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Study casts doubt on claims about plain packs

| May 6, 2015

A study published by Tobacco Control provides evidence that the introduction of standardized tobacco packaging in Australia has not increased significantly the consumption of illicit tobacco products.

The study, which was carried out by researchers at the Centre for Behavioural Research in Cancer (CBRC), Cancer Council Victoria, seems to paint a different picture to that painted by a report prepared by KPMG for Philip Morris, British American Tobacco Australia and Imperial Tobacco Australia. That report indicated illicit tobacco products represented a record 14.5 percent of total consumption in 2014.

A story on the KPMG report by Roman Kennedy for The Australian quoted Phillip Morris managing director John Gledhill as saying that the growth in illicit tobacco consumption came during a period that saw two 12.5 percent tobacco excise increases and the implementation of standardized tobacco packaging in December 2012.

The CBRC researchers, led by Dr. Michelle Scollo, set out to assess whether following standardization of tobacco packaging in Australia, smokers were, as predicted by the tobacco industry, more likely to use illicit tobacco.

They carried out cross-sectional telephone surveys continuously from April 2012 (six months before the implementation of standardized packaging [SP]) to March 2014 (15 months after) and used responses from current cigarette smokers. Changes between pre-SP, the transition to SP and SP phases were examined using logistic regression models.

Among those whose factory-made cigarettes were purchased in Australia; compared with pre-SP, there were said to be no significant increases in the SP phase in the use of: ‘cheap whites’, international brands purchased for 20 percent or more below the recommended retail price, or packs purchased from informal sellers.

The prevalence of any use of unbranded illicit tobacco was said to have remained at about 3 percent.

The researchers concluded that while they were unable to quantify the total extent of the use of illicit manufactured cigarettes; they found, in what they described as their large national survey, no evidence of increased use of two categories of manufactured cigarettes likely to be contraband, no increase in purchases from informal sellers and no increased use of unbranded illicit ‘chop-chop’ tobacco.

PMI to webcast conference presentation

| May 6, 2015

Philip Morris International is due to host a live audio webcast – at ww.pmi.com/webcasts – of the company’s remarks and question-and-answer session by CEO André Calantzopoulos and CFO Jacek Olczak at the Goldman Sachs Global Staples Forum starting about 09.30 Eastern Time on May 12.

The webcast, which will be in listen-only mode, will provide live audio of the entire PMI session.

The audio webcast may be accessed also on iOS or Android devices by downloading PMI’s free Investor Relations Mobile Application at www.pmi.com/irapp.

An archived copy of the webcast will be available at www.pmi.com/webcasts until 17.00 on June 10.

Remarks and slides will be available at www.pmi.com/presentations.

Excise and plain packs blamed for illegal trade rise

| May 5, 2015

A record level of illicit tobacco consumption last year has caused the Australian government to suffer an estimated tax ‘loss’ of $1.35 billion, according to a story by Roman Kennedy for The Australian, citing a report by KPMG.

The report, prepared for Philip Morris, British American Tobacco Australia and Imperial Tobacco Australia, indicated that illicit tobacco products represented 14.5 percent of total consumption in 2014.

KPMG estimates that if this quantity of tobacco products had been consumed instead in the form of licit products, the government would have earned an additional A$1.35 billion.

Phillip Morris managing director John Gledhill was quoted as saying that the growth in illicit tobacco consumption came during a period that saw two 12.5 percent tobacco excise increases and the implementation of standardized tobacco packaging in December 2012.

Two further 12.5 percent tobacco tax increases are planned for this year and next.

The story said that most of the illicit cigarettes consumed in Australia came from China and South Korea.

India urged to implement giant-warnings regulations

| May 5, 2015

The World Health Organization has urged India’s Ministry of Health to go ahead with an earlier decision to require that health warnings cover 85 percent of the surface area of tobacco product packaging, according to a story by Aditi Tandon for the Chandigarh Tribune.

The WHO representative in India, Nata Menabde, said on Friday that India was not fully compliant with the Framework Convention on Tobacco Control (FCTC), which required that at least 50 percent of both of the main faces of tobacco packs were covered with health warnings depicting the adverse effects of tobacco use.

“India is not fully FCTC compliant as the tobacco pack warnings currently occupy only 40 percent of the principal display on one side of the pack,” said Menabde. “Given the heavy public health and economic costs to the country due to tobacco consumption, WHO strongly supports early implementation of the October 2014 notification for increasing the size of tobacco pack warnings,” Menabde said.

On March 25, the WHO director general, Margaret Chan, wrote to Prime Minister Narendra Modi congratulating him on India’s decision to implement 85 percent warnings.

The Health Ministry, however, didn’t go ahead with those warnings because the Committee on Subordinate Legislation asked it to hold talks on the matter with stakeholders, such as bidi manufacturers.

Concerns as Indonesia looks to increase revenue

| May 5, 2015

Indonesia’s cigarette manufacturers are concerned that the government aims this year to raise tobacco excise a second time, according to a story in The Jakarta Post.

In its revised 2015 budget, the government has indicated that it aims to take Rp145.7 trillion (US$11.2 billion) this year in excise tax, 20.9 percent higher than its initial target of about Rp120.5 trillion.

The government raised tobacco excise by an average of 8.7 percent from January 1, and concerns have emerged among industry players that tobacco excise will be raised again to meet the higher revenue target.

Based on data from the Indonesian Cigarette Producers Association, the number of cigarette factories in the country has declined from as many as 4,900 in 2009 to around 600 at present, with many unable to survive the excise hikes and fierce competition.

Smokers to be ousted from Seoul’s riverside parks

| May 5, 2015

Eleven riverside parks along the Han River are due to be designated tobacco-smoke-free zones as early as July, according to a story in The Korea Times quoting a Seoul Metropolitan government announcement.

Smoking bans at the riverside parks became possible after the city council revised its ordinance last year.

The riverside parks, which cover more than 40 square km, have been a haven for smokers, so the new regulations are expected to meet with strong opposition.

But the government said the priority would be to make the transition as smooth as possible, and that it was considering all options.

One such option might be the installation of smoking booths.

One thing is certain, though: violators will be liable to a fine of WON100,000 (US$92), after a grace period of three to six months.

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