Tobacco Asia

Volume 18, Number 3

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22 tobaccoasia TOBACCO PRODUCTS 产品新闻 India Smaller cigs, bigger profits ITC Ltd. has seen its fourth quarter profits jump by 18% after it introduced a new brand of smaller cigarettes. The new design – shorter than the full-size (69 millimetres) cigarettes by 5 mm – landed the new cigarette in a lower government tax bracket. In the past two years, the Indian government left 64 mm sticks out of its steep excise tax hikes, which means they are taxed at less than half the rate of regular size cigarettes: data from the Central Board of Excise and Customs shows that the excise tax on a 64mm cigarette is Rs.0.67 (US$0.011) compared to Rs.1.47 (US$0.025) on a 69mm one. Since 70% of smokers in India buy their cigarettes in single units, the government applies taxes by single cigarette rather than by pack. ITC, India's biggest tobacco firm sells four out of every five cigarettes in India and stand to benefit the most from this new product category that industry analysts predict will skyrocket in the next few years. Although ITC is nearly 25% owned by British American Tobacco Plc, it also sells a number of consumer goods other than tobacco, which despite turning in a small profit, have not shown consistent growth. However, according to the com- pany's data, its non-cigarette consumer goods business posted the highest ever pretax profit of Rs.43.09 crore (US$7.2 million) in the last quarter – up from Rs.11.87 crore a year ago, for the first time turning in an operating profit for the full year. Today, India is a $6 billion cigarette market and has more than 275 million smokers. Worldwide PMI HeatSticks hopes Philip Morris International Inc. (PMI) announced that it plans to launch its own type of e-cigarettes called Marlboro Heat- Sticks in Japan and Italy later this year. HeatSticks contain real tobacco and resemble cigarettes. They can be inserted into a device called an iQOS, which then heats up the HeatSticks to 350 degrees Fahrenheit (176 degrees Celsius). Once heated, the sticks give off a tobacco-flavored nicotine vapor, which is then inhaled by the users. Products that heat tobacco don't create ashes and are supposed to leave a lingering smell. Tobacco heating products were introduced into the market more than 20 years ago and the HeatSticks design is based on Accord, a product that Philip Morris USA pilot-tested in the mid-1990s. However, sales of early products failed because users complained that the heated tobacco tasted different from cigarettes and that the devices were hard to use. PMI believes that now that there is a shift in society's views towards smoking cigarettes the time is ripe to re-introduce tobacco-heating products. It's spent over US$2 billion and more than 10 years developing the products. The company hopes that its investment will pay off with an estimated US$700 million in profits from the sale of 30 billion units. At an investor day presentation PMI c.e.o. Andre Calantzo- poloulos said that products like the HeatSticks "represent a potential paradigm shift for the industry, public health and adult smokers." HeatSticks aren't PMI's only venture into smoking alterna- tives. The company also recently purchased Nicocigs Ltd., a company that produces e-cigarettes and is based in the UK. Vietnam VTA urges compliance The chairman of the Vietnam Tobacco Association (VTA), Vu Van Cuong, issued a warning for tobacco product consumers not use any cigarette packs that do not have picture-based health warnings. As of this year every cigarette pack sold in Vietnam must carry a graphic warning to be legally sold inside the country, as a result of a 2013 circular published by the ministries of Health, Industry and Trade over tobacco production and imports. Cuong was cited as saying that selling any other cigarette packs is a violation of the law, and that some unscrupulous individuals, like tobacco magnates, dealers, and agents, sold cigarette packs, which had been manufactured prior to the release of the circular and carried either no graphic health warnings at all or merely warning slogans. He also blamed falling tobacco production as one of the causes of incorrectly labeled cigarette packs being in circulation and tobacco smuggling. Compared to the same period last year, tobacco production fell by 9% in the first three months of 2014, resulting in a loss of VND2 trillion (US$94.34 million) in tax revenues for the government. Do Thanh Lam, deputy director of the Ministry of Industry and Trade's market watch department, stated that incorrectly labeled cigarette packs affected the business of reliable tobacco producers and created unhealthy competition. According to the VTA, tobacco smuggling in Vietnam has soared 30% in the first four months of the year when the mandatory picture-based health warning regulation came into effect. The data of the Market Watch Department indicates that authorities seized over 6.8 million packs of illegally imported tobacco during 2013 and in the first quarter of 2014. Thailand Pack warnings larger yet The Thai Supreme Administrative Court, in its latest decision, overturned its verdict favoring Philip Morris, who earlier had lodged a complaint against the latest round of anti-tobacco

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