Category: Markets

  • Japan: Male Smoking Drops to Historic Low

    Japan: Male Smoking Drops to Historic Low

    Photo: Colleen Williams

    Fewer than one third of Japanese men are smoking. Male cigarette consumption slipped to 28.8 percent last year, according to the national livelihood survey, a study conducted every three years by the Health, Labor and Welfare Ministry. In 2016, the male smoking figure was 31.1 percent. The female smoking rate fell 0.7 points to 8.8 percent over the same period.
     
    By age bracket, smokers in their 20s saw the biggest drops, with the ratio for men falling 4.1 points to 27 percent and the ratio for women dropping 1.9 points to 8.3 percent.
     
    Most smokers in Japan are in their 40s, with rates of 37.6 percent for men and 13.4 percent for women.
     
    The male smoking rate has been declining since hitting 48.4 percent in 2001. The downtrend is likely driven by growing health awareness and stricter anti-tobacco policies. In April, Japan banned smoking indoors at restaurants, offices, in hotel lobbies and other public places.
     
     The survey of people aged 20 or over counted as smokers those who smoke “every day” or “sometimes.”

  • KT&G Start Exports to Russia Under PMI Deal

    KT&G Start Exports to Russia Under PMI Deal

    Photo: KT&G

    KT&G started exporting its Lil tobacco heating devices to Russia last month, according to The Korea Times. Earlier this year, KT&G and Philip Morris International (PMI) signed an agreement under which PMI would commercialize certain KT&G products outside of South Korea.

    During the announcement of its second-quarter results, KT&G confirmed that KRW12.5 billion ($10.54 million) worth of e-cigarette devices were exported to Russia in July.

    The partnership is calling for KT&G to export its tobacco heating devices and tobacco sticks worldwide through PMI’s global sales network.

    The exports to Russia come as heat-not-burn (HNB) appears to be losing steam in South Korea, with category penetration decreasing for the second consecutive quarter. The rate stood at 13 percent at the end of last year but declined to 12.6 percent in the first quarter and 12.4 percent in the second quarter.

    The company, however, said this does not mean a deadlock in HNB products’ growth, citing the expansion in overseas markets.

    “From a future business standpoint, the overall heat-not-burn tobacco market is expected to grow,” a company spokesperson was quoted as saying. “When the new products are introduced, the market is bound to grow. While there would be some minor impact from governments’ policies and market events, there is no doubt about the growth trajectory.”

    KT&G said conventional tobacco sales this year will likely exceed its annual goal set earlier as demand remains strong. In exports, the firm has already secured shipping volume destined for Middle Eastern markets in the second half of the year, while other overseas markets are showing signs of recovery from the impact of Covid-19.

    KT&G reported KRW1.32 trillion in consolidated sales during the latest quarter, up 4.8 percent from a year earlier. But the operating profit contracted by 1.1 percent year-on-year to KRW394.7 billion, due to the decline in duty free sales.

    Overseas tobacco sales increased by 14.1 percent to KRW286.4 billion, as its main export markets in the Middle East show solid recovery. The company expected growth will continue as its sales are increasing in Latin South America and Africa.

    KT&G’s international ambitions were examined in-depth in Tobacco Reporter’s June 2020 issue.

  • Bhutan to Tolerate Tobacco Sales

    Bhutan to Tolerate Tobacco Sales

    Photo: Taco Tuinstra

    The decision by Bhutan’s government to allow the opening of tobacco sale outlets in the country is consistent with the nation’s Tobacco Control Act and constitution, according to the Office of the Attorney General (OAG).
     
    While the Tobacco Control Act of 2010 restricts the domestic sale and purchase of tobacco products, it allows individuals to import tobacco for personal consumption.
     
    Because of the coronavirus crisis, however, Bhutan has closed official border crossings, boosting illegal imports. By allowing limited domestic sales, the government hopes to crack down on smuggling.
     
    Responding to critics who questioned the legality of the measure, the OAG said the extraordinary situation brought about by the coronavirus crisis justified the measure. However, the office insisted that the domestic sales outlets could be tolerated only for the duration of the pandemic.

    Bhutan banned tobacco sales in December 2004. Soon after, Tobacco Reporter visited the Himalayan kingdom to report from the world’s first officially smoke-free nation.

  • Cigarette Sales Up in South Korea

    Cigarette Sales Up in South Korea

    KT&G cigarettes sold in the domestic market
    Photo: KT&G

    Sales of cigarettes in South Korea rose 3.8 percent in the first half of 2020, according to data compiled by the Ministry of Economy and Finance.
     
    South Korean smokers purchased 34.8 billion cigarettes from January until June, compared with 33.4 billion cigarettes in the same period last year.
     
    Meanwhile, sales of heat-not-burn tobacco products fell 6.6 percent to 180 million units in the first half of 2020. Sales of e-cigarettes plunged 80.3 percent to 1.2 million pods during the period as the government strongly advised people against vaping.
     
    The longer-term trend of tobacco sales remains firmly downward. Compared with the first half of 2014, cigarette sales declined 14.7 percent.
     
    In January 2015, South Korea increased the price of cigarettes by 80 percent to KRW4,500 ($3.76). In 2016, it required tobacco companies to place graphic images depicting the harmful effects of smoking on cigarette packs.

  • Combustibles Outperform E-Cigarettes

    Combustibles Outperform E-Cigarettes

    Photo: Tobacco Reporter archive

    Traditional cigarette sales in the U.S. have continued to do better than those of e-cigarettes during the coronavirus pandemic. Overall sales volume for combustible cigarettes was down 0.2 percent for the four-week period ending July 11 while e-cigarette sales were down 13.2 percent, according to Nielsen data.

    David Sweanor

    The drop in e-cigarette sales follows more regulation on the products from the U.S. Food and Drug Administration. “It is deeply ironic that the credit for the recovery of the cigarette business from a near-death experience a little over a year ago can be credited to the Centers for Disease Control and Prevention, Michael Bloomberg and the others who pushed an abstinence-only agenda on nicotine,” said David Sweanor, an adjunct law professor at the University of Ottawa and the author of several e-cigarette studies.

    “By undermining the low-risk alternatives to cigarettes, they protected the cigarette business.” When the stay-at-home orders were first issued, combustible cigarette sales increased 1.1 percent for the week ending March 22.

  • Kazakhstan Strengthens Tobacco Controls

    Kazakhstan Strengthens Tobacco Controls

    Photo: Tobacco Reporter archive

    A comprehensive set of tobacco control measures has been adopted after the president of Kazakhstan, Kassym-Jomart Tokayev, approved the legislation on July 8, 2020.
     
    Under the new legislation, the definition of tobacco products has been expanded to include all nicotine products, such as e-cigarettes and heated-tobacco products. The law also bans the import, production, sale and distribution of smokeless tobacco products.
     
    The list of smoke-free places has been expanded, now including bus stops, outdoor playgrounds, underground walkways, transit areas and cars with children inside. Using new products in these places is also banned, and waterpipes are not allowed to be used in public; they are only allowed in homes.
     
    Fines have been increased.

    Manufacturers must now disclose information on the content of all nicotine-containing products, and the size of pictorial health warnings has increased. Tobacco products cannot be displayed at point-of-sale, and the purchase age has been raised to 21 years.  

  • Japanese Cigarettes Unaffected by Boycott

    Japanese Cigarettes Unaffected by Boycott

    Photo: okaybuild from Pixabay

    Sales of Japanese cigarettes have remained resilient in South Korea despite a consumer boycott against Japanese products, reports The Korea Bizwire.

    The Korea Customs Service reported that South Korea imported 4,220.6 tons of cigarettes from the Philippines between July last year and June of this year, which was merely 2.79 percent lower than the volume of imports during the same period in the previous year.

    Among the top four cigarette companies dominating the South Korean market, Japan Tobacco International (JTI) is the only company with a production plant in the Philippines. All cigarette imports from the Philippines, therefore, are de facto produced by JTI.

    Sales of Japanese cars and beer, by contrast, have declined significantly in Korea because of the boycott, which was sparked by a deepening dispute over the countries’ wartime legacy.

    Experts say tobacco consumers tend to be more brand loyal than users of other products. What’s more JTI’s share in South Korea has been comparatively small, lowering the chance of being affected by the boycott movement.

  • South Korea: Sales of Heated Products Likely to Edge Up

    South Korea: Sales of Heated Products Likely to Edge Up

    Photo: KT&G

    Sales of heated tobacco products in South Korea will likely edge up this year, even as the overall tobacco market is expected to decline, reports The Korea Herald, citing figures from Euromonitor International.

    According to the market intelligence company, the Korean tobacco market reached KRW17.19 trillion ($16 billion) in 2019. Of that figure, KRW1.89 trillion was spent on heat-not-burn cigarettes, making South Korea the second-largest market for such products after Japan.

    Euromonitor forecast Korea’s heating tobacco product market to reach KRW2 trillion in 2020.

    Sales of e-cigarettes are expected to drop by 80 percent to KRW16.8 billion this year in the wake of new government restrictions on the category.

    Flavored tobacco products, meanwhile, are gaining popularity in Korea. Last year, flavored products accounted for about 20 percent of South Korea’s conventional cigarette market, which is higher than in Japan (7 percent) and China (1.7 percent).

  • Unidentical Twins

    Unidentical Twins

    Photo: Keechuan | Dreamstime.com

    South Korea and Japan, the world’s leading heat-not-burn markets, have different views on the technology’s potential for tobacco harm reduction.

    By Stefanie Rossel

    Six years after Philip Morris International’s (PMI) IQOS device hit the shelves, Japan and South Korea are the world’s two leading markets for heated-tobacco products (HTP). Euromonitor International valued Japan’s HTP market at $8.59 billion in 2019, up from $7.76 billion in 2018. South Korea’s HTP market totaled $1.61 billion in 2019, up from $1.53 in 2018 and more than $1 billion above third-ranking Italy. In contrast to South Korea’s overall tobacco sector, which is expected to grow only modestly through 2023, the country’s HTP market may increase by 21 percent annually to reach $4.4 billion, according to Euromonitor.

    That South Korea followed in the footsteps of Japan surprised few. Both countries are perfect breeding grounds for high-tech reduced-risk tobacco products. Before the arrival of HTPs, their tobacco markets were dominated by combustible cigarettes. Both nations are health-conscious and tech savvy, sporting a love of gadgets. And both are economic powerhouses. With a population of 51 million, South Korea is the world’s 11th largest economy; Japan (population: 126.5 million) ranks third behind the U.S. and China. Both cultures value discretion and politeness, meaning that smokers are keen to avoid disturbing others, for example with secondhand smoke.

    There are, of course, differences between the two markets. Japan has often been cited as a special case in its rapid adoption of HTPs as there is little competition from other reduced-risk products (RRPs). Nicotine-containing vapor products are banned in Japan.

    Nonetheless, South Korea’s smokers eagerly embraced HTPs when they entered the market in 2017. Three types of electronic nicotine-delivery systems (ENDS) are sold in the country: e-cigarettes, HTPs and a hybrid product combining elements of both. Although e-liquid vapes were introduced earlier, HTPs quickly became much more popular. According to The Korea Herald, HTPs represented 13.5 percent of the country’s tobacco market in 2019 while e-cigarettes had a share of 4 percent. By comparison, the share of HTPs in Japan, where the products have been on the market since 2014, was estimated at 23 percent in 2019.

    In both countries, the HTP market is dominated by first-mover IQOS although other players have joined the race over the past few years. In Japan, IQOS held 17.7 percent of the country’s tobacco market in the first quarter of 2020. Other products include Glo (British American Tobacco) and Ploom (Japan Tobacco).

    In South Korea, HTPs include IQOS, Glo and KT&G’s Lil. With an estimated 50 to 60 percent, IQOS has the largest slice of the market.

    Advertisement

    Japanese success

    South Korea appears to offer even greater potential for lowering the overall smoking rate than Japan. Smoking is predominantly a male habit in South Korea, and although prevalence has slowly fallen over the past decades, it is still high compared with the Organization for Economic Cooperation and Development average of 23 percent. According to statista.com, 40.6 percent of male adults in South Korea smoked in 2018 whereas the figure for female smokers was 6 percent according to the most recent available data, from 2017. In total, the average smoking prevalence stood at 21.7 percent in 2018, down from 26.1 percent 10 years earlier, according to a study by the Korea Centers for Disease Control and Prevention.

    Until it became a testing ground for HTPs, Japan had similar figures. The share of men smoking decreased from 50 percent in 2001 to around 25 percent in 2018, with about 10 percent of Japanese women smoking, according to japan-guide.com. While sluggish at first, the decline accelerated spectacularly after the nationwide introduction of HTPs in late 2015. A study published in May 2020 on behalf of the Coalition of Asia-Pacific Tobacco Harm Reduction Advocates (CAPHRA) based on data from the Tobacco Institute of Japan and PMI confirmed that the remarkable reduction in combustible cigarette sales was triggered by the entry of HTPs.

    David Sweanor, a professor at the Faculty of Law of the University of Ottawa and one of the study’s authors, calls Japan a success story in tobacco harm reduction. The Japanese experience, he says, proves how consumers’ interest and the regulatory environment shape markets. While Japanese regulations precluded alternatives to combustible cigarettes, such as nicotine vapor products, HTPs generated huge interest among smokers in Japan.

    “As more [smokers] adopted the alternative, they helped speed switching by others,” says Sweanor. “I think this gives us an indication of just how much more rapidly countries could reduce cigarette use if there were many different low-risk alternatives available and policies and public education campaigns facilitated a widespread move away from [combustible] cigarettes. We have seen the most rapid decline in cigarette sales ever witnessed in a major market. A third of the cigarette market was gone in a remarkably short period of time, and this was accomplished with a noncoercive measure. People who smoke cigarettes were simply provided with a viable alternative.”

    Sweanor insists there now is evidence that a range of low-risk products could help rapidly achieve the smoking rate targets of the World Health Organization’s (WHO) sustainable development goals. “To seek to ban or limit access to such products protects the cigarette industry rather than public health,” he says.

    RRPs are the most disruptive influence on smoking in decades, according to CAPHRA Executive Director Nancy Loucas. In northern Asia, HTPs are the most popular form of safer nicotine products, she says. “So it is very disheartening that countries in Asia Pacific, like Korea and the Philippines, are looking to either ban and/or reduce access and choice of all forms of tobacco harm-reduced products for their smoking citizens.”

    South Korea’s home-grown heat-not-burn device, Lil by KT&G (Photo: KT&G)

    Different stance

    South Korea’s government, however, turned out to be less receptive to the harm reduction potential of HTPs than Japanese authorities. In June 2018, the country’s ministry of food and drug safety announced the results of its own study of HTPs, claiming that five cancer-causing substances had been found in the products, with the level of tar in some of them exceeding that of conventional cigarettes. The public health agency also ruled out that HTPs could serve as smoking cessation tools if they produced similar levels of nicotine as traditional cigarettes. The announcement sparked a legal battle with PMI and an ongoing conflict between tobacco manufacturers and South Korea’s government over the latter’s attempts to impose stricter regulations on HTPs.

    Advertisement

    The product category also saw a significant tax hike. Unsure about how to treat HTPs, regulators initially taxed them at half the per-pack rate of combustible cigarettes and required them to carry a dedicated health warning featuring a syringe. After category growth and a WHO recommendation, the government increased the tax rate to 90 percent of that of cigarettes and changed the warning labels to match those of traditional cigarettes.

    KT&G in January 2020 announced an agreement with PMI for the distribution of three HTPs and a vapor product outside of South Korea. Although the target markets have yet to be revealed, Japan is likely to be among them as it accounts for more than 90 percent of the global $5 billion HTP market, according to Euromonitor. And the category is expected to grow further in the country. The Japanese Ministry of Health, Labour and Welfare’s 2018 National Health and Nutrition Survey, which was published in January 2020, found that 30.6 percent of Japanese male current adult smoker and 23.6 percent of Japanese female current adult smokers were already using HTPs.

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Jordan: Industry Blamed For High Smoking Rates

    Jordan: Industry Blamed For High Smoking Rates

    Photo: ZEBULON72 from Pixabay

    Jordan’s exceptionally high smoking rates have been exacerbated by the influence of the tobacco industry, according to a recent article in The Guardian.

    With 60 percent of Jordanian men and 17 percent of women smoking, the country’s smoking rate is now the world’s highest, surpassing that of Indonesia, which was long considered to have had the world’s highest tobacco usage.

    More than eight out of 10 Jordanian men smoke or regularly use nicotine products including e-cigarettes, according to a government study carried out in 2019 in collaboration with the World Health Organization. Jordanian men who smoke daily consume an average of 23 cigarettes a day, the survey found.

    Critics attribute Jordan’s high smoking rates in part to the influence of Big Tobacco, which they say operates with fewer restraints in the kingdom than elsewhere.

    Tobacco company lobbyists have been accused of inappropriate involvement in shaping regulations on their products in Jordan.

    The Guardian cited minutes showing that lobbyists from British American Tobacco, Japan Tobacco International (JTI) and Philip Morris International (PMI) attended a series of meetings last year to discuss standards for e-cigarettes and heated tobacco products.

    PMI and JTI said that it was normal and lawful for their companies to be consulted as stakeholders when relevant regulatory issues were being debated.

    “Our interactions with government officials in Jordan—like elsewhere—comply with all applicable laws,” PMI was quoted as saying.

    “In addition, we abide to our own international standards and practices which are stricter than many national laws. In any democratic society, the central objective of regulatory policy—ensuring that regulations are designed and implemented in the public interest—can only be achieved with full participation of those concerned.”

    Jordan ranked second in the world for tobacco company interference in government, according to analysis by a civil society group.