion ($35.35 billion) in total organic revenue and adjusted operating profit of £12.48 billion for the year, according to The Wall Street Journal.

    BAT noted that while the U.S. was showing some early signs of recovery, traditional cigarette volumes were down around 9 percent so far this year across the industry.

    Chris Beckett, head of equity research at Quilter Cheviot, told Reuters BAT’s anticipated decline in first-half revenue and profit was “more pronounced” than expected.

    The company expects half-year revenue and adjusted profit from operations to fall by low single digits, but says it is on track to deliver its guidance for the full year.

    “We expect our performance to be second-half weighted, mainly driven by wholesaler inventory movements related to continued investment in our U.S. commercial actions, as well as the phasing of new launches,” said BAT CEO Tadeu Marroco.

    “Our guidance also reflects ongoing macro-economic pressures, particularly in the U.S. market and continued lack of effective enforcement against the growing illicit vapor segment. As a result, we expect our H1 revenue and adjusted profit from operations to be down by low-single digits on an organic, constant currency basis.”

  • Cote D’Ivoire to Require Plain Packaging

    Cote D’Ivoire to Require Plain Packaging

    Photo: alexlmx

    Cote D’Ivoire will start requiring cigarette manufacturers to sell their products in plain packaging in November.

    According to the Campaign for Tobacco-Free Kids (CTFK), Cote D’Ivoire is the second nation in Africa to introduce following Mauritius.

    “The Campaign for Tobacco-Free Kids applauds Cote D’Ivoire for joining Mauritius in bringing plain packaging to Africa,” said CTFK President and CEO Yolanda Richardson. “These new measures should serve as a reminder that countries around the world can and must take swift action to curb tobacco use, protect public health and stop Big Tobacco companies from targeting youth.”

  • Investor Plans Nicotine Extraction in Zimbabwe

    Investor Plans Nicotine Extraction in Zimbabwe

    Photo: Tobacco Reporter archive

    A Chinese investor plans to build a multi-billion dollar nicotine-extraction factory in Zimbabwe, reports The Herald. The plans are at an advanced stage, according to the country’s former ambassador to China, Christopher Mutsvangwa.

    The facility will extract nicotine from tobacco stalks, leaves and flowers for the cigarette alternatives, such as e-cigarettes. Once established the factory is expected to also process tobacco from neighboring countries including Malawi, Mozambique and Zambia.

    “There is going to be a very big industry to extract nicotine from the by-products after selecting the premium tobacco leaves,” Mutsvangwa told participants in meeting of the ruling  Zanu PF’s party’s Mashonaland West provincial coordinating committee in Chinhoyi.

    “The Chinese firms have an interest in setting up the factories here in Zimbabwe because of our production levels,” he said.

    The investor’s board of directors reportedly met on May 31, 2024, to finalize the modalities of setting up the factory, which will likely be built in Karoi, in one of Zimbabwe’s largest tobacco producing districts.

    Zimbabwe is also expected to be a major producer of cannabis seeds following plans to establish a US$400 million factory. “We now have capacity to produce cannabis seed in the country. After an initial investment of $30 million, the company now wants to set up a seed production factory,” said Mutsvangwa.

    The investments in nicotine extraction and cannabis production will boost Zimbabwe’s attempts to extract more value from its tobacco industry, as detailed in the government’s Tobacco Value Chain Transformation Plan.  

  • FDA Updates Vaping Products ‘Red List’

    FDA Updates Vaping Products ‘Red List’

    Photo: xy

    The U.S. Food and Drug Administration has updated its import alert, which includes a “red list” of vapor products that may be detained “without physical examination,” the agency announced.

    The alert authorizes U.S. Customs and Border Protection to detain new tobacco products that do not have the required marketing authorization under the Federal Food, Drug and Cosmetic Act, which gives the FDA the authority to regulate all tobacco products.

    The list of products now includes Chinese manufacturers and distributors as well as U.S. importers and distributors.

    The FDA announced last week that it is taking stronger enforcement actions against unauthorized e-cigarettes. The agency is seeking civil money penalties (CMP) against nine brick-and-mortar retailers and one online retailer for selling unauthorized Elf Bar brand vaping products. The FDA is seeking a penalty of more than $20,000 from each retailer.

    “In order to remove a firm’s product from the red list, information should be provided to the agency to adequately demonstrate that the firm has resolved the conditions that gave rise to the appearance of the violation,” the FDA wrote. “The purpose of this is so that the agency will have confidence that future shipments/entries will be in compliance with the Federal Food, Drug and Cosmetic Act.”

  • Smoking Decline Traced to Noncombustibles

    Smoking Decline Traced to Noncombustibles

    Photo: Natalia

    Sweden’s smoking rate is poised to dip below 5 percent, a share that is widely considered the hallmark of a “smoke-free” society, reports The Business Mirror.

    Only 5.6 percent of Swedish adults smoked cigarettes in 2022, down from 49 percent of men in 1960, according Sweden’s public health agency. As a result, Sweden has 52 percent fewer tobacco-related male deaths than Poland and 57 percent fewer than Romania. For male lung cancer, Sweden has significantly fewer deaths than France, Germany, Italy and Poland.

    A report titled “No Smoke Less Harm” by the advocacy group Smoke Free Sweden attributes this achievement to Sweden’s openness to alternative nicotine products, such as snus.

    The report points out that smoking-related diseases are caused primarily by the byproducts of tobacco combustion rather than nicotine, as many mistakenly assume.

    The Swedish experience demonstrates the importance of understanding public misperceptions about nicotine to develop health policies that better protect and inform consumers.

    Karl Fagerström, co-author, ‘No Smoke Less Harm’

    While nearly one in four Swedish adults still use nicotine daily, in line with European averages, Sweden boasts far lower rates of tobacco-related deaths (44 percent), cancer rates (41 percent) and cancer deaths (38 percent) than the rest of the European Union.

    Smoke Free Sweden’s report appeals for the World Health Organization and global public health communities to acknowledge that combustible products, not nicotine, cause harm to smokers.

    “While nicotine is addictive, it does not cause the serious diseases associated with smoking,” Fagerström said. “Our findings support a shift in focus from cessation to substitution with less harmful alternatives for those unable to quit completely.”

  • Malaysia to Enact Age Restrictions this Year

    Malaysia to Enact Age Restrictions this Year

    Photo: Heorshe

    Malaysia will restrict the sale and purchase of tobacco products and tobacco substitutes to those aged 18 and over this year, reports The Star.

    Lawmakers have been alarmed by rising rates of vaping among underage consumers.

    The recent National Health and Morbidity Survey revealed that the rate of cigarette use among adolescents aged 13 to 17 dropped from 13.8 percent in 2017 to 6.2 percent in 2022. For vaping, however, it increased from 9.8 percent in 2017 to 14.9 percent in 2022.

    “This is a wake-up call. The regulations (of the Act) will be enforced to curb this,” said Health Minister Dzulkefly Ahmad at the World No Tobacco Day Carnival in Kuala Lumpur June 2, 2024.

     The war on smoking requires a whole-of-government, whole-of-society approach, he added.

     “This includes non-governmental organizations, teachers, retailers, politicians and enforcement bodies, as well as Malaysians in general. We must be united in curbing the smoking and vaping culture,” he added.

  • French Tobacconists Oppose Price Hike

    French Tobacconists Oppose Price Hike

    Photo: OceanProd

    French tobacconists have objected to a proposal to raise cigarette prices to €25 per pack by 2040, reports Euractiv.

    Cigarettes in France currently retail for around €12.50 per pack, one of the highest rates in the Organization for Economic Cooperation and Development. In Europe, only U.K. and Irish smokers shell out more for their cigarettes.

    Despite the high price, France remains one of the countries with the highest number of daily smokers, and every year tobacco causes 70,000 premature deaths.

    To address this issue, the Senate Social Affairs Committee in a recent report suggested doubling the price over the next 16 years.

    Noting that “the policy of reducing smoking has failed,” the committee recommended increasing the price by at least 3.25 percent every year between now and 2040. According to the Senate, the prevalence of smoking decreases when the price increases by more than 4 percent.

    The Confédération des buralistes, which represents the interests of tobacconists in France, condemned the proposal, arguing that French already leads the way in terms of tobacco taxation. The group said the report disregards the consequences of price, both on the country’s public health and on the network’s economic situation.

    For tobacconists, efforts should focus on the fight against the black market, which account for between 30 percent and 40 percent of cigarettes consumed in France.

    However, this figure is disputed by anti-tobacco association ACT, the directorates of public finances and customs, Observatoire français des drogues et des tendances addictives, who put the figure at around 6 percent.

    France’s 2023-2027 National Tobacco Control Plan, presented in November by former health minister Aurélien Rousseau, currently plans a price of €13 per pack by 2026.

    The EU is likely to review tobacco taxation following the EU elections in June, as the current Commission has not reviewed the 2014 Tobacco Products Directive and the 2011 Tobacco Taxation Directive, as originally planned.

  • Namibia to Regulate E-cigarettes

    Namibia to Regulate E-cigarettes

    Image: sezerozger

    Namibia plans to regulate vapor products and water pipes, reports the Windhoek Observer.

    The country’s Ministry of Health and Social Services wants to amend the Tobacco Act to include those products.

    The goal is to curb the growing use of electronic cigarettes and water pipes across the country. The amendment will also facilitate the development of a comprehensive tobacco strategic plan scheduled for launch later this month.

    Deputy Minister of Health and Social Services Ester Muinjangue stressed the urgency of regulating vaping products, despite existing legal frameworks to combat tobacco use in Namibia. “There is no safe form of tobacco smoke,” she said, rejecting suggestions that vaping and hookah smoking are safer alternatives to traditional cigarette smoking.

    Muinjangue encouraged smokers seeking to quit their habit to utilize existing resources and seek support from health professionals.