Issue link: https://read.dmtmag.com/i/550325
30 tobaccoasia / Issue 3, 2015 (July/August) according to research conducted by Euromonitor In- ternational (See Table 3). Underage Smoking Prevention Successes But to further understand the thinning-out of the consumer base, one also has to look at Japan's rather successful measures to curb underage smoking. The country's Underage Smoking Prohi- bition Law stipulates that smoking is only permit- ted from age 20 onwards and this age restriction certainly also has an impact on plummeting smok- er numbers. If someone isn't smoking by age 20, the chances that they're going to smoke at a later stage in their lives are arguably much lower than if they had been starting from a younger age. TIOJ in particular is very active in preventing underage smoking. For several years running, the organization has earmarked every July as "Youth Smoking Prevention Reinforcement Month", dur- ing which it disseminates leaflets, brochures, and stickers and conducts public information events at tobacconists. It also organizes anti-smoking cam- paigns at junior and senior high schools and rec- reational venues across the country where many minors gather. The initiative furthermore includes the year-round pasting of "Under 20 Years Old Smoking Ban" stickers on cigarette vending ma- chines and on shop and door windows of point- of-sale outlets, as well as frequent placement of advertisements requesting that adults take respon- sibility for discouraging underage smoking. The Taspo Card An important development to tackle underage smoking was the nationwide introduction in July 2008 of the so-called Taspo card system, which is deployed in virtually all cigarette vending ma- chines. Buying cigarettes from vending machines is not possible without a Taspo card. "The Taspo card is basically a contactless RFID smart card needed for age verification when pur- chasing cigarettes from a vending machine", ex- plains Yasuhiko Bunazawa, TIOJ's managing director. Jointly developed by TIOJ, the Japan Tobacconist Federation, and the Japan Vending Machine Manufacturers Association, the card can be obtained free of charge. It electronically stores the age information of the holder and can only be acquired by adults aged 20 or above at tobacco retailers upon filling out an application form, pre- Year 2008 2009 2010 2011 2012 2013 2014* Adult Male Population** 40.2 39.5 38.9 33.7 32.7 31.5 30.3 Adult Female Population** 12.7 12.9 11.9 10.6 10.4 10.1 9.8 Total Adult Population 26.0 25.7 24.9 21.7 21.1 20.4 19.7 Table 3. Smoking Prevalence in the Adult Population 2008 – 2014 (% adult population) Sources: Euromonitor International; from national statistics / *Japan Tobacco Inc., "Annual Japan Smoking Rate Survey" (May 2014) **Defined as daily smokers at and above the legal smoking age of 20 years. senting an official ID document, and having their photo taken. Freebies Drive Convenience Store Sales Meanwhile, Euromonitor observed in its most re- cent country report on Japan that in 2013 more than half of all cigarettes sales were made at con- venience stores - at the cost of declining sales through vending machines. The research firm at- tributed this development to the comparatively complicated – thus inconvenient – Taspo card ap- plication process. "Manufacturers, noticing such consumer incli- nation to convenience stores, subsequently allo- cated their resources more onto point-of-sales marketing at convenience stores", the report said, and "attaching promotional freebies to cigarette [packs] is the most common marketing activity. Such freebies [may] include a lighter, a portable ash tray, [ready-to-drink] canned coffee, and chew- ing gums." As a matter of fact, shelve space for cigarettes at convenience stores is limited and therefore manufacturer are compelled to offer at- tractive promotional gifts not only to being able to properly display their products but also to reach their consumers, the report implied. The Ministry of Finance reported that there were approximately 264,864 retailers of tobacco products nationwide at the end of fiscal year 2014, a decline of 1.4% compared to the previous year (268,530). During the same fiscal year, 6,497 retail outlets opened up while 10,163 closed down their businesses. Tax Hikes Stifle Profits Yet another prime factor contributing to sales de- creases – and affecting the profits of both retailers and manufacturers – are various tax hikes imple- mented in recent years. "During the last 10 years, the Japanese market has experienced two excise tax raises, in July 2006 and October 2010, plus a VAT increase in April 2014," says TIOJ's Bunaza- wa. "As a result, the average price for a pack of 20 cigarettes has jumped up considerably." A further VAT increase from currently 8% to 10% will most likely occur in April 2017. According to TIOJ, Japan's excise tax com- prises three separate taxes, namely the national tobacco excise tax, the regional tobacco excise tax, and the tobacco special excise tax. The calculation of these taxes is extraordinarily complex and ap- plied at the manufacturing base to units of 1,000 sticks instead of packs (which is the reason why Japanese cigarette packs do not bear tax stickers): 1,000 cigarettes are currently levied with ¥5,302 (national tobacco excise tax), ¥6,122 (regional tobacco excise tax), and ¥820 (tobacco special excise tax). This translates as a total excise tax of ¥244.88 for every standard pack of 20 sticks. (¥100=US$0.80.). Tobacco Institute of Japan logo Parliament 100's Box