Tobacco.org

Increasing taxation doesn't encourage smokers to quit 

Landmark research suggests that so-called "sin taxes" do not encourage people to give up.

Academics found the number of smokers in Eastern Europe did not fall when 10 states joined the EU in 2004 - even though the price of cigarettes soared by as much as 100 per cent ahead of wages when they became subject to Brussels rules on minimum tax levels.

On average, the affordability of cigarettes, measured by minutes of work needed to buy a pack of 20, fell by 40 per cent. But there was no fall in smoking prevalance - and in several countries, the number of smokers actually rose, to the bafflement of researchers.

Adam Spielman, a tobacco analyst at Citigroup, said the results contradict the "absolute orthodoxy" of public health policy - that tax increases cut smoking. . . .

A spokesman for the Tobacco Manufacturers' Association said: "This study clearly demonstrates that taxation is a largely ineffective tool for reducing consumption. We very much hope that, in his Autumn Statement, the Chancellor will take the opportunity to combat tobacco smuggling in a meaningful way and resist the temptation to raise duty."

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• Tobacco sector wants freeze on cigarette duty 

Academics found the number of smokers in Eastern Europe did not fall when 10 states joined the EU in 2004 - even though the price of cigarettes soared by as much as 100pc ahead of wages when they became subject to Brussels rules on minimum tax levels.

On average, the affordability of cigarettes, measured by minutes of work needed to buy a pack of 20, fell by 40pc. But there was no fall in smoking prevalance - and in several countries, the number of smokers actually rose, to the bafflement of researchers.

Cigarette makers say the research shows successive tobacco duty hikes are unjustified.

"There was no correlation between changes in cigarette affordability and changes in prevalence, either before or after adjustment for unemployment rates or changes in Tobacco Control Scale Scores [the measure of how easily cigarettes are sold]", the researchers wrote in Addiction, the medical journal.

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1/3 of Consumer Goods Are Counterfeit 

Knockoff Chinese cigarettes from Kaliningrad, Italian wines actually made in the CIS and Bavarian car parts made in Podolsk imply a certain geographic schizophrenia for Russian consumers.

But the harsh reality is a market for counterfeit goods that some experts estimate to be worth between $3 billion and $6 billion per year.

Jin Ling cigarettes are produced especially for smuggling and have flooded Europe in the last several years. The cigarettes’ packaging resembles the American brand Camel and claims to use “U.S.A. blend” tobacco. The cigarettes have been found to contain asbestos, the Daily Mail reported earlier this year.

Large quantities of the cigarettes, also produced in Ukraine and Moldova, are frequently seized in the Baltic republics. Last month at least three smugglers attempted to move more than 27,000 cartons of Jin Ling cigarettes in separate incidents across the Latvian and Lithuanian borders, according to news reports. . . .

Media reports last week, citing Interior Ministry investigations, said up to a third of all consumer items, including clothes, perfume, cigarettes, household chemicals and food, are counterfeit.

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TRUTH ABOUT BLACK MARKET BRITAIN  

During his stint spent working in the fi elds of the Fens Niculescu came to know well the market in booze and tobacco. Cheap cigarettes and tobacco – much of it from Russia, Eastern Europe and Central Asian countries – have been a regular part of life for migrants living in Britain.

“Each week I know of a van that comes from Poland loaded with cheap cigarettes, the sort we like, not the expensive cigarettes smoked here,” explains one Estonian living in Peterborough.

“We all smoke, maybe 30, maybe more each day and it is cheap, not like British cigarettes. Those we cannot afford.”

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• EU wants neighbours to match tobacco duties to hit smuggling  

The EU will seek talks with Russia and other eastern neighbours on tobacco duties in an effort to fight smuggling, which cost the bloc 10 billion euros ($14.2 billion) a year, a top official said Thursday.

"One of the instruments is negotiations with countries on the other side of the border regarding the gradual moving of their excise policy closer to EU policy," Algirdas Semeta, the 27-nation EU's tax and customs chief, told reporters.

On a visit to his native Lithuania, an EU country bordering non-members Belarus and Russia, Semeta said differences in excise duties encourage smuggling.

Semeta later specified that Moldova and Ukraine have already "in principle agreed with the principle of drawing closer their excise duties".

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• US Tobacco Growers Scramble to Find New Markets  

In 1964, the U.S. Surgeon General publicly declared the health hazards of smoking.

Since then, smoking rates have been basically cut in half. In 2011, there are approximately 50 million smokers in the United States.

But globally, the number is 1 billion ... and growing.

It's not difficult to reach the conclusion that tobacco's future is outside of North America. That's why both cigarette maker and tobacco farmer are shifting their focus.

"We go to the parts of the world where the population is increasing and where the consumption is increasing."

"In Eastern Europe, the sales are increasing," said Brian Furnish during a trade show in Krakow, Poland. Furnish is an eighth-generation tobacco farmer who also represents a five-state tobacco cooperative that is trying to sell millions of pounds of burley tobacco all over the world — in Poland, Indonesia, China, Egypt and Serbia, for example.

For the CNBC Original Cigarette Wars, we followed him to Eastern Europe to witness the transition from Kentucky farmer to international salesman.

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• Illicit Cigarettes Flood EU From the East 

Millions of illegally imported cigarettes, many made specifically for smuggling in the Russian enclave of Kaliningrad, are distributed within the EU every year after passing Poland's northeastern borders. The point of entry isn't accidental: Kaliningrad is surrounded by the European Union's passport-free Schengen zone.

Cigarette smugglers try their luck on border crossings with Russia and Belarus, and the open border with Lithuania, where customs officers use increasingly sophisticated x-ray machines and sniffing dogs to stop them.

"The majority of those crossing the Polish-Russian border are smugglers," says the regional customs office based in Olsztyn, in northern Poland. The region borders with the region of Kaliningrad, where Baltic Tobacco Factory produces Jin Ling, a brand not available through legal channels in the EU. The company hasn't returned calls for comment. . . .

More than three years after Poland and Lithuania joined the European Union's passport-free Schengen area, cigarettes smuggled through the EU's external borders with the Baltic States pour into the rest of the EU through the open border between Poland and Lithuania. Customs in the region of Podlasie, which borders Lithuania and Belarus, last year seized about 110 million cigarettes, about 60% on the freeway border with Lithuania where customs officials stop selected trucks for inspection.

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• Tobacco sales and promotion in bars, cafes and nightclubs from large cities around the world 

Context

Little is known about tobacco promotion activities in low and middle-income countries. Information on tobacco sales, advertisement and promotion in bars, cafes and nightclubs is needed to develop interventions to reduce smoking initiation and relapse, particularly among youths and young adults.

Objective

To evaluate cigarette sales and tobacco advertisement and promotion in bars, cafes and nightclubs using a volunteer survey approach in large cities throughout the world.

Methods

Between 2007 and 2009, we administered an interview-based survey to 231 bar/cafe/nightclub owners/managers in 24 large cities in Africa, the Americas, Asia and eastern Europe.

Results

Cigarette sales and tobacco advertisement and promotions were found in bars/cafes/nightclubs in most cities. Examples of promotions included cigarette giveaways and event sponsorship. Establishments that allowed smoking were more likely to sell cigarettes compared to smoke-free establishments (OR 8.67, 95% CI 3.25 to 23.1). Larger establishments (maximum occupancy ≥100 vs <100 customers) were more likely to have tobacco advertising (OR 4.35, 95% CI 2.04 to 9.24) and to receive promotional items from tobacco companies (OR 3.18, 95% CI 1.41 to 7.17).

Conclusions

Cigarette sales and tobacco promotions were common in bars, cafes and nightclubs in the majority of cities. Socialising and hospitality venues must be covered by legislation banning tobacco sales and promotions to limit exposure among populations at high risk of tobacco initiation and relapse from quitting.

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Japan Tobacco Aims to Boost Profit in Russia, Eastern Europe  

Japan Tobacco Inc., the world’s third-largest publicly traded cigarette maker, aims to boost overseas profit at least 10 percent as a tax increase damps demand at home.

Japan Tobacco plans to increase sales in countries including Russia, Yasushi Shingai, executive vice president of the JT International SA unit, said in an interview on Feb. 10 in Tokyo, where the company is based. The cigarette maker will focus on its more profitable brands including Mild Seven and Winston, he said.

The company is targeting profit growth in Russia even as the country seeks to crack down on smoking through an advertising ban and higher taxes. Eastern Europe including Russia is the biggest overseas market for Japan Tobacco, accounting for 48 percent of its international unit’s sales volume in 2010, the company said Feb. 7.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, for Japan Tobacco’s international business rose 7.7 percent in dollar terms, based on constant rates of exchange, last year after gaining 15 percent in 2009, Japan Tobacco said last week.

The company had a 37 percent market share in Russia. Japan Tobacco also aims to expand sales in the Middle East and North Africa, Shingai said.

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The role of Baltic states in cigarette smuggling 

There are sold 14 billion cigarettes in Baltic states every year.

Additional 20 to 30 percent of cigarettes are sold in black market.

The most popular cigarettes in the black market of Baltic states are cheap, low class brands (for example 'Prima'), mainly produced in Russia, Belarus and Ukraine.

According to unofficial data, in the domestic market Latvian smugglers make profits of around 6 to 7 million US dollars. Due to unpaid taxes, state budget loses around 10 million US dollars.

Profits Estonian smugglers gain from contraband cigarette trade should be approximately the same. In Lithuania in this kind of business smugglers are able to earn about 5-6 million US dollars.

It seems that contraband cigarette trade in local black market is business of small organized groups or solitary traffickers.

Large smuggling groups operate mostly in the United Kingdom, Germany, Sweeden, Denmark, Netherlands, Belgium, Norway and Austria.

According to unofficial data, every three months around 13 million pounds are brought into Lithuania which are earned selling contraband cigarettes in the UK black market.

In Lithuania there are 6 or 7 large contraband rings, but only part of these rings trade in UK black market. In total, around 30 Lithuanian organised groups smuggle cigarettes to Western Europe, Scandinavian and Northern countries.

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• Britons have highest deaths from breathing conditions in Europe: figures  

A greater proportion of men and women die from respiratory conditions than in Europe, data from the Office of National Statistics has revealed.

It is thought that data collection of causes of death is more accurate in Britain but also the high rates of smoking here have left a legacy of poor health.

Experts said some Eastern European countries may now have higher smoking rates than in Britain but this is relatively recent, since they came out from Communist rule, and so the diseases have not yet manifested.

There are 87.7 deaths in men from respiratory conditions including flu, pneumonia, bronchitis, emphysema, asthma and lung disease, per 100,000. For women the figure is 64 deaths per 100,000. It does not include lung cancer.

However across the 27 EU member states the average rate for men was 63.4 and for women just 32.5. . . .

Professor Stephen Spiro, spokesperson for the British Lung Foundation, said: "The results in this report about respiratory disease are unsurprising as unfortunately deaths due to lung diseases including Chronic Obstructive Pulmonary Disease (COPD), lung cancer, and respiratory infection such as pneumonia, are extremely high in the UK.

"Although data collection in the UK is extremely advanced, these results are a reflection of the smoking prevalence that we have in this country and the length of time that people have smoked for.

"However in the future we expect to see the mortality rates in the UK mirrored by other countries in Europe as smoking rates continue to rise."

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• Smoking issue smoulders  

Russian prime minister Vladimir Putin has become the latest leader in Central and Eastern Europe to take up the cudgels against smoking, and it remains to be seen whether he will do better or worse than his counterparts.

In the past two years, Turkey, Serbia, Macedonia and Greece have been among countries to revise their laws on smoking bans, with varying results.

Russia's tobacco consumption market is massive. Quoting a United Nations report, health minister Tatyana Golikova said that there were more smokers in Russia than in any other country in the world, news agency Interfax reported.

About 40 per cent of Russians smoke, with a sharp gender differential; 80 per cent of men and 50 per cent of women. Official estimates are that 400 000 people in Russia die from smoking-related illnesses each year. . . .

If Putin is looking for encouraging examples, there is Turkey, where a ban on smoking was extended to restaurants, cafeterias and coffee houses with effect from July 2009. . . .

As is usual with all countries that legislate smoking bans, there have been complaints from restaurants and café owners who claim that their businesses are being damaged. This emerged at the same time as reports that health minister Andreas Loverdos has complained that the smoking ban was being ignored: "Everywhere, I mean in eight out of 10 cases, the ban is being violated," he said.

Talks have been held between health ministry representatives, community police and representatives of restaurant owners to discuss possible changes to the ban. Restaurant and bar owners, who face huge fines of up to 10 000 euro for allowing breaches of the ban, already have held protests in central Athens.

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• Japan Tobacco Says Demand Is Recovering in Russia, Ukraine and Neighbors 

Japan Tobacco Inc., the world’s third-largest publicly traded cigarette maker, said demand is recovering in Russia, Ukraine and neighboring countries, as the region emerges from the global recession.

Sales by volume of Japan Tobacco’s Winston, LD and other brands in the region rose 0.6 percent in the two months ended Aug. 31 after falling 9.7 percent in the first quarter and 7.3 percent in the second, the company said in a presentation to investors yesterday.

Japan Tobacco counts on Russia and other markets in eastern Europe to spur earnings as it expects domestic sales to fall 16 percent this fiscal year because of a planned tax increase on Oct. 1. The region accounts for almost half of Japan Tobacco’s overseas cigarette sales by volume, according to the company.

There have been “initial signs of recovery observed, with the return of the historic trend of higher consumption during the summer,” the Tokyo-based company said in its presentation in St. Petersburg.

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Indoor smoking bans in Bulgaria, Croatia, Northern Cyprus, Romania and Turkey 

Background

The purpose of this study was to examine attitudes towards attempts to limit second-hand smoke (SHS) in five Eastern European nations. . . .

Results

Across nations, there is more support for smoking bans in offices and indoor work spaces and indoor public space as opposed to restaurants and bars and pubs. Personal smoking behaviours are linked strongly with the smoking bans. Most importantly, it is specific knowledge about the health dangers of smoking which fosters support for indoor smoking bans.

Conclusion

Policy implications suggest that government and the media must disseminate accurate information about the harm of smoking to broader segments of the population to gain support for policies that affect the dangers of SHS in these nations.

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Ukraine Confirmed as a World Leader in Combating Illegal Sales of Tobacco Products  

The most recent edition of the authoritative Tobacco Atlas, released by the American Cancer Society and World Lung Foundation, ranks nations on their success in combating illegal sales of cigarettes and tobacco products. The report confirms that the Ukraine, with a population of 45 million people and despite porous borders, has the extremely low rate of 1.7% of its total market in contraband tobacco. The Ukraine utilizes the EDAPS Tax Stamp System to control the illicit sales of products.

The Ukraine rate of 1.7% is 8 times better than the results in Switzerland, 7.5 times better than the UK, 15 times better than Italy, 3.5 times better than the United States, 20 times better than Brazil, 23 times better than Greece, 15 times better than Malaysia, 8 times better than Turkey, 46 times better than Iran and 13 times better than neighboring Russia.

The 2009 edition of the Atlas concludes: "Cigarettes are the world's most widely smuggled legal consumer product. In 2006, about 600 billion smuggled cigarettes made it to the market, representing an enormous missed tax opportunity for governments, as well as a missed opportunity to prevent many people from starting to smoke and encourage others to quit."

In the years studied, one of the largest areas of trade in illegal cigarettes was Eastern and Central Europe as show by 607 seizures of 100,000 or more counterfeit cigarettes. In the Commonwealth of Independent States, 20 percent of all cigarettes consumed - some 100 billion - were illicit. Yet among 196 nations studied, the Ukraine has one of the lowest percentages of illicit cigarettes consumed.

The well-established EDAPS Tax Stamp System utilized by the Ukraine has resulted in more than doubling the legitimate sale of tobacco, alcohol and other products, and has resulted in billions of dollars in savings for that nation.

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