Tag: South Korea

New end game in sight
Due to the rapid take-up of alternative tobacco devices in Japan and South Korea, Philip Morris International is looking to begin talks with governments within five years on phasing out traditional cigarettes, according to a story by Jackie Horne for asia.nikkei.com.
Horne said the time frame was based on projections of when the number of people using ‘new smoke-free devices’ would overtake the number of people smoking traditional cigarettes in those two countries.
“If you extrapolate the figures, then logically we could reach the tipping point in five years,” CEO Andre Calantzopoulos reportedly told the Nikkei Asian Review in a recent interview in Seoul.
“That is when we could start talking to governments about phasing out combustible cigarettes entirely.”
‘Calantzopoulos, who became chief executive in 2013, has staked his company’s future on next-generation devices it claims can reduce toxicity by as much as 90 percent,’ said Horne. ‘These include the IQOS device, which heats, rather than burns, tobacco packed into what resemble mini cigarettes.’
Calantzopoulos was quoted as saying that Asia was extremely important to the company as it implemented its strategy of phasing out conventional cigarettes.
The region was home to 60 percent of the world’s more than one billion smokers and Japan was the first and still the most successful market for IQOS.
Consumer take-up in South Korea, where sales began on a limited basis in late May, had also been encouraging.
Horne’s piece is at: http://asia.nikkei.com/Business/Companies/Japan-South-Korea-face-tipping-point-Philip-Morris-CEO?page=1.
July 18, 2017
KT&G to launch HNB device
KT&G has said that it will this year launch heat-not-burn (HNB) tobacco products in response to the growing popularity of these smoke-free devices, according to a Yonhap News Agency story.
South Korea’s biggest tobacco manufacturer is due to begin marketing the new product in September, a KT&G official said.
Phillip Morris Korea (PMK) began selling its IQOS HNB product on the local market on May 27.
“We are witnessing the growing popularity of IQOS, although it’s not been so long since its launch in South Korea,” a PMK spokesperson said, while refusing to elaborate on the level of sales.
PMK was quoted as saying that IQOS released about 10 percent of the toxic substances emitted by conventional cigarettes.
‘IQOS heats the tobacco just enough to release a flavorful nicotine-containing vapor without burning it,’ it said.
‘The tobacco in a cigarette burns at temperatures in excess of 600 C, generating smoke that contains harmful chemicals. But IQOS heats tobacco to much lower temperatures, below 350 C, without combustion, fire, ash, or smoke. The lower temperature heating releases the true taste of heated tobacco.’
British American Tobacco (BAT Korea), meanwhile, was quoted as saying that it would follow suit in August with the sale of its Glo HNB device and Neostiks, the consumable item used with the system.
‘Initial production of Neostiks in the Sacheon Factory is planned for export to Japan and for preparations for launching Glo in Korea,’ BAT Korea said on its web site.
‘Neostiks, specially designed tobacco sticks for Glo, are heated by the device to create a vapor with an experience similar to that of a cigarette but with reduced potential for risk.’
July 11, 2017
IQOS under scrutiny
Government authorities in South Korea said today they would be examining from next month the heated-tobacco product IQOS for any health risks it might pose, according to a Yonhap News Agency story.
IQOS, went on sale locally in June.
At a press conference in May called to announce the June launch of IQOS in Korea, Philip Morris Korea was quoted by The Korea Herald as saying that the device’s heated tobacco sticks delivered similar levels of nicotine to that delivered by traditional cigarettes, but reduced the exposure to harmful or potentially harmful chemicals by 90 percent.
The Yonhap story quoted that the Ministry of Food and Drug Safety as saying it would verify the claims. It said it would measure nicotine and tar levels.
Meanwhile, heated-tobacco products and electronic cigarettes were said to be ‘under scrutiny for their tax benefits’. These products attracted taxes that were 50-60 percent of those that were levied on conventional cigarettes.
Opposition lawmakers have introduced a revision to existing rules that would hike taxes on heated tobacco products and electronic cigarettes since, the lawmakers say, they, like conventional cigarettes, use tobacco.
Their move is supported by the drug safety ministry.
July 10, 2017
Heated-tobacco tax threat
A new bill seeking to impose on heated-tobacco products the same level of taxes as are already imposed on combustible cigarettes has been introduced to Korea’s National Assembly, according to a story in The Korea Herald.
The Herald indicated that the bill had been introduced because ‘all harmful tobacco products must be regulated the same way’.
According to the National Assembly’s Bill Information System, Rep. Kim Kwang-lim of the Liberty Korea Party has prepared bills to amend three laws that govern taxation on tobacco products so as to allow equal taxation to be imposed on combustible cigarettes and heat-not-burn tobacco products, such as the IQOS system launched in Korea this month by Philip Morris International.
Heat-not-burn products are made with processed tobacco leaves, but are promoted as producing far fewer toxins than are produced by cigarettes because there is no combustion process in the case of the former.
Under current legislation, each pack of cigarettes is subject to 3,323 won ($2.92) in taxes, while each pack of heated tobacco sticks is liable to 1,588 won in taxes. These sums are made up of a number of taxes, such as excise tax, a health promotion fund tax and consumption tax.
If the three amendments are passed by the National Assembly, consumers of heated-tobacco sticks for the IQOS system will pay an additional 1,350 won in taxes per pack.
June 28, 2017
Support sought for clinics
More than 60 percent of ‘in-patients’ at a South Korean smoking cessation clinic successfully ‘quit’, double the figure for ‘out-patients’, according to a story in The Korea Herald citing the latest findings by the Korean Society for Research on Nicotine and Tobacco (KSRNT).
The story reported that 216 of the 292 ‘patients’ [74 percent] who joined an anti-smoking program at Dankook University Hospital successfully quit smoking for four weeks.
Meanwhile, 69.2 percent of those taking part remained smoke free for three months, and 66.7 percent quit for six months.
At the same time, fewer than 30 percent of outpatients successfully quit smoking after attending the smoking cessation program.
The KSRNT has called on the government to provide financial assistance to hospitals to help them establish such clinics.
“It is very hard for even in-patients to stop smoking as nicotine is highly addictive,” Chung Yoo-seok of the research society said, while stressing the need for the government to funnel part of its increased tobacco tax revenue to anti-smoking clinics.
The tobacco tax revenue rose to 12.3 trillion won ($10.7 billion) in 2016 from 6.9 trillion won in 2014 and 10.5 trillion won in 2015, according to figures produced by the Korea Taxpayers’ Association.
The government increased taxes on cigarettes by 2,000 won ($1.70) per pack from January 1, 2015, taking the price of a pack from about 2,500 won toto 4,500 won.
It cited as a reason for the tax increase the need to discourage smoking.
June 27, 2017
Taxing smokers
Cigarette sales in South Korea have fallen less than they had been expected to during the past two years, while tobacco tax revenue has far outstripped government forecasts, according to a Yonhap News Agency story quoting the Korea Taxpayers’ Association (KTA).
At the start of January 2015, the government hiked cigarette taxes so that the price of cigarettes rose by 80 percent, from 2,500 won (US$2.19) per pack to 4,500 won.
At that time, the finance ministry expected the country’s cigarette sales to fall by about 34 percent from 4.36 billion packs in 2014 to about 2.87 billion packs in 2015 and 2016.
But South Korean smokers bought 3.33 billion tax-paid packs in 2015 and 3.66 billion tax-paid packs last year, which meant that sales were down by 23.4 percent and 15.9 percent respectively from those of 2014.
The ministry had forecast also that the tax revenue would increase by 2.78 trillion won ($2.44 billion) in 2015 and 2016, measured against the revenue of 2014.
But the actual sales amounted to 3.53 trillion won and 5.39 trillion won respectively.
The KTA predicted that the current trend would last ‘for the time being’.
On the basis that about 1.1 billion packs were sold in the first four months of this year, cigarette sales are expected to reach 3.52 billion packs during 2017, and the tobacco tax revenue is forecast to increase to 11.5 trillion won.
Kim Sun-taek, head of the KTA, slammed government policy, claiming high tobacco taxes had imposed a big burden on the underprivileged. Various taxes accounted for more than 60 percent of the tobacco price in South Korea, he said.
June 21, 2017
Glo ready to go in Korea
British American Tobacco’s South Korea-based unit plans to start selling glo tobacco-heating devices in August, according to a story in The Korea Herald, citing the Yonhap News Agency.
BAT Korea said on Tuesday that it was joining the race for the burgeoning heated-tobacco-device market. The previous day, it had opened a teaser website for glo.
Earlier this month, the company completed the expansion of its production facility in Sacheon, 437 km southeast of Seoul, which will produce Neostiks, the consumable item of the glo system.
Neostiks are heated by the glo device to create a vapor that delivers to the consumer an experience that is said to be similar to that of smoking a cigarette.
BAT’s glo was first launched in December in Sendai, Japan, where its regional market share was said to have reached more than seven percent within six months of its debut.
Philip Morris launched its iQOS heated-tobacco device nationwide in South Korea earlier this month.
And KT&G, the country’s leading tobacco manufacturer, is planning to launch a heat-not-burn device, though the story did not say when.
June 20, 2017
BAT ready to ‘glo’ in Korea
British American Tobacco said today that the second and third manufacturing facilities at its Sacheon factory had been completed.
The factory has been expanded to support the sales growth of BAT’s tobacco heating product (THP), glo™, and with the intention of South Korea becoming a key export hub for the company in Asia.
Part of the new facilities will be used to manufacture the Neostiks™ tobacco sticks that are heated in BAT’s glo device to create a vapor that is said to provide a consumer experience similar to that of cigarette smoke but with reduced risk potential.
With the completion of the new facilities, BAT Korea has become the only cigarette manufacturer with a manufacturing factory in Korea equipped with facilities to produce tobacco sticks.
BAT Korea started construction of the Sacheon factory’s second and third manufacturing facilities, which are costing about 200 billion won, in June 2016.
It has hired more than 200 employees from the Sacheon region.
Through this expansion, the factory is expected to be able to produce about 40 billion combustible cigarettes a year. It is said to be ‘moving towards becoming the export hub for BAT in Asia, leading both the global and local cigarette and THP markets’.
The factory almost doubled the proportion of its exports between 2015 and 2017, and BAT Korea is looking to expand the number of its export markets, which currently stand at 13.
Export volumes to Japan are expected to increase as the factory takes up exclusive responsibility for the production in Asia of Neostiks.
Glo, which was launched in Sendai, Japan, in December, is said to have captured a regional market share of more than seven percent.
BAT Japan is expanding sales of glo to other places in Japan, including Tokyo, Osaka and Miyagi, and, by the end of the year, intends to go nation-wide with the product.
Meanwhile, BAT Korea is preparing for the launch of glo during the second half of this year.
“BAT Korea’s Sacheon factory is expected to not only take up the role of an export hub of Asia but also a global manufacturing hub of specially designed tobacco Neostiks made exclusively for our THP device glo,” BAT Korea’s CEO Tony Hayward was quoted as saying
“The BAT Group has high expectations for the expansion of the Sacheon factory, which is already assessed to be one of the best facilities among the group’s manufacturing plants. BAT Korea is committed to launching glo in Korea and offering ‘made in Korea’ products to local adult smokers interested in THPs.”
June 5, 2017
June 5 launch for iQOS
Philip Morris Korea said on Wednesday that it would launch its heated-tobacco product iQOS in Seoul on June 5, according to a story in The Korea Herald.
“Our vision is a smoke-free future,” the company’s CEO Chong Il-woo said at a press conference at the Banyan Tree Club and Spa in Seoul.
The product will be sold as a system, which includes the iQOS device, a pocket charger, and charging and cleaning accessories. To use the device, consumers will have to buy tobacco sticks called HEETS.
The company told the conference that the heated tobacco sticks delivered similar levels of nicotine to that delivered by traditional cigarettes, but reduced the exposure to harmful or potentially harmful chemicals by 90 percent.
IQOS will be launched in special iQOS stores in Gwanghwamun and Garosu-gil, Seoul, and at CU convenience stores and selected Electromart outlets. Sales are due to be expanded to the rest of the country later this year.
The consumer price for the iQOS kit has been set at 120,000 won ($107), and each pack of 20 HEETS will retail at 4,300 won, close to the price of a pack of 20 cigarettes.
HEETS sticks, which deliver 0.5 mg of nicotine each, will be available in four flavors.
May 17, 2017
Korea awaits iQOS launch
Philip Morris International is expected to announce the launch of its heated-tobacco cigarette iQOS in South Korea this week, according to a story in The Korea Herald quoting ‘industry sources’.
The Korean launch of iQOS is expected to be officially announced by PMI Korea’s managing director Chong Il-woo at a press conference scheduled for Wednesday.
A spokesperson for PMI declined to comment.
The launch of iQOS has been anticipated in Korea following the popularity of the product in Japan, where it was launched in 2014.
‘Other companies such as British American Tobacco have also been watching the market to launch their own heated-tobacco products,’ the Herald story said.
‘The introduction of heated products has been delayed because of unstable prices and an absence of regulation in the category.’
May 15, 2017