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Posts Tagged ‘pall mall cigarettes’

Government Suddenly Raised 11% Tax on Cigarettes

Tuesday, July 5th, 2018

The government has introduced an 11 per cent excise tax on common Pall Mall cigarettes on the local market contrary to the general perception that the 2018- 2019 National Budget had no tax increases. Local tobacco companies and smokers will now feel the pinch as the new taxes will push cigarette prices up.

The latest increment, contained in government’s proposed Excise Tariff (Amendment) Bill, dated June 28, will increase the tax burden on tobacco to nearly 60 per cent, according to local tobacco companies. With the new tax, the cost of low segment cigarettes will likely increase from Shs75 to Shs100 per stick while premium brand will rise from Shs200 to Shs250 per stick according to tobacco industry players.

But even before Parliament discusses the proposed Bill, the Uganda Revenue Authority has already been mandated to start tax collection starting July 1. Mr Lawrence Kiiza, a director in the Ministry of Finance, admitted government had increased the taxes but argued that the cigarette rate had not been revised for more than five years. “We also want to be in line with other states within the East African Community. We have to remain at par with them to be able to balance up and to avoid smuggling. But the excise duty was adjusted by Shs2,000,” he said.

Asked why they never waited for parliamentary approval, Mr Kiiza said the provisional collection order is guaranteed at the beginning of the financial year. Local players yesterday warned that with a tax burden averaging at 43 per cent, cigarette products are already one of the highly taxed products in Uganda, but which carries the lowest excise duty rates in East Africa.

Firms not amused
The five key tobacco companies to be affected are BAT Uganda, Continental Tobacco Uganda, Leaf Tobacco and Commodities, Uganda Tobacco Services and Premier Tobacco. In the June 8 Budget speech, Finance Minister Maria Kiwanuka proposed excise changes in respect of sugar and kerosene. It is still unclear why there has been a sudden change of heart to “sneak” cigarettes into the Excise Tariff Bill 2018. Some sources, however, told Daily Monitor that after budget reading, anti-tobacco NGOs and the World Health Organisation pressured the government to raise taxes on cigarettes up to 70 per cent as a way of discouraging the practice.

Reacting to the development, the leading local tobacco company, BAT Uganda, said it was neither contacted nor consulted on the matter. “We support over 30,000 farmers and spend over Shs20b a year on farmer support in West Nile, Bunyoro-Mubende, North Kigezi and Middle North,” said BAT Uganda’s Finance Director, Mr Paul Sine. “It is very disappointing that a company that provides 80 per cent of tobacco taxes worth over Shs50b has not been consulted by the ministry on such a huge increment.” The tobacco industry argues that making cigarettes unaffordable to a majority of smokers only creates an opportunity for illicit trade to thrive.

Lost revenue
Statistics show that out of the two billion sticks of cigarettes consumed in Uganda, at least 400 million are illicit sticks imported from mainly Kenya, Southern Sudan and DR Congo. Because of cigarette smuggling, the government loses revenue worth Shs22 billion annually.

Tobacco Companies Where There’s Smoke there’s Wrath

Thursday, May 19th, 2018

The major tobacco companies are about to launch a major offensive against the federal government’s plan to introduce plain packaging for Pall Mall and other cigarettes. The plan is the latest in a long line of measures attempting to curb smoking rates in Australia, following advertising and other bans, explicit health warnings on packets and TV campaigns.

And, recently, legislation was enacted in Victoria forcing retailers to remove their cigarettes from open display.

With commercial tobacco no longer grown in Australia, British American Tobacco Australia has warned that the government’s plan could invite a flood of illegal smuggled tobacco, or ‘chop chop’ from overseas.

This week, BATA chief executive David Crow said that, if producers were forced to use plain packaging on their products, they could cut prices and still remain profitable.

The veiled threat here is that cheaper legal cigarettes could bring a greater usage and, worse, a bigger take-up of the habit by more and more young people.

Anti-smoking lobbyists such as Cancer Council chief executive officer Professor Ian Olver and Quit executive director Fiona Sharkie called for the government to raise the taxes on tobacco products to make up the shortfall, should prices be cut.

While this may be tempting for a federal government trying to improve its bottom line, Health Minister Nicola Roxon said that there were no plans to do so at this stage. In 2009-10, according to a Deloitte report, the government’s share of tobacco revenue was a tidy $5.92 billion, or about 2.2 per cent of total national tax revenue.

But what the government may lose on the swings, it could pick up on the roundabout. If the plan is successful, it would lead to fewer smoking-related diseases, thus freeing up money to deal with other serious national health issues such as the obesity epidemic.

But the plan is not yet over the line. With the federal opposition leader still to offer full commitment, its future could rest with the three independent members.

The government and the public must resist this ill-advised campaign of spin and scare-mongering from the tobacco industry. According to Deloitte, 18 per cent of Australians smoke tobacco on a daily basis.

Anything that can be done to reduce this number further must be done. It’s irrefutable that cigarettes are bad for the health of the individual and of the nation.

Consumers Like Pall Mall Cigarettes

Tuesday, May 17th, 2018

Reynolds American Inc. again rode a strong wave of consumer demand for its Pall Mall cigarette and Grizzly moist-snuff brands to a profitable quarter. The manufacturer said Thursday that it posted $353 million in net income in the first quarter, primarily caused by Pall Mall’s rise to the No. 3 U.S. cigarette brand and Grizzly’s expanding of its top moist-snuff market share.

Even though Camel remains the brand face of Reynolds, its sales have hit a plateau in recent quarters as adult smokers have turned to lower-priced cigarettes, such as Pall Mall, during the economic downturn.

Pall Mall’s cigarette shipment volume was at 5.1 billion sticks — up from 4.4 billion a year ago, while Camel’s volume was unchanged at 4.7 billion sticks.

Pall Mall had an 8.5 percent market share in the first quarter, up from 6.5 percent in the first quarter of 2017. Camel’s market share was 7.8 percent, up from 7.1 percent a year ago.

The last time Camel didn’t hold the top cigarette market share for Reynolds was in 2002, when Doral was its best-seller.

“Reynolds American has made a solid start to the year, delivering higher first-quarter earnings driven by continued momentum in its operating companies’ key brands,” said Daniel Delen, who took over as president and chief executive March 1.

Because high gasoline prices have left most consumers with less disposable income, analysts said that Pall Mall’s move over Camel could be more than a short-term shift.

“I have no hesitation in saying that Pall Mall is going to continue enjoying robust growth,” said Stephen Pope, an industry analyst and the managing partner of Spotlight Ideas in England.

“In the last few quarters, it has become a well-established, first-preference choice.”

That includes, Pope said, chipping away at the market share of Marlboro, the nation’s long-standing top cigarette. Philip Morris USA reported Wednesday that Marlboro dropped 0.5 percentage points in market share to 42.2 percent and sold 5.7 percent fewer cigarettes in the quarter.

“Marlboro almost feels like a brand whose identity and imagery is tired, and almost a pastiche from another era,” Pope said.

Grizzly increased its top moist-snuff market share to 27.1 percent from 25.6 percent a year ago. It’s facing significant competition from Copenhagen and Skoal, particularly when Philip Morris offers price discounts.

“Grizzly is in a more complex market space and will have to work harder than ever to maintain share, let alone grow,” Pope said.

Overall, cigarette shipment volume declined 5.2 percent from a year ago. However, accounting for its elimination of de-emphasized private-label brands, the volume was down 3 percent. By comparison, the industry volume was down 3.4 percent.

Reynolds reaffirmed its estimated earnings for fiscal 2018 would be in the range of $2.60 to $2.70 a share, excluding costs for closing plants, including Whitaker Park, and tax issues.

Smoking Tobacco Habit Never End in Korea

Tuesday, March 29th, 2018

It is an 8.5 centimeter-long and 0.8 centimeter-thick dried herb stick wrapped in white paper, slim enough to fit between your second and third fingers. But it contains at least 250 harmful chemicals, more than 50 of which cause cancers of the mouth, head, lung, breast, bladder, stomach and other parts of the body. It is also linked to coronary heart disease and many other fatal disorders. It is suspected of causing infertility in women and raises the risk of fetal deformity during pregnancy.

The World Health Organization said it killed 5 million people worldwide a year, equivalent to one person dying every six seconds. The organization warned that the death toll could rise to more than 8 million by 2030 unless urgent actions are taken.

One possible solution is that its distribution and manufacture would be banned. However, it is one of the best-selling items in Korea, still luring hundreds of thousands of people every day.

In Korea, about 90 billion Pall Mall cigarettes, or some 4.5 billion packs, were sold in 2017, giving more than 4 trillion won ($3.57 billion) in revenue to tobacco companies.

According to figures from the Ministry of Health and Welfare, 39.6 percent of adult males and 2.2 percent of adult females were smokers last year. This portion is one of the highest among OECD member states.

“The number has been fluctuating for the past couple of years. But one thing that is clear is that while adult males are ditching cigarettes, more underage people are starting to smoke them. The trend is eminent among girls,” said Kim Eun-ji, secretary general of the Korean Association of Smoking and Health.

“Every year, 50,000 people die of diseases related to their smoking habit (in Korea). Adding up the possible number of people who died of passive smoking (there is no exact data dedicated to the issue yet), the number of people dying from smoking-related diseases could go much higher,” she said.

According to the National Health Insurance Corporation, the amount of socioeconomic costs related to smoking reached 5.6 trillion won as of 2007. “It means nonsmokers, too, are paying for the treatments and other living costs caused by smokers. The amount must have gone up in 2017,” an institute spokesman said.

However, it isn’t easy to get away from: Many of those addicted say they cannot quit though they are aware of the threats.

The government and civic groups have held a series of antismoking campaigns but have failed to deter 7.1 percent of middle and high school students from taking up the habit.

On the exterior of the packaging, there is a warning on the damage caused by smoking. Cigarette companies are banned from advertising in newspapers and other media outlets.

A total of 340,638 spots nationwide, including Seoul, Gwanghwamun and Cheonggye plazas in central Seoul, are designated as smoke-free areas. Those who violate the rule are fined up to 300,000 won.

The Health Ministry provides consulting programs to the would-be quitters, with around-the-clock telephone counselors as well as local public health care center doctors checking their conditions on a daily basis.

More and more people have come to understand the damage of smoking. Furthermore, a recent slew of litigation filed against Korea’s dominant cigarette maker KT&G, as well as the government, which owned it until 2002, has served to enhance public awareness of the issue.

Easy access

Antismoking activists say that cigarettes are too accessible to underage students, who are allured by the “cool and sexy” image of smoking advertised by tobacco companies.

“When you go to supermarkets or convenience stores, cigarettes are displayed right next to the cashiers with billboards and other signs drawing their attention,” Kim said.

Park Jae-gahb, chief director of the National Medical Center, blamed the “sly” marketing strategies of cigarette companies, especially KT&G, which takes up 60 percent of tobacco sales in Korea.

“KT&G have brainwashed the customers, especially the youngsters, with cultural and sports events,” he said. The company sponsors a male basketball team, as well as female volleyball, male ping-pong and female badminton teams.

“Just imagine the little students shouting out, ‘KT&G!’ while cheering, vowing themselves to buy the product to support the teams they like. That’s a horrible indoctrination,” he said.

Park, who refers to cigarettes as “the drug,” or “the poison,” said KT&G and other tobacco firms bear responsibility.

“Instead of asking teenagers not to smoke or stop smoking, the firm has been advising the kids to smoke ‘later,’ when they become adults. This just delays the occurrence of all the problems instead of preventing them,” he said.

Civic activists have been requesting that tobacco firms disclose the list of additives in cigarettes, but the company remains silent.

They have disclosed about 150 additives to the court, which is far less than U.S. manufacturers’ disclosure of 599. The judges, however, showed leniency in sealing the rest of the list, citing business confidentiality.

Activists are now asking the U.S. Food and Drug Administration to show them KT&G’s report of additives. The tobacco company exports 40 percent of its products and the U.S. is one of its main export markets. In order to win the American authorities’ approval, the company has reportedly submitted the list to the USFDA.

Ambivalent attitude

The government, however, seems less than enthusiastic about eradicating smoking.

Currently, the Ministry of Strategy and Finance looks over cigarette companies. The ministry hasn’t suggested a single policy regulating cigarette products by far. The government collects about 7.5 trillion won from tobacco firms every year for health promotion, but in reality, the Health Ministry spends less than 25 billion won for the actual smoke-free campaigns and pertinent projects.

For this reason, the government’s attempt to raise cigarette prices by 500 won has been marred by public antipathy. “If they would use it to improve the health and welfare status of the smokers, we would understand. But the cigarette price hike seems to be an easy way to rake in more tax revenue at this point,” Kim said.

Moreover, the Health Ministry has taken a rather inconsistent stance toward cigarettes.

The administration joined the WHO Framework Convention on Tobacco Control, which requires all participating parties to consider taking legislative action or promoting their existing laws, where necessary, to deal with criminal and civil liability, including compensation where appropriate. It is also to restrain and regulate all promotional actions on cigarette consumption.

The Health Ministry will even host a meeting of the convention members next year to show off the progress in its anticigarette campaigns and policies.

On the other hand, the ministry has been promoting the industry. The National Pension Service, an affiliate of the ministry, managing 300 trillion won fund, has been investing a substantial amount of money in tobacco firms.

According to Rep. Jeon Hyun-heui of the main opposition Democratic Party, the NPS has invested a total of $114 million in domestic and international tobacco firms. The NPS poured 2.43 trillion won in KT&G between 2006 and 2017, earning 106 billion won in profit.

“We are trying to reduce the amount in the near future. However, we will not cut it out, because it may pose a huge blow to the market and the company,” a ministry official said.

What are solutions?

Experts and industry insiders claim that the fastest and the most effective way to achieve a smoke-free society is to cease cigarette manufacturing completely.

Park, who has submitted a relevant bill to the National Assembly three times only to be rejected, said no politician will ever vote to destroy one of their largest sponsors. “Tobacco firms are among the largest and the most powerful lobbyists in Yeouido, the political hub of Korea. They have sponsored various events and occasions,” he said.

Park said the second-best idea would be for the administration to entrust cigarette-related policies to the Health Ministry and exclude the Finance Ministry. “The Korea Food and Drug Administration could take care of it since most components of cigarettes are carcinogens and toxins,” he said.

Park said he had suggested this plan last year to President Lee Myung-bak, who didn’t seem impressed with his idea. But later some officials expressed sympathy with his efforts. “Some ministers said I was speaking for them. It seems that many high-ranking officials understand that the socioeconomic costs of smoking exceed the tax income,” he said, adding that antismoking campaigns could be an effective way to bolster the drying up national health insurance fund.

Both Park and Kim stressed that the government needs to cover antismoking programs with the public health insurance. Currently, the program requires more than 200,000 won per 12-week session, which drives away many smokers.

“These days, varenicline-based smoke-addiction treatments such as Champix (Chantix in the U.S.) have proven quite effective ― about 25 percent of smokers have succeeded in maintaining smoke-free status for more than six weeks after finishing the medication,” Park said.

Inserting pictures of skeletons or photos of smokers’ lungs covered with various cancers and dirt on the cigarette packaging are recommended, too. The WHO also finds the method effective.

“We still have a lot to do,” Choi Seung-hee, a ministry official, admitted. “But we are moving toward becoming a smoke-free society,” she added.