Blog - Tobacco Reporter

Excise Duties, Tobacco Purchasing Age Raised

Turkmenistan has raised the excise duty rates for production and import of alcohol and the import of tobacco products, reports Interfax. The legal purchasing age for tobacco products was also raised from 18 years old to 21 years old.

Excise on imported tobacco products will rise from 93 percent to 116 percent effective Jan. 1, 2023. Excise on strong alcoholic beverages produced in the country will increase from 53 percent to 61 percent; beer produced in the country will see an increase from 26 percent to 30 percent; and imported beer will increase from 80 percent to 92 percent.

The purchase age increase is effective immediately.

December 1, 2022

Flavor Ban Didn’t Stop Vapers

The U.S. Food and Drug Administration ban on flavored tobacco products, except for menthol and tobacco flavors, did not stop consumers from vaping, reports EurekAlert!, citing a study published in Tobacco Control.

The study showed that less than 5 percent of the 3,500 adult e-cigarette users surveyed quit using e-cigarettes in response to the ban. The remaining respondents switched to other forms of tobacco products or flavors of e-cigarettes that are not covered by the ban.

“An increasing body of literature shows that e-cig flavors themselves cause damage when inhaled, so it makes sense to ban flavors,” said Deborah J. Ossip, a tobacco research expert and professor in the Department of Public Health Sciences and Center for Community Health and Prevention at the University of Rochester Medical Center (URMC) who co-authored the study. “But the ban doesn’t appear to be working. People—including youth—can still get flavored products and are still using them.”

Lead study author Dongmei Li, associate professor of clinical and translational research, obstetrics and gynecology and public health sciences at URMC, stated that a big issue is that the ban did not cover products such as disposable e-cigarettes and e-cigarettes that use tanks rather than cartridges or pods.

“Other forms of flavored e-cigs, especially disposable e-cigs, have become very popular after the FDA policy,” Li said. “The FDA policy also did not ban menthol[-flavored] or tobacco-flavored products—and our study shows many people switched to menthol-flavored e-cigs after the ban. It seems many people find menthol to be a nice flavor.”

Of the survey respondents, nearly 30 percent switched to tank or disposable flavored e-cigarettes and another 30 percent switched to menthol-flavored or tobacco-flavored pods; 14 percent switched to combustible products, like cigarettes, and 5 percent switched to smokeless tobacco. Less than 5 percent quit using e-cigarettes following the ban.

December 1, 2022

BAT Donates Cigarette Destruction Machine

BAT has donated a Hammermill cigarette destruction machine to the Uganda Revenue Authority (URA) to support the national fight against illicit cigarette trade, reports the PML Daily.

Receiving the machine at the URA head offices in Nakawa, acting Commissioner of Customs Okaka Godfrey said that the Hammermill will provide a more convenient and cost-efficient way to destroy illicit cigarettes compared with manual methods.

The acquisition of the machine follows a report by Kantar suggesting that nearly one-third of the cigarettes sold in Uganda are illicit. More than half of these illicit cigarettes are manufactured in Uganda for export, with the rest being manufactured in other countries before being smuggled into the country.

The government misses out on an estimated USH30 billion ($8.01 million) in tobacco tax revenues each year due to the illicit cigarette trade. BAT attributes a recent 41 percent drop in tax remittances to the URA to competition from the illicit market.

According to BAT Managing Director Mathu Kiunjuri, the illicit trade problem has become worse recently. This year, the share of the illicit market has increased to 27.5 percent from 23.8 percent in 2021 and 15.4 percent in 2020.

Between 2019 and 2022, URA enforcement teams seized more than 293,099 cartons of illicit cigarettes valued at $340,000. The major brand intercepted was Super Match made in Uganda for export, followed by high end brands such as Dunhill, Business Royal and Sportsman.

December 1, 2022

Brazil Anticipates Larger Crop in 2023

Farmers in southern Brazil have planted enough tobacco to harvest 604.73 million kg in 2023—7.95 percent more than in 2022, reports Kohltrade, citing the country’s tobacco growers’ association, Afubra.

In Rio Grande do Sul, the production estimate points to 256.73 million kg of tobacco, cultivated in an area of 117,675 hectares with a productivity of 2,182 kg per ha. Compared with the past crop, tobacco growers in the Rio Grande do Sul increased their area by 3.17 percent and production should be 3.8 percent higher, Afubra estimates. Average productivity during the 2021–2022 harvest was 2,168 kg per ha.

In Santa Catarina, the projection is 191.55 million kg, produced in an area of 77,489 hectares with a productivity of 2,472 kg per ha. The planted area increased 10.22 percent from last year, and production is estimated to be 11.49 percent higher. Santa Catarina’s farmers average productivity was 2,444 kg per ha in the past season.

In Parana, production should reach 156.46 million kg in an area of 66,576 hectares with an estimated productivity of 2,350 kg per ha. The producers of Parana increased their area under tobacco by 6.99 percent. Afubra estimated increased production will be up by 10.93 percent. Productivity in the past season was 2,267 kg per ha.

Afubra President Benicio Albano Werner said the increase in the production area was expected. “The past crop was for a large part of tobacco growers very profitable,” he said. “This encouraged some producers to increase their planted area.”

December 1, 2022

Australia Plans Major Crackdown on Nicotine

Australia plans to tighten the screws on vaping and smoking, reports The Guardian.

While Australia was on the forefront of anti-tobacco policies for many years—the country pioneered plain packaging, for example—federal Health Minister Mark Butler says the former government has been “asleep at the wheel” as vaping skyrocketed.

Vaping rates doubled in Australia between 2016 and 2019. In New South Wales, almost a third of 16-year-olds to 24-year-olds had tried vaping by last year, up from 15 percent three years earlier, according to a state government population survey.

To help remedy the situation, the Therapeutic Goods Administration will begin public consultation on changes to importation laws, premarket assessments of vapor products, labeling, advertising, flavoring and identification of nicotine-containing products. Many nicotine-containing products are misleadingly labeled as nicotine-free, according to authorities.

It is illegal to sell, supply or possess an e-cigarette or any liquid that contains nicotine in Australia without a doctor’s prescription. But suppliers have been getting around this by removing “nicotine” from the ingredients list, even though their products contain it.

New South Wales Health revealed it had seized more than 157,000 vapes containing nicotine in raids in the 18 months leading to September.

The government also intends to further tighten the screws on combustible cigarettes. Among other measures, it wants to require cigarette manufacturers to print health warnings, such as “smoking kills,” on every individual cigarette and produce cigarettes in less appealing colors. Health promotion inserts should be put in every cigarette pack and advertising regulations will be updated to include vaping products. The government also wants to ban flavored cigarettes, including mentholated varieties.

The proposed measures are intended to help Australia achieve a smoking prevalence of less than 10 percent by 2025 and 5 percent or less by 2030.

The public consultation on reforms will be open until Jan. 16.

December 1, 2022

A Persistent Problem

Iran’s large illicit tobacco market has gotten even larger in the wake of U.S. sanctions.

By Vladislav Vorotnikov

Despite efforts to crack down, Iran continues to struggle with rampant illicit trade. In 2021, nearly half of the Iranian tobacco market was controlled by illegal businesses, according to the Association of Tobacco Products Manufacturers and Exporters. The authorities are believed to consciously turn a blind eye to smugglers and underground workshops producing cigarettes of dubious quality.

Although domestic cigarette production expanded in recent years, nearly 5,000 tons of tobacco products, primarily cigarettes, are smuggled into the market each year, according to Mohammad Reza Tajdar, the head of the tobacco products manufacturers association. Domestic consumption is 12,000 tons while Iranian cigarette factories produced roughly 5,000 tons last year, Tajdar said.

Legal imports exist in negligible quantities, and the gap between production and consumption is filled through smuggling and illegal domestic production, according to Tajdar. The illicit trade has bedeviled Iran for more than a decade, but it picked up tremendously after U.S. President Donald Trump imposed harsh sanctions against the country in 2018.

Illegal cigarette workshops in Iran “spring up like mushrooms,” so the volumes illegally produced in Iran exceed even those supplied through smuggling, according to Hossein Ali Pouraqbali, the former head of the country’s tobacco production and standards department.

Occasionally, authorities raid underground workshops, but their campaign remains haphazard. Since the beginning of 2022, the average price of cigarettes in Iran has jumped by nearly 42 percent. Without the illegal workshops, the price would rise even further.

Meeting the Challenge

Since the introduction of sanctions, legal imports of most cigarette brands have nearly come to a halt. The Iranian government also discourages the import of Western goods to the domestic market, citing ideological reasons but mainly to preserve foreign exchange, which is in increasingly short supply.

Pouraqbali explained that smuggling is limited to a handful of brands that cannot be imported legally. He estimated that illegal import reaches 2,000 tons per year.

In the past years, the Iranian tobacco manufacturers association has been waging war on illegal cigarette suppliers but with little success. Tajdar claimed that a large share of goods supplied through illegal channels turn out to be counterfeit, which means that it doesn’t comply with any production standards.

One challenge the industry faces is ignorance; the average customer is unable to distinguish counterfeit cigarettes from legally produced cigarettes. And even if they could, it might not make much of a difference; opinion polls suggest that a significant share of customers would opt for illegal products even if they were aware of their status—as long as those products are less expensive than legal ones.

Bringing Order to the Market

To help bring the illegal tobacco trade to heel, lawmakers have been discussing the creation of an electronic tobacco product tracking system, but few expect it to be implemented in the foreseeable future. Iranians are very sensitive to price fluctuations of consumer goods, especially since Western sanctions have caused purchasing power to nosedive.

Iran is currently battling one of the worst political crises in its modern history, sparked by the Sept. 16 death of a 22-year-old woman after her detention by the country’s morality police. Initial protests have quickly grown into one of the largest upheavals since the 1979 Islamic Revolution. At least 328 people have been killed and 14,825 others arrested in the unrest, according to human rights activists in Iran.

In such an environment, authorities may hesitate to implement measures that are likely to increase cigarette prices and stoke further discontent.

Legal Business Facing Criticism

In addition to illegal traders, legal tobacco companies face several other challenges in Iran. Over the years, Iranian officials repeatedly expressed dissatisfaction with the dominance of the local tobacco market by Western manufacturers.

During a press conference in August, Hojjat-ul-Islam Syed Salman Zakir, a member of the Social Commission of the Islamic Council, complained that more than 75 percent of Iran’s legal tobacco market is controlled by Japan Tobacco International and BAT.

Such anti-Western rhetoric is common in Iran, especially since 2018. JTI and BAT often are targeted by government officials and lawmakers who frequently demand higher taxes and import duties. Some even question whether Western businesses should be allowed to continue operating in the country.

Hopes on the Local Factories

The Iran Tobacco Co. (ITC), the oldest and biggest local cigarette manufacturer, currently controls around 10 percent of the domestic market, a fact that Zakir described as “regrettable.” However, the authorities hope that the balance of power will soon swing in ITC’s favor.

“ITC is currently paying special attention to fulfilling its social duties and supporting the population’s health,” Zakir said, adding that foreign tobacco companies neglect to fulfill their social obligations. JTI and BAT, he noted, import tobacco from abroad while ITC in March of 2022 rolled out a comprehensive support program for Iranian tobacco farmers.

“This is a good incentive for farmers [to boost operation], and we hope for a rise in its [ITC] share on the market,” Zakir added.

Targeting the lower end of the market, ITC can produce 40 billion cigarettes annually to meet 50 percent of domestic demand. The actual production, however, dropped from 12 billion cigarettes in 2018 to 6 billion in 2021.

In the previous years, Iranian officials estimated that ITC purchased 15,000 tons of tobacco from local farmers, creating 20,000 jobs in the industry. The government estimated that the latter figure could be ramped up to 100,000 jobs with a corresponding increase in local raw tobacco production. However, this would require allocating state aid to tobacco farmers—a step the Iranian government has been reluctant to take in the past several years.

ITC Mulls Investment in Zimbabwe

The Iranian Tobacco Co. wants to invest in Zimbabwe to reduce the cost associated with buying tobacco through middlemen, reports The Sunday Mail. Among the areas the Iranians are targeting are irrigation, curing and mechanization. They also want to contract with farmers and set up factories in Zimbabwe.

The investments were discussed during a visit to Tehran by a delegation led by Zimbabwe’s First Lady Auxillia Mnangagwa.

“We get our needs through agents, and prices go higher for us and also causing Zimbabwean farmers to have little profit,” said Iran’s vice president of commerce and economy, Hamid Gharesheikh, during the meeting.

“We want to get companies to work with directly in Zimbabwe and do away with middlemen. We are under sanctions, and it’s difficult for us to import from other Western countries, but with Zimbabwe, we have a better understanding and for that, our cooperation will be helpful to both of us. We can also supply you with equipment such as tractors and implements for production. We can also supply dryers for curing and processing,” he said.

The proposed cooperation dovetails with Mnangagwa’s passion to economically empower Zimbabwe’s citizenry, especially women and youths, in the effort to attain upper middle-income status for the country by 2030.

During the meeting, Gharesheikh said Iran would prioritize women in its investments.

December 1, 2022

New Mexico Sues Over Tobacco Settlement

New Mexico is suing over a dozen tobacco companies over payments relating to the 1998 Master Settlement Agreement, alleging conspiracy and breach of contract, reports the Albuquerque Journal, citing Attorney General Hector Balderas.

Balderas claims that the companies have withheld portions of annual payments due under a multistate tobacco settlement. According to the attorney general, New Mexico has lost more than $84 million over the past 14 years.

“There is no end to these baseless delay tactics, and it is time to force the tobacco companies to pay New Mexico what they owe for damages—funding much-needed health initiatives,” said Balderas.

Companies are obligated to pay annually under the settlement, but each year, the companies file disputes that result in a percentage of the payment being withheld, which triggers an arbitration process that can take years, according to the attorney general’s office.

The amount withheld grows each year, according to officials, and the lawsuit states that the tobacco companies do not disclose how much is withheld or where the withheld funds are held, and withholding practices can change annually.

“This conspiracy is a calculated strategy to permanently and fraudulently decrease defendants’ contractual payments under the (settlement agreement) and to frustrate the purposes of the (settlement agreement),” the suit reads.

November 30, 2022

Supreme Court Asked to Stop California Ban

Tobacco companies have asked the U.S. Supreme Court to stop California from enforcing a ban on flavored tobacco products set to go into effect on Dec. 21, reports CBS News Bay Area.

On Nov. 8, Californians voted to uphold a state law ending the sale of most flavored tobacco products, including flavored e-cigarettes, menthol cigarettes and flavored cigars.

Originally passed by lawmakers in 2020, the measure was put on hold after opponents gathered enough signatures to force a referendum on the ban.

Following the Nov. 8 ballot, tobacco companies challenged the law in court, arguing that only the federal government can ban tobacco flavors, as the Family Smoking Prevention and Tobacco Control Act gives the U.S. Food and Drug Administration authority to regulate tobacco.

The Supreme Court filing states that the companies would suffer “irreparable harm” from being shut out of one of the country’s largest markets. Small retailers, they argued, would potentially have to lay off employees and close.

Previously the Ninth Circuit Court of Appeals denied the tobacco companies’ request to block the law pending appeal.

November 30, 2022

FEELM Presents Sustainable Vape

Smoore’s atomization platform FEELM has introduced a new sustainable product series, called Future.

Future is made with recycled paper rather than plastic and its design integrates the product’s body and packaging. The device contains post-consumer recycled material and bio-based material, reducing plastic use by 60 percent and curbing carbon emissions by up to 58 percent, according to FEELM.

After use, the product can be easily disassembled. Consumers can separate internal components, such as the battery core, plastic and e-liquid tank, and recycle them separately.

“The series is our latest sustainable design concept, aiming to make it easier for consumers to dismantle and dispose of products responsibly, whilst solving the environmental problems caused by littering,” says Totom Lu, director of FEELM’s design team.

The solution was developed in part with an eye on upcoming regulation. The EU for example intends to require disposable vapes to have removable and interchangeable batteries as early as 2025, according to FEELM.

The company believes that countries should improve the collection and recycling of electronic equipment, and to make it easier for consumers to properly dispose of their vapes. In a press note, FEELM said it would welcome any initiative that could standardize the free collection of disposable vapes at the point of sale, as well as awareness initiatives to educate consumers on the importance of recycling their devices properly.

November 30, 2022

Greenbutts and Boegli Partner in Filters

Greenbutts and Boegli Gravures have jointly developed a new technology to manufacture biodegradable filters.

Trademarked as Greenbossing, the innovation enhances and tailors existing filtration capabilities along with the sensorial experience, according to the companies.

Greenbutts’ fully patented biodegradable filters deliver the sensorial experience of traditional cigarette filters without the plastic waste.

“For decades, our company has placed itself on the cutting edge of new technological solutions in the field of macro, micro and nano embossing solutions called ‘Vividus,’ ‘Midas’ and ‘Iris,’” said Boegli Gravures CEO and chairman Charles Boegli in a statement. “We are very proud to partner with Greenbutts to join our competences and address the huge ecological needs arising in the field of filter manufacturing, to which Greenbossing will be the answer.”

“Our organization has cultivated a strong partnership with the world-renowned embossing technology company Boegli and is pleased to announce the patent filing of our joint technology,” said Luis Sanches, chief strategy officer of Greenbutts. “This new IP will revolutionize the process of Greenbutts’ filter rod manufacturing. Greenbossing is a truly innovative feature, which will strengthen our position by introducing the next generation of biodegradable filters for the tobacco industry.”

“We are very proud to have Boegli Gravures as a solid and reliable partner,” said Greenbutts CEO Tadas Lisauskas. “The embossing technology that we jointly developed is nothing short of revolutionary, and we look forward to introducing even further technological advances in the coming months. As the cigarette industry is faced with transformative changes, driven by single-use plastic legislation and stronger commitments to their environmental agendas, we will ensure that Greenbutts continues to offer industry-leading innovations to maintain our leadership status in assisting with this transition.”

November 29, 2022