Policymakers should consider the risks of encouraging the illicit trade of tobacco products before raising the prices through higher taxes, according to Alvarez & Marshall.
In a 2021 report titled “Causes and Control of Illegal Tobacco,” the U.S. consultancy says that taxation policy and its effect on the affordability of tobacco products is an important factor in the global illegal tobacco trade.
“There is a 97 percent correlation between taxes and tobacco consumption,’’ the A&M report said.
“Illegal trade grows when legal tobacco products become less affordable,” it added. “When cigarette prices rise more quickly than consumer incomes, consumers begin to seek cheaper options and switch to illegal products.”
This suggests that increasing the price of tobacco and reducing affordability encourages smokers to seek cheaper products and creates opportunities for criminals. In other words, less affordable tobacco products result in more illegal trade.
“We find that … if cigarettes become 10 percent more expensive for consumers relative to their income, the share of illegal tobacco will rise by an average of almost 7 percent,” A&M added.
In a separate study, relayed by the Business Inquirer, the EU-ASEAN Business Council and Transnational Alliance to Combat Illicit Trade estimates that governments in Southeast Asia lose tax revenues of about $3.32 billion yearly.
Aside from causing monetary losses to governments and legitimate businesses, the illegal tobacco trade undermines public health initiatives, contributes to underage smoking, and funds organized crime and terrorist activities, according to the EU-ASEAN study.
Badeco Adria will close its Fabrika Duhana Sarajevo (FDS) tobacco factory due to financial losses, FDS said on Feb 14.
In the past three years, losses have reached KM7.5 million ($4.3 million), FDS told SeeNews.
The decision will be put to the vote at a Badeco Adria shareholders meeting in early March, after which the 200 employees at the factory will be laid off and will receive severance pay.
Badeco Adria is the legal successor to FDS, which was established in 1880 as a tobacco company. After a restructuring process, the company changed its name to Badeco Adria in 2018. Badeco Adria is majority owned by Austria’s CID Adriatic Investments, which holds an 89.2 percent stake, according to the Sarajevo Stock Exchange.
FDS plans to halt its operations on March 31, according to Faktor news agency.
A majority of Swiss voters want to limit tobacco advertising seen by minors, reports SWI.
During a ballot on Feb. 13, 56.6 percent of voters and most of the country’s 26 cantons backed a proposal to ban all tobacco and e-cigarette advertising that may reach young people in Switzerland. About 5.3 million people took part in the vote.
Gregoire Vittoz, director of Addiction Switzerland, described the outcome as a “big step forward.”
“The people have understood that health is more important than economic interests,” said Stefanie de Borba of the League Against Cancer.
Home to some of the world’s largest tobacco companies, including Philip Morris International and Japan Tobacco International, Switzerland currently has some of the weakest laws against tobacco advertising in Europe.
While cigarette ads in general on television and radio are prohibited at the federal level, each region has different rules for tobacco promotions in cinemas and public places, such as festivals or public transport. Only a few cantons ban cigarette ads in the written press or on the internet.
Around one in four people in Switzerland smokes—a share that has remained stable over the past decade. The figure is slightly higher among 15-year-olds to 24-year-olds. Research shows that most adult smokers began when they were minors.
Critics of the people’s initiative, which included the Swiss government, argued unsuccessfully that the proposal represented an intrusion on economic freedoms and would be hard to implement in the digital age. They submitted a counterproposal that would have still allowed tobacco advertising at points of sale.
Federal authorities must now adjust Switzerland’s Tobacco Product Law to incorporate the proposal. A law must be drafted and put forward for consultation and discussion in Parliament. Once adopted, the law must be subjected to a facultative referendum. Health Minister Alain Berset said the new rules are unlikely to take force in 2022.
The JT Group’s revenue increased 11.1 percent to ¥2.32 trillion ($20.15 billion) in 2021. Adjusted operating profit a constant exchange rates was up 22.9 percent to ¥598.4 billion. On a reported basis, operating profit increased 25.4 percent to ¥610.4 billion. The company reported an operating profit of ¥449 billion, up 6.4 percent over that reported in the previous year.
“The JT Group reported a robust performance in 2021, driven by strong momentum across the tobacco business,” said JTI President and CEO Masamichi Terabatake in a statement. “Our consumer-centric approach and strong brand portfolio have enabled share gains in the majority of our markets and resulted in a record sales volume in the international tobacco business.
“Despite a challenging operating environment, including the ongoing pandemic, the group accomplished several important milestones in the year. We implemented measures to generate sustainable growth, notably in our priority investment category where we launched our new HTS [heated tobacco sticks] device, Ploom X, starting in Japan. We also successfully implemented various initiatives related to the new operating model for the consolidated tobacco business, which went live this January.”
Going forward, JTI’s priority will be to expand its presence in the reduced-risk product (RRP) category, with an emphasis on HTS products. The company aims to break even in the RRP category by 2027 by achieving a heated tobacco segment share in the mid-teens across its key HTS markets.
“To reach this goal, we are accelerating necessary business investments and expect an annual average growth rate of adjusted operating profit at constant currency to be mid-single digit during the 2022 business plan period,” said Terabatake. “Furthermore, we plan to grow profit, which in turn will increase shareholder returns, in line with our shareholder return policy.”
“Countries which have chosen to legalize and regulate e-cigarettes have seen a fall in overall smoking rates and have much better control over youth vaping. It’s exciting for Thailand, and in fact the world, that the government is now set to overturn its ban on the sale of vape products,” says Asa Saligupta, director of ENDS Cigarette Smoke Thailand (ECST).
According to Saligupta, Thailand’s harsh ban and penalties on vape sales has meant too many smokers have been stuck with cigarettes, while young people buy e-cigarettes in the underground economy with no control over the purchase age or product safety standards.
“We’ve seen the legalization and regulation of vaping in places like the United States, United Kingdom and New Zealand work very well. I’m delighted the Thai government is now listening to the science with the adoption of effective tobacco harm reduction (THR) policies now increasingly imminent,” he says.
The ECST director says Digital Economy and Society Minister Chaiwut Thanakamanusorn, government officials, public health experts and advocates have all been key to finally addressing Thailand’s failed tobacco control policies.
He says that, despite the minister adopting an evidence-based approach, local conservative health groups continue to unfairly target him and publicly scaremonger.
“It was a big breakthrough last year when the minister told local media that vaping is safer for people trying to quit smoking. Since then, he has walked the talk—looking at ways vaping can be legalized. He fully understands it offers smokers a less harmful alternative to deadly cigarettes and protects non-smokers from the dangers of second-hand smoke.
“Consumer groups like ours have worked hard to encourage our politicians and officials to follow the significant international public health evidence. It has been a long journey, but we’re pleased with the progress the government’s working group continues to make on legalizing e-cigarette sales,” says Saligupta.
International research also shows countries which have adopted progressive policies around vaping have seen their smoking rates fall twice as fast as those countries that haven’t.
Nancy Loucas
Nancy Loucas, executive coordinator of The Coalition of Asia Pacific Tobacco Harm Advocates (CAPHRA), says that by lifting its long ban on vape sales, Thailand will join about 70 countries that have legalized vaping.
“Around the world, vaping is saving millions of ex-smokers’ lives and can save many more if safer nicotine products are embraced, not demonized,” says Loucas. “Thailand’s 10 million smokers have long deserved a readily and legally available alternative to cigarettes. The country’s sky-high smoking rate is totally unacceptable but thanks to the work of ECST and others, it’s about to be seriously addressed.”
According to Loucas, Thailand has become increasingly isolated internationally with its harsh policies. Vapers currently risk arrests, sanctions and even imprisonment.
“By legalizing that sale of vapes, Thailand will join countries like the Philippines and Malaysia which are also waking up to the fact that vaping bans inevitably fail, leading to unnecessary smoking-related illnesses and deaths,” says Loucas.
Geek Bar is launching its first range of shisha vapes, which will be widely available across the U.K.
The Geek Bar shisha vape includes 575 puffs and uses the same battery technology as previous Geek Bar products. The range, which comes with 2 ml e-liquid capacity and contains 20 mg/ml nicotine to comply with U.K. regulations, is available in a number of flavors, including Watermelon Berries Shisha, Hawaii Sunshine Shisha and Pineapple Guava Shisha.
The fruit flavored range is designed to help adult smokers quit conventional cigarettes. A study conducted by Nicotine & Tobacco Research last year highlighted that vaping sweet flavors associated with fruits were more likely to help an adult smoker give up their habit than use of tobacco flavored e-liquid, according to Geek Bar.
“Shisha pipes have become increasingly popular in the U.K., and we wanted to give those who smoke them a safer option just like we do for conventional cigarette users with a range of disposable vape products which have been a phenomenal success in the U.K.,” said Geek Bar CEO Allen Yang.
“Due to the popularity of Geek Bar in the U.K., we’re delighted to add this new shisha range to our product offering. We are plugging an important gap in the market which will support improved public health in the U.K.”
The new shisha range will use Geek Bar’s new packaging which will allow both retailers and consumers to check the authenticity of the product from a compliance perspective as well as make it clear that the product is for sale to only over 18-year-olds.
Malaysians are skeptical about the effectiveness of a plan to prohibit the sale of tobacco and vapor products to those born after 2005, according to a survey by the Retail and Trade Brand Advocacy (RTBA) Malaysia Chapter that was relayed the New Straits Times.
Eighty-five percent of respondents to the RTBA survey said the ban would not work and would create a black market for cigarettes and vape products. They also said that the ban would be difficult to enforce and ultimately impact Malaysia’s legal and local businesses.
“Banning is not a solution,” said RTBA Malaysia managing director Fazli Nordin. “For example, vape products containing nicotine are currently prohibited from being sold in the market. Yet there is consumer demand for vape products containing nicotine. Worst still is the tobacco black market, where Malaysia has the highest level of illegal cigarettes in the world, driven by the huge price gap between legal and illegal products.”
Nearly 1,200 Malaysians participated in the survey by RTBA Malaysia, which is a non-governmental organization that safeguards businesses from criminal conduct.
While Malaysia’s plans were inspired by New Zealand’s, they differ in that New Zealand does not plan a ban on vapor products, according to Fazli.
“Instead, the country promotes vape as a less harmful alternative and encourages New Zealanders to make the switch from traditional cigarettes,” he said.
A recent study revealed that encouraging smokers to switch to vape as a less harmful alternative would help Malaysia reduce the smoking population to 4 million by 2025.
The report estimated that such a strategy would help the country to reduce its spending on treating smoking-related diseases by MYR1.3 billion ($310.21 million) in 2025.
RELX has initiated China’s first clinical research on vaping safety. The company is studying the acute effects of traditional cigarettes and electronic cigarettes on the human respiratory system and cardiovascular system. This month, RELX registered its clinical research with the China Clinical Trial Registry, a primary registry in the World Health Organization Registry Network.
In a press release, REXL took the opportunity to highlight its commitment to cross-disciplinary fundamental research into atomization mechanisms, so as to explore the long-term health effects of vaping.
In March 2021, RELX conducted clinical research on the metabolism and kinetics of nicotine. In both clinical studies, RELX used the vaping devices made by its strategic partner Smoore.
Moreover, in September 2021, RELX and Smoore took the lead in drafting two industry standards “General Technical Specifications for Electronic Atomization Devices” and “Safety Technical Specifications for E-liquid”, led by the Electronic Cigarette Industry Committee of China Electronic Chamber of Commerce.
In October 2020, the National Natural Science Foundation of China approved a research program on vaping harm reduction jointly conducted by Smoore and Tongji University. Over the next few years, Smoore and Tongji University will continue to conduct a series of studies on the health effects of vaping.
In January, Smoore launched the world’s thinnest ceramic coil vape pod solution—FEELM Air—in London. Compared with last generation, FEELM Air boasts an overall harm reduction performance improvement of 80 percent.
On Dec. 2, 2021, China’s State Tobacco Monopoly Administration issued the draft rules governing e-cigarettes following the regulator’s release of the exposure draft of national standards of e-cigarettes on Nov. 30, 2021.
As China’s national standards of e-cigarettes come into effective, RELX said it will continue to increase its R&D investment and examine the harm reduction of vaping via scientific substantiation.
KT&G’s net income declined 15.5 percent to KRW990 billion ($825,52 million) on weaker exports and other adverse developments, according to the company’s annual earnings release. Operating profit declined to KRW1.32 trillion from KRW1.47 trillion.
Sales grew 3.4 percent to an all-time high of KRW5.23 trillion driven by growth of the company’s heat-not-burn and overseas cigarette businesses, which offset decreases in KT&G’s real estate and cigarette export units.
In the fourth quarter of last year, KT&G’s bottom line plunged 63.7 percent on-year to KRW111.5 billion. Sales declined 2.3 percent to KRW1.2 trillion, with operating income tumbling 24.5 percent to KRW264.9 billion.
The company said it sold 38.8 billion cigarettes in overseas markets last year, down 7.4 percent from the prior year, with domestic sales edging down 1.3 percent to 41.1 billion cigarettes.
Despite the global spread of Covid-19, KT&G said it made forays into 20 new countries last year, with its overseas markets totaling 120 nations.
The company voiced optimism that its exports will gradually rebound down the road once global supply chain bottlenecks ease.
Philip Morris International plans to manufacture IQOS in the United States to get its tobacco-heating device back on that country’s store shelves, reports Bloomberg.
The move follows an adverse ruling against the company and its U.S. partner, Altria Group, in a patent dispute with British American Tobacco.
In September 2021, the International Trade Commission (ITC) upheld an initial determination from May 2021 that IQOS infringes on two patents owned by BAT subsidiary Reynolds American Inc. (RAI).
The ITC instituted an import ban and issued a cease-and-desist order, barring Altria Group from importing PMI’s IQOS 2.4, IQOS 3, IQOS 3 Duo products into the U.S. By declining to intervene, the U.S. Trade Representative upheld the ITC finding in November, leaving PMI with the options to produce IQOS domestically or tweak the design.
A design change, however, would require authorization from the U.S. Food and Drug Administration again.
In an interview with Bloomberg, PMI CEO Jacek Olczak, said the company had planned to manufacture IQOS in the U.S. all along. “From the very beginning of us going to the FDA, we had in mind that IQOS would one day not only be sold in the U.S., but manufactured there, if you take into consideration the size of the market and the opportunity for IQOS,” he said. “It’s just happening sooner because of the ITC decision.”
In July 2020, the FDA authorized PMI and Altria to market IQOS with certain modified-exposure claims, giving the company a leg up over its rivals.
PMI has not specified where it will be manufacturing IQOS but said it plans to sell IQOS in the U.S. again in the first half of 2023.
