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Tag: Covid-19

  • Article: Ripple Effect of Restrictive Tobacco Regulations in S. Africa

    Article: Ripple Effect of Restrictive Tobacco Regulations in S. Africa

    South Africa’s 2020 tobacco ban, intended to reduce smoking-related health risks during the COVID-19 pandemic, drove legal sales underground and opened the door for illicit products that today account for as much as 75% of the market, according to law graduate Mukundi Budeli, writing for the Rational Standard and republished by the Free Market Foundation. Budeli said the shift cost the government tens of billions in lost tax revenue, fueled organized crime, and exposed consumers to unregulated and potentially more harmful products.

    He also said the policy hastened the departure of British American Tobacco, which announced the closure of its Heidelberg plant by the end of 2026, which will directly affect 230 employees and is expected to ripple across the broader tobacco value chain, impacting up to 35,000 jobs. Budeli argues that the crisis illustrates the unintended consequences of overly restrictive regulation and calls for a re-evaluation of South Africa’s approach to tobacco policy. He suggests that future governance should strike a balance between public health objectives, economic stability, and individual freedoms to prevent similar market distortions.

    The Free Market Foundation emphasizes that the situation serves as a warning to policymakers about the dangers of regulatory overreach and the need for pragmatic, accountable, and market-aware legislation in the tobacco sector.

  • Dutch Study Finds Fewer People Seeing GPs to Stop Smoking

    Dutch Study Finds Fewer People Seeing GPs to Stop Smoking

    Fewer people in the Netherlands are visiting general practitioners for help quitting smoking since the start of the COVID-19 pandemic, according to new research by health services institute Nivel. Nivel said smoking rates dropped only slightly—from 21.7% in 2019 to 19% in 2023—while vaping increased during the same period, and that changes in reimbursement cannot explain the decline.

    While GP services largely recovered after an initial drop during the pandemic, requests for smoking cessation support did not rebound. Although the study did not provide the exact number, it stated that consultations for quitting smoking in 2023 reached their lowest level since records began in 2014, despite the expansion of insurance coverage for cessation support since 2020. The study also found that patients have been visiting GPs less frequently for education-, work-, and social-related issues since the pandemic.

  • Battening Down the Hatches

    Battening Down the Hatches

    Photo: Synthex

    Having weathered the supply disruptions of Covid-19, tobacco freight forwarders must now dodge missiles in one of the world’s busiest waterways.

    By Stefanie Rossel

    Forwarding businesses that are specialized in the shipping and storage of tobacco have gone through some challenging years: The Covid-19 pandemic led to a scarcity of containers and caused shipping rates to skyrocket in 2020–2022. The situation eased in 2023 when inflation tempered demand and eventually even reversed the supply and demand balance.

    The end of last year, however, brought about a new test for the sector. Just as global supply chains returned to normal, the Houthis, a Shia Islamist political and military organization that emerged from Yemen in the 1990s, began attacking container ships and oil tankers passing through the southern Red Sea and even hijacked one of the vessels.

    The attacks with ballistic missiles and drones near the entrance to the Bab-el-Mandeb Strait—a vital corridor for global shipping—started Nov. 19, shortly after the outbreak of the war between Israel and Hamas in early October. The strikes are in retaliation for Israel’s military offensive in the Gaza Strip, which by mid-February had killed around 27,500 civilians, according to Gaza’s health ministry. The Houthis claim that they target vessels linked to Israel and its U.S. and British allies, although ships associated with other nations have reportedly been hit as well.

    There is strong evidence that Iran is bankrolling and arming the militants, who have meanwhile extended their attacks to include the neighboring Gulf of Aden. In response to the continuing attacks, U.S. and British forces have struck Houthi targets in Yemen to secure the waterway. The European Union is also planning a military operation to protect one of the world’s most important maritime trade routes.

    Despite the airstrikes on the Houthis’ bases in Yemen, the rebel group’s drone and missile activity continues. Shipping companies began avoiding trade routes via the Suez Canal In December, rerouting their journeys via Africa’s Cape of Good Hope—a detour that greatly increases the time and cost of many shipments. According to data from supply chain platform Project44, the number of container vessels sailing through the Suez Canal fell by about 65 percent between December 2023 and the end of January 2024.

    Longer Travel Time, Higher Costs

    The Suez Canal carries an estimated 12 percent of global trade and is the shortest sea route between Southeast Asia and Europe. Cargo travels 8,500 nautical miles in 26 days to be shipped from Singapore to Rotterdam, for instance. By contrast, the trip around the southern tip of Africa takes 36 days and measures 11,800 nautical miles.

    The Red Sea shipping disruptions impact many nations, but European countries are likely to feel the heaviest impact, according to business intelligence firm Euromonitor International. While electronics, chemicals, automotive, machinery and other engineering industries in Europe—which rely heavily on components imported from Asia—are the most vulnerable to trade disruptions, production disruptions would also impact upstream industries and cause temporary deficits of components or manufactured goods. “In turn, this would add to the higher inflationary pressures across Europe,” writes Euromonitor in a report. “Companies are also likely to face greater pressure on their profit margins as slower economic and consumer income growth make it more difficult to fully pass on cost increases to the end consumer.”

    Nonetheless, Euromonitor says that large-scale trade disruptions as witnessed during the Covid-19 pandemic are unlikely because global production capacity remains sufficient and shipping companies and buyers have greater flexibility in adjusting their trade routes and production processes. This, however, will result in higher logistics costs for the companies. Euromonitor estimates that the 10 extra days needed to sail around the Cape of Good Hope require approximately $900,000 in additional fuel. Increased travel time and higher insurance costs for shipping companies also directly impact shipping rates, the research company points out. “For example, freight prices for a 40-foot-equivalent container on Asia-Europe routes have more than doubled to $4,000.”

    The shipping disruptions lead to a series of other issues, including delays further down the transportation network. “Changes and disruptions to shipping schedules will cause challenges in ports and put greater pressure on cargo handling and road transport sectors to efficiently handle the goods and avoid major delays,” writes Euromonitor. “For buyers of logistics services, it will likely result in higher prices, as logistics providers will face higher labor, fuel and fleet management costs.”

    Challenging Shipments

    Lisa Rautenbach | Photo courtesy of Andromeda Forwarding

    Sea freight accounts for 80 percent of Andromeda Forwarding and Logistics’ operations. While it offers all the services of a carrier, the Rotterdam-headquartered company does not own any vessels.

    Until the Houthi attacks began, 80 percent of Andromeda’s shipments went through the Suez Canal, according to Lisa Rautenbach, Andromeda’s tobacco department manager. “This issue has so far impacted all commodities that have to be transported through the Red Sea and the Suez Canal,” she says. “Routings dramatically changed, with the result that they have a very long transit, and some routings have added an extra 30 days prior to arrival.”

    Meanwhile, shipments are being delayed, leading to longer transit times and additional surcharges, with minimum equipment and space available for new bookings. Vessels are overbooked, leaving little space for additional shipments. “Blank sailings,” which is when an ocean carrier cancels or skips a scheduled port of call or region in the middle of a fixed rotation, also occur.

    Freight rates increase, and liners use the Red Sea crisis as an excuse to raise rates for routings that don’t even need to be rerouted or were never planned for the Red Sea route, according to Rautenbach. “After finally having seen stable rates after the pandemic, we now have to cope with supplementary fees that are added to pending shipments already sailing; with shipments forced to be rerouted while already on route; and, unfortunately, with disappointing our customers, which is out of our control.”

    While it is uncertain how much longer the security crisis in the Red Sea will last, shippers, vessel operators and manufacturers may perhaps take comfort in the fact that they have learned from the Covid pandemic. In a recent article on U.S. National Public Radio, supply chain experts noted that affected companies quickly evaluated the emerging threat this time and took action much sooner. Manufacturers benefit from having gone back from a just-in-time to a just-in-case inventory due to the pandemic, experts said. The bottom line, however, is that all stakeholders involved in the forwarding business must learn to live with uncertainty.

    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.
  • PMI, Medicago Cut Ties After WHO Rejection

    PMI, Medicago Cut Ties After WHO Rejection

    Credit: Antonioguillem

    Philip Morris International and the health group Medicago have severed ties after the World Health Organization rejected Medicago’s Covid-19 vaccine, according to a tobacco control body.

    Covifenz, the world’s first plant-based Covid-19 vaccine, was jointly developed by Medicago, which is owned by Mitsubishi Chemical, Philip Morris and Glaxo, according to Bloomberg. The Canadian government, which provided $173 million in funding for its development, has cleared it for use.

    The government of Quebec previously said it wanted to help Medicago replace its shareholder PMI with another investor so that the biotech firm can distribute its Covifenz Covid-19 vaccine internationally.

    “Tobacco corporations, vaccines and governments don’t mix well, and we applaud the expulsion of Philip Morris from the Medicago collaboration,” Les Hagen, the executive director of not-for-profit organization ASH Canada, said in a statement. 

    Medicago’s request for an emergency-use listing was denied earlier this year by the World Health Organization because of the links with tobacco industry.

    Earlier this year, Medicago announced it would cut 62 jobs at its manufacturing facility in Durham, North Carolina, USA, which played a key role in producing the company’s tobacco plant-based Covid-19 vaccine.

  • Study: Major Drop in Vaping by Under-20s

    Study: Major Drop in Vaping by Under-20s

    Use of e-cigarettes vaping devices dropped during the first year of the Covid-19 pandemic, according to a new study.

    Researchers from Johns Hopkins University in Baltimore, Maryland, found that usage of vaping products dropped seven percent overall from 2018 to 2020 – including a 17 percent drop among people aged 18 to 20.

    Researchers published their findings Friday on the JAMA Network Open after gathering data from the U.S. Centers for Disease Control (CDC) and Prevention’s Behavioral Risk Factor Surveillance System for the study, according to media reports.

    The survey included a total of 994,307 respondents. In 2017, the CDC reported 4.4 percent of U.S. adults reported use of an e-cigarette. The figure climbed 25 percent to 5.5 percent in 2018.

    ‘This increase, primarily observed in younger age groups, was associated with the concurrent rise in the availability of flavored products and high nicotine–concentration pod mod devices (modular vaping devices with refillable or replaceable nicotine cartridges, or pods, such as JUUL brand devices),’ the researcher’s wrote in the study.

    Data from 2019 was not gathered. In 2020, overall usage of e-cigarettes fell to 5.1 percent, a seven percent drop from two years earlier. The most dramatic shift was seen among people aged 18 to 20 years old – the youngest group included in the study.

  • Top Court Reviews Tobacco Ban

    Top Court Reviews Tobacco Ban

    The government wants to overturn a lower court’s verdict that the ban was unconstitutional.

    South Africa’s Supreme Court of Appeal heard an appeal on Thursday arguing that the tobacco ban during the country’s Covid-19 lockdown was justifiable under the constitution, according to the Times Live.

    In December 2020, the Western Cape High Court found that the tobacco ban had breached a number of human rights under the constitution and that the ban was unlawful because it was not “necessary” to prevent escalation or alleviate effects of the disaster (the coronavirus pandemic) as required by the Disaster Management Act.

    The ban has not been in effect for a while, and President Cyril Ramaphosa said that the national state of disaster would soon be lifted as well, according to his state of the nation address. It is not guaranteed that another state of disaster would not be declared due to new and potentially more harmful Covid-19 variants, however. The court decision on the tobacco ban is important, then, because it would set precedent for future states of disaster.

    “In a situation of evolving scientific knowledge, and with infection numbers rising and likely to continue to do so, the government had to take a cautious approach,” said Andrew Breitenbach, counsel for the government, arguing that the court judgment should not stand.

    The goal of the ban was to relieve the strain on the healthcare system, and Breitenbach argued that the science at the time showed that smokers had higher rates of hospitalization and severe illness from Covid-19.  

    Alfred Cockrell, counsel for BAT South Africa, said it that the government needed to show that stopping smoking during lockdown would reverse or lessen the progression of Covid-19, not just that stopping smoking had an immediate “general good” effect.

    “The point is that the dangers from cigarette smoking result from long-term chronic use,” Cockrell said.

    More than 18 months after South Africa lifted its tobacco ban, the country is still coping with elevated levels of illicit cigarette sales.