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Korea’s retailers face prison for ‘bulk’ cigarette sales

| December 2, 2014

The South Korean government was forced on Monday to threaten draconian action against tobacco retailers that might be tempted to sell large numbers of cigarettes ahead of a tax-led January 1 price hike, according to a story in The Korea Times.

The government said it would crack down on stores selling tobacco ‘in bulk’ this month. Proprietors caught selling large volumes of cigarettes would face up to two years in prison or a WON50 million ($45,000) fine.

The market faces a turbulent time with prices rising by up to 87 percent. In the first increase in 10 years, cigarette prices are set to rise by WON2,000 ($1.80) per pack to between about WON4,300 and WON5,000 per pack.

Sales have surged during the past two months since the Health Ministry released in September its plans to raise tobacco prices.

The Trade Ministry was quoted as saying that tobacco sales rose by 12.1 percent and 5.9 percent in September and October respectively, compared with sales during the same months of last year.

And since the country’s two main parties reached an agreement on Friday to raise prices, tobacco sales at GS25, Korea’s largest convenience store chain, have risen by 25.2 percent from those of the previous week.

According to the National Assembly Budget Office, the price hike will bring in WON5 trillion in tax revenue, which is almost double the government’s estimate of WON2.8 trillion.

But some observers have accused the government of lowering its own estimate to avoid criticism that it was saddling low- and middle-income earners with more taxes.

“Low-income earners have little more than tobacco for enjoyment compared to the high-income groups, who have more resources,” said Yoo Jong-il, an economics professor at the Korea Development Institute School. “The price hike would therefore place a bigger price on them, without having too much of an impact on their health or cigarette consumption.”

Record broken at London auction of rare cigars

| December 2, 2014

A record £554,125 – including fees – was raised at last night’s C.Gars winter 2014 cigar auction at Boisdale Belgravia in London, the UK.

“Lot 317, the highly desirable Cubatabaco 1492 humidor containing 50 1992 Cuban cigars, went for £26,500,” said managing director Mitchell Orchant.

“The second highest hammer price was £16,200 for Lot 339, the Romeo y Julieta Coronations de Luxe pre-embargo Havanas.’

Bidders were said to have flown in from America, Asia and mainland Europe to attend the auction.

The next C.Gars auction will be online in February.

Vector declares quarterly dividend

| December 2, 2014

The Vector Group yesterday declared a regular quarterly cash dividend on its common stock of $0.40 per share.

The dividend will be payable on December 30 to shareholders of record as of December 12.

The Vector Group is a holding company that, among other interests, indirectly owns the Liggett Group, Vector Tobacco and Zoom E-Cigs.

Britain’s smokers under 20 percent of population

| December 1, 2014

The incidence of smoking among Great Britain’s adult (16 years of age or older) population fell from 20 percent during 2012 to 19 percent last year, according to a recently-released report from the Office for National Statistics (ONS).

The incidence of smoking among men was unchanged at 22 percent, but the proportion of women smokers fell from 19 percent during 2012 to 17 percent last year.

Great Britain has seen a long-term, gradual decline in smoking with the overall incidence having fallen from 46 percent during 1974.

According to the ONS, not only have fewer people been taking up smoking, but more smokers have been quitting.

The proportion of adult cigarette smokers is highest among unemployed people, people working in routine and manual occupations and those with lower educational qualifications: all factors associated with poverty.

But unmarried people are almost twice as likely as are married people to be cigarette smokers.

Meanwhile, the ONS said that electronic cigarettes were almost exclusively used by smokers and ex-smokers. ‘Almost none of those who had never smoked cigarettes were e-cigarette users,’ it said.

Cigarette price hike tentatively agreed in South Korea

| December 1, 2014

South Korea’s ruling and opposition parties have tentatively agreed to raise the tax on cigarettes by WON2,000 ($1.80) per pack next year, according to a story in The Korea Herald.

Under the agreement, cigarette prices would be pushed into a range that rose from about WON4,300 to about WON5,000 per pack.

The government announced in September that it would push to raise cigarette prices by 80 percent by January as one of its measures aimed at decreasing the country’s smoking rate among adult males to 29 percent by 2020.

The Health and Welfare Ministry has said that, in addition to the tax and price hike, it would like to see the introduction of a pricing system under which cigarette prices increased in line with inflation.

The most recent previous price hike was in December 2004.

Fining manufacturers not way to tackle illegal trade

| December 1, 2014

The UK’s Revenue & Customs department has privately told British American Tobacco that fining tobacco companies for breaching anti-smuggling legislation might be less than helpful in the fight against the black market in tobacco products, according to a story in The Times citing the leaked minutes of a meeting.

BAT was penalised last month for oversupplying tobacco products to Belgium amid concerns that licit tobacco sold in lower-priced markets was being brought into the high-tax UK illegally.

BAT, which was the first company to be penalized under the legislation, was fined £650,000; and it could have its executives called before MPs on the Commons Public Accounts Committee.

HMRC said last month that it was keeping rival tobacco companies ‘under review to ensure they comply with the rules’.

However, in draft minutes of a meeting between BAT and HMRC in London in March, which have been passed to The Times, the tax agency said that fining tobacco companies could reveal the shortcomings of the legislation.

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