Tobacco companies encourage smokers to protest against taxes and bans

Major tobacco companies are doing their best to turn average smokers into the rebels by the latest underground campaign promoting mass protests against hefty taxes, regulations and smoking bans.

The campaign named “I Deserve to Be Heard” comprises putting small notes into cigarette packs sending smokers to certain website stating: “It’s time to tell the government you’ve had enough”.

The Australian government states it will concentrate efforts on eliminating the tobacconists’ campaign, as the spokesperson for Australian Minister of Health said the campaign is a vivid example of how low tobacco industry is ready to go to promote their dangerous goods.

Anti-tobacco organizations are shocked by the latest strategy, naming the campaign arrogant and unprecedented.

Local smokers have faced two considerable hikes in cigarette taxes during the last 12 months and the number of venues where puffing is permitted is decreasing annually since the federal and state legislatures implement extensions to cover more places by the bans.

Smoking is prohibited throughout the country in bars, clubs, cafes, restaurants, business centers and other places, while several states have prohibited, or intend to prohibit lighting up on beaches, parks and other outdoor facilities.

Business owners criticize the new regulations as well, especially after the lawmakers approved the law to require cigarettes to be sold in generic packages and under the counter, and implemented a set of further restrictions on marketing and advertising.

The I Deserve to Be Heard public campaign was introduced by Philip Morris International’s Australian unit, which markets Marlboro, the world’s best-selling tobacco brand, L&M, and other world-known cigarette brands.

The campaign encourages adult smokers to contact their MP and support their smoking electorate.

The campaign has three targets – tax increases, smoking bans in outdoor venues, and generic packaging of cigarettes.

“Australia has been one of the most over-governed countries across the developed nations,” according to the website.

“If you are a smoker, you are definitely annoyed and frustrated.”

Philip Morris Limited issued a written statement, saying that the campaign concentrates on giving people who purchase the company’s products the chance to make their opinion heard regarding the excessive and senseless laws which affect them.

A spokesperson for Nicola Roxon, Australian Minister of Health stated the government was preparing to fight with the campaign, and considering the legal fight as well.

“Tobacco companies don’t want people to know that about 75 percent of adult smokers attempt to stop smoking or reduce consumption annually – people are aware that smoking is a deadly habit, while the smoking rate is dropping,” the spokesperson added.

Tobacco Companies Promote Their Products in Developing Countries

Suffering tough restrictions in the United States, multinational tobacco enterprises are more and more promoting their products in developing countries, mostly among women and adolescents.

While smoking rates in certain industrially developed countries are dropping at about 1% per year, those in developing countries are rising at around 3%.

According to estimates, if present trends continue within next 30 years, more than 7 million people from developing countries will die from tobacco related illnesses.

For the past years, tobacco companies as British-American Tobacco, Philip Morris and RJ Reynolds have been extending rapidly in Africa, Asia, Eastern Europe and Latin America.

“In the US, Hispanic minorities have been mostly attracted by the tobacco manufacturers since the early 1960s, and have received a great dose of advertising,” said Jeanette Noltenius, an expert on tobacco and alcohol abuse issues.

Bureau of Census, U.S. Department of Commerce stated that the number of young Latino smokers will increase by 2020, constituting 19% of young American smokers, up from 9 at present.

Since 1980 the American trade officials, conducted a long campaign to open and promote markets in Japan, South Korea, Taiwan and Thailand. For instance in Taiwan all these efforts brought to increased levels of smoking mostly among women and kids.

These actions have urged the Asia-Pacific Association to stand against what they suppose an invasion of their countries by U.S. companies attracting Asian women and children.

Various researches demonstrate that in the poorest households in emerging countries, 10% or more of the total household expenditure is comprised in tobacco. Thus there is less money for main items like food, education and health that brings to unbalanced diet, illiteracy and premature death.

Currently in China tobacco enterprises are moving continuously inland with intensive advertisement campaigns. It was estimated that of the world’s 1.71 billion smokers, more than 350 million live in China, where the rate of lung cancer has been raising 4.75 % per year.

The Chinese government officials are facing a dilemma of advertising tobacco cessation programs while it substantially depends on profits from the state-run tobacco company.

Researches from the School of Public Health at the University of California declare that increasing the tobacco tax by the equivalent of 15% per cigarette pack could save more than 13 million lives and accumulate $9.5 billion in revenue for the Chinese government.

While U.S. anti-smoking organizations wait a particular moment for action, those in developing countries are less effective. Such countries’ policies and programs won’t be efficient unless transnational tobacco companies are made to limit their persistent promoting.

KT&G set to take the lead in slim-cigarette market with flagship ESSE brand

When asked what it the most popular cigarette brand in the world, the majority of adult smokers would probably name one of the iconic brands, such as Marlboro, Winston or Lucky Strike, produced by the world’s largest tobacco companies, Philip Morris International, Japan Tobacco International and British American Tobacco.

Nevertheless, if considering only the slim cigarette market segment, it seems that those legendary brands were bypassed by a newcomer, named ESSE and manufactured by South Korean KT&G, which has been steadily growing and capturing international market share.

The Seoul-based tobacco maker reported a two-fold growth in exports, selling 20.8 billion ESSE cigarettes on the international market, up from 11.2 billion in 2009, to outstrip its major competitors, Philip Morris’s Virginia Slims and British American Tobacco’s Vogue.

According to Euromonitor International, a UK consulting agency, KT&G sold 29.2 billion ESSE cigarettes in 2009, while PMI sold 17 billion Virginia Slim cigarettes and BAT sold 11 billion Vogue cigarettes.

“Since its launch in 1996, we have developed Esse cigarette brand as our global flagship brand. This premium brand is currently selling in more than 40 markets across the world including Middle East countries and Russia,” admitted Huh Up, director of global businesses for KT&G.

“It should be mentioned that ESE is currently the best-selling brand in super-slim segment of cigarette market in Iran, Indonesia and Uzbekistan. In Russia, ESSE holds more than 10 percent share of the super-slim segment.”

Mr. Huh mentioned that KT&G, former state-owned cigarette maker, entered the global cigarette market a decade ago, after the domestic market demonstrated saturation.

Trying to promote ESSE and make it a world-famous tobacco product, KT&G showed its potential at organizing various marketing events.

At present, the company is an overwhelming leader of the Korean cigarette market, with 85 percents of the domestic super-slim market.

When one of the styles of ESSE, was launched in the domestic market, it took about a week to reach milestone sales of 10 million packs, becoming the shortest ever period for the company.

Currently, ESSE offers many styles, such as ESSE Super-Slims Menthol and ESSE Super-Slims Special Gold.

“While exporting ESSE brand to other markets, we have opened several manufacturing units in major markets to keep up with growing sales”, Huh admitted. In addition, the company is set to promote its other brands and acquire competitive brands in order to become a solid player on the international tobacco market.

KT&G invested nearly $100 million to establish a production line in Kaluga Region, Russian Federation, in order to supply Eastern Europe region with ESSE cigarettes.

In addition, the company as well: opened manufacturing units in Turkey and Iran to work with Middle East and Asian markets.

Philip Morris International is Expecting a Drop in Demand for its Tobacco Products

Chris Nelson, representative of the PMI, stated the tobacco industry may have problems in surpassing last year’s record sales due to the increase in the excise duties, which affected cigarette products. Nelson also stated that the increasing political crisis in the Middle East, which is the main destination for Filipino workers, might also be a reason of the slump in the demand for cigarettes.

“Last year, it was the case with significant volumes and a great demand. But this year our sales might suffer, tacking into account current situation in the Middle East,” the representative stated without giving any details.

“We shouldn’t forget about the increase in excise duties in January and higher prices would clearly influence demand,” Nelson declared.

But the market would proceed to develop because of propitious demographic like the country’s growing adult population.

“The industry’s growth has always been associated with the country’s population, which has been increasing by 1.7 % to 1.8% annually. Since 2005 the industry has increased by about 2%.

“The market is rather price sensitive since it is an indicator of the consumer’s expendable income. Any sudden tax increase would weaken the market. It would be judiciously to admit that the demand would be influenced but overall, the industry prospect, not peculiar to 2011, is favorable. The only warning is that the right excise duty system should be in place,” Nelson stated.

The cigarette producer has been forcing for the prolongation of the present excise duty system, which is expiring in 2013.

“Excise duties collection on tobacco products have raised significantly to P31.6 billion last year, surpassing the government’s objective of P25 billion. This proves one more time, that the system works and there is no motive for it to be changed,” Nelson said.

The Act Increasing the Excise Duties Rates Imposed on Alcohol and Tobacco Products, stipulates for increases every two years from 2005 to 2001. The scheme settles that alcohol and cigarettes are placed in four categories with changing duty rates.

“There are few laws in many countries which produced such an effect as the RA 9334 that permitted government to levy more taxes and at the same time. It is an evident success, which works very well,” Nelson said.

Starting from January 1, all cigarettes packed by machine with the net retail prices of less than P5 (0.11 USD) per package would be levied P2.72 (0.06 USD).

Philip Morris set grow market share in Armenia tobacco market .

Last year Armenian government approved several regulations to control local tobacco market and major tobacco companies. Regional senior manager of Philip Morris International, the leading tobacco group in Armenia, Sargis Tsaghikyan stated that the tobacco giant is set to show another great performance capturing more market share in 2011.

Mr. Tsaghikyan said that Philip Morris Armenia offers solid and balanced brand portfolio in the local market, and is presented in all price categories, keeping in touch with all adult costumers’ needs. This makes the company believe that its business performance will be successful and the market share will continue to grow.

According to PMI Armenia is an emerging and very competitive market. And the Marlboro-maker has a 19.5 percent share of that market, the biggest among its major rivals.

In 2010 Philip Morris International offered the following brands to the Armenian smokers: Marlboro, L&M, Parliament, Chesterfield, Virginia Slims, Bond Street, Muratti Ambassador, Red&White and Assos Slims. L&M is the best-selling brand among PMI brands.

Last October, Armenian president signed into law amended Excise Tax Law and Tobacco Products Tax Law under which the tax rate difference among imported and locally manufactured tobacco products will be gradually reduced starting from Jan 1st 2011, therefore introducing equal approach to local and imported cigarettes. Philip Morris International welcomed these tax code amendments, as they are implemented in established time and prompt Armenian Tobacco Products Taxation equaling with World Trade Organization requirements.

Armenia adopted a universal and thorough legislative base to regulate tobacco industry and according to Philip Morris Armenia senior manager, the company is willing to cooperate with the government and public health authorities to establish norms and regulations for the domestic tobacco industry. The company believes it is vital that regulatory base is comprehensive, justified by evidence and covering all tobacco companies and products and that enforcement is adequate and even. These regulations could allow the authorities reach the public health objectives.

Philip Morris International is the largest international tobacco group in the world, selling its products in more than 160 markets. In 2009 the company had an approximately 15.4 percent share of global cigarette market excluding the United States, or 26 percent, excluding China and the USA.

On its official website, PMI states that smoking can cause addiction and severe health complications and recognizes that there is no safe form of tobacco consumption. The company supports strict and effective measure to regulate tobacco, and agrees that cessation should be the major aim of public health policies. At the same time Philip Morris International doesn’t target non-smokers and minors, and their marketing strategies are intended to adult smokers and set to encourage them top prefer PMI’s brands in favor of competitors’ products.