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What’s happening in tobacco – June 2009

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BAT buys Bentoel in Indonesia... Smoking ban hits beer in France... Price rises in Spain could kill RYO... New report shows terrorists turning to illicit trade in cigarettes... Bill giving FDA control over tobacco becomes law in the US... First individual lawsuit against tobacco filed in Middle East...

Smoking Bans

Greece – Partial smoking ban goes live

From 1 July 2009 a nationwide public smoking ban was introduced in Greece, although cafes, restaurants and bars of less than 70 sq m may opt to be either smoking or non-smoking while larger establishments are allowed to have clearly identified and ventilated smoking areas.

According to the Greek health ministry, 83% of Greeks approve of the ban which could be made more rigorous in January 2010. However, two previous smoking bans in Greece, the EU's heaviest smoking nation at 40% prevalence, were largely ignored.

US – Philly city council may ban smokeless

Philadelphia City Council is considering a ban on smokeless tobacco three years after it imposed a public smoking ban. The ban would include snuff, chewing tobacco and dipping tobacco. According to the Council, smokeless is popular in baseball and other sports.


Malaysia – Graphics become compulsory

All cigarettes packs without the recently introduced graphic health warnings are to be removed from the market by 1st June 2009 with fines or jail for retailers not complying. From 1 January 2009, all manufacturers had to ensure that two brands displayed the warnings and by 1 March 2009, all brands had to display the warnings.

US – FDA orders big pharma to add warnings

The Food and Drug Administration (FDA) has ordered Pfizer Inc and GlaxoSmithKline plc, two of the world's largest pharmaceutical companies, to add strong warnings on their anti-smoking medication to highlight the risk of serious mental health problems. The warnings must be added to Pfizer's Chantix and Glaxo's Zyban, following 'more than 5,000 reports' of depression, hostility and other behavioural changes, according to the FDA.

UAE - Health warnings implementation accelerated

The United Arab Emirates is expediting the implementation of new tobacco products health warnings following the WHO telling the Gulf Co-operation Council (GCC) countries that they should speed up the introduction of pictorial warnings on tobacco packs, including shisha packs.

India – Graphic warnings introduced

Graphic warnings are now compulsory on tobacco product packs in India. In April 2009 the Supreme Court put an end to some seven months of attempts by the industry and lobby groups to modify the legislation by imposing a deadline of May 31st for the imposition of the warnings though, at the time of writing, they had not appeared in shops. However, although the graphic warnings must be present on cigarette packs and other tobacco products packs, the nature of the Indian market, where most tobacco users live in rural areas, casts doubts on the potential effectiveness of the legislation. (See article 'Graphic warnings arrive in India – but can they reach the real tobacco products market?')


US - Family Smoking Prevention and Tobacco Control Act passed

On June 22nd 2009 President Obama signed the law giving the US Food and Drug Administration the power to regulate the US tobacco industry and, at the same time, made the most unequivocal attack on the tobacco industry of any President of the United States. The new law - The Family Smoking Prevention and Tobacco Control Act - will enable the FDA to put strict limits on the manufacturing and marketing of tobacco products though not to ban cigarettes or nicotine. (See article 'Obama signs off FDA law'.)

India – Screen smoking restrictions plan shelved

According to the Minister, the government is not seeking to impose regulations banning on-screen smoking on the grounds that such a ban is not practical and worse things should be banned first.

US - Effect of FDA control

The Family Smoking Prevention and Tobacco Control Act has been passed but the first impacts are not likely to be felt for several months. The initial cost of FDA regulation is estimated at 1-2¢ a pack of cigarettes rising to about 7¢ a pack by the time the FDA's Center for Tobacco Products is fully operational in 2012-13.


Indonesia – Excise rise

The Government plans to increase the excise rate on cigarettes by 10% in 2010 but has decided to leave rates unchanged this year to protect employment.

Spain – Price rises benefit Imperial and damage RYO

New prices were recently announced in Spain following a government increase in minimum tax. This resulted in an 11% increase in the retail price of Marlboro to US€3.45. Imperial, the market leader, increased its manufacturer prices by 8-10%. Growth of low margin roll-your-own is likely to be reversed due to the imposition, for the first time, of a minimum level of tax, meaning that the cheapest RYO brands' retail price is increasing 75%. This makes a 40g pack becomes more expensive than a pack of 20 Marlboro and, according to some analysts, could kill RYO and thus boost cigarette volumes.

Taiwan – Price fixing accusations

Taiwan's three largest cigarette manufacturers have been accused of running a price cartel following a rise in the health and welfare surcharge on tobacco products. The Department of Health (DOH), Fair Trade Commission (FTC), and Consumer Protection Commission (CPC) accused Taiwan Tobacco and Liquor Corporation, Philip Morris, and Japan Tobacco, which together account for over 80% of the cigarette market, of raising prices on 58 cigarette products by NT$5 per pack, in addition to the surcharge rise.


Saudi Arabia – Suit filed

A Saudi citizen has filed a lawsuit against two tobacco companies asking for US$10 million in compensation for the injuries he allegedly suffered from smoking, the first individual damages case brought against tobacco companies in the Middle East.

US – Reynolds ruling

A Florida jury has awarded US$30 million to a Pensacola widow in a ruling against RJ Reynolds on the grounds that the company's conspiracy to conceal information about cigarettes was a legal cause of the death of Benny Martin. RJ Reynolds' lawyer said he would appeal. This is one of the first of possibly thousands following the “Engle” case judgment which stated smokers could sue individually and thus has great importance for the industry.


Sweden - Swedes back al fresco ban

Some 73% of Swedes are in favour of a ban on smoking in outside dining areas of cafés and restaurants, according to a new poll by Synovate commissioned by the Swedish Parliament which plans that by 2014 no one should be subjected to tobacco smoke against their will. Some 86% of survey respondents agreed with this, including two thirds of regular smokers.

New Zealand - Smoking up despite quit campaigns

Despite spending $37 million a year on stop smoking campaigns, smoking prevalence and tobacco consumption are both increasing. Tobacco smoking is far more prevalent amongst Maoris (45%) than it is amongst the population as a whole (21%). However, according to an annual survey of smoking habits, the number of regular teenage smokers dropped nationally to 12% in 2008, compared with 29% in 1999.

UK – Poll shows smokers delaying quitting

According to a BBC report quoting an Ipsos Mori poll, smokers in the UK are delaying attempts to quit smoking. Some 25% said they had started to smoke more during the economic downturn while 23% said they had put off plans to quit, while 28% said they had been too stressed to make a successful attempt to quit during the past six months due to job and financial worries.


China leads the world in contraband

China leads the world in contraband cigarette production followed by Paraguay and Ukraine according to a new report by the International Consortium of Investigative Journalists (ICIJ), a project of the Center for Public Integrity in Washington, DC, USA. The report also stated that terrorist groups are increasingly turning to cigarette smuggling for financing, including al-Qaeda, the Taliban, the Real IRA, and the Colombian FARC.


US – AMA to study e-cigs

The American Medical Association (AMA) plans to study the potential role of electronic cigarettes in smoking cessation to answer the question – are e-cigarettes fostering addiction to nicotine under the guise of being an aid to smoking cessation? The US Food and Drug Administration is currently reviewing the data on e-cigarettes and has been refusing to allow importation of such products on the grounds that they are 'unapproved drug delivery devices'.


South Korea – Cloud 9 sales driven up by politician's death

According to reports, sales of KT&G's Cloud9 and This cigarette brands rocketed in the week of mourning for Korea's late former President Roh Moo-hyun. These were the favourite brands of the late president, a chain smoker who died on May 23 after jumping from a cliff following a bribery investigation.

Romania – JTI investment

Japan Tobacco International is investing €30 million in two new production lines in Romania, where it is the third biggest cigarette market player. According to JTI Romania, Bulgaria and Croatia, the new production lines would boost automation at the Romanian plant and, by the middle of 2010, increase capacity there by 25% compared with that of 2008.

France - Smoking ban depresses beer sales

The 5% fall in France's beer consumption in 2008 was blamed by brewers mainly on the public smoking ban and the economic downturn. The fall follows a drop of 3.3% in 2007, the year in which France prohibited smoking in restaurants, bars and pubs.


India - Godfrey Phillips to launch candy

Godfrey Phillips India (PMI) is planning to expand its confectionary portfolio with the launch of a new sugar boiled candy.


JT announces new technology charcoal filter

Japan Tobacco Inc is to launch a cigarette with a charcoal filter which it claims does not interfere with menthol delivery. Seven Stars Black Charcoal Menthol Box is scheduled for nationwide release in early August 2009. According to JTI, when conventional charcoal filters are applied to menthol cigarettes, much of the menthol component is absorbed by the filter. The charcoal used in the new filters uses a special membrane technology which stops the menthol component of cigarettes from being absorbed before smoking.

Imperial launches new Davidoff cigarillo

Imperial recently launched Davidoff Aromatic Mini Cigarillos presented in a silver-bronze rather than a white box. The new cigarillos comprise a flavoured, 100% tobacco blend with a Java binder and a Sumatra wrapper. The cigarillos are claimed to produce a 'discreet' vanilla and liquorice aroma, as well as a hint of berries and honey'.


UK - Doctors call for cigarette vending machine ban

The British Medical Association (BMA) is urging MPs to support proposals in the Health Bill for age-restriction mechanisms for tobacco vending machines such as payment with tokens that could only be bought by those over 18 or a remote control that shopkeepers can activate if they believe the customer to be over 18. In May, the House of Lords endorsed a ban on the display of tobacco products in shops by 2013 but voted down an amendment to outlaw vending machines immediately. The BMA wants cigarette vending machines banned and manufacturers forced to use plain packaging.


BAT buys Bentoel in Indonesia

British American Tobacco (BAT), the world's second-biggest cigarette maker, is to buy a controlling stake in Indonesia's fourth-biggest tobacco company for US$494 million (£302 million). After the acquisition of 85% of Bentoel Internasional Investama, BAT will take full control.

BAT is following PMI into the kretek market. Kreteks dominate the Indonesian market but are also smoked elsewhere in the world where smokers have a taste for clove-flavoured cigarettes. (See article ' BAT makes kretek move with acquisition of Bentoel'.)

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