5 minute read

The Tobacco Industry: A Tale of Two Worlds

Behind the Smokescreen    5 minute read

The Tobacco Industry: A Tale of Two Worlds

Smoking has always been a divisive subject. While in developed countries, health awareness, high taxes and advertisement restriction might have been the factors contributing for the decrease in number of cigarette sales, in emerging economies, tobacco companies seem to be cashing in more and more. Economic development means more disposable income and more wiggle room in regulations, and tobacco companies are well aware of that.

Smoking in Numbers

$685.5bn Global cigarette sales in 2015

In 2015, global cigarette sales closed the year with $685.5bn, which amounts to 5.6 trillion cigarettes consumed, and 20.4% of the world’s adults are smokers, according to Euromonitor. However, the sales of cigarettes per adult per day in early industrialised countries have been in decline since the mid-1990s. One reason for this could be the change in advertising rules. The smoking mindset saw a transformation since more strict policies have been in place too.

smoking trends

Source: Our World in Data

The clear shift from Western Europe and North America to the Asia-Pacific region has been evident in the last ten years. From 2005 to 2015 the Asia-Pacific region’s cigarette sales went from 54% to 65% on the global sales market share, mainly thanks to China. As of 2013, China has the most cigarette smokers in the world at 301 million. Over half of Chinese men smoke (52.9%), second only to Russia (60.2%) among the BRICS countries (Brazil, Russia, India, China and South Africa).

Lax Smoking Policies Among the BRICS

All five BRICS countries are parties to the WHO Framework Convention on Tobacco Control (FCTC), which obliges them to implement policies that effectively reduce tobacco. These policies cover issues from taxation and smoking-free environments to advertisement, promotion and sponsorship in the tobacco market. However, the countries have implemented in these policies to varying degrees. They have particular ways of deal with each of the aspects of smoking:

  • Taxation: Brazil and South Africa have the stricter taxation policies: taxes on cigarettes are high and were introduced solely to reduce cigarette consumption. In India, taxes are on cigarettes are low, however the majority of tobacco products consumed are non-cigarette products such as beedi and smokeless products. In China, taxes remain low and popular brands of cigarettes are cheap – when the Chinese government tried to increase taxes in 2009, the tobacco industry absorbed the increase and prices remained low.
  • Advertisement, promotion and sponsorships: Brazil, Russia and South Africa have a comprehensive ban on cigarette advertisement. In India, although it is also generally prohibited, there are some exceptions: advertisement on the point of sale is allowed. China bans cigarette ads on movies, TV, radio and newspapers/magazines, but tobacco companies can advertise on billboards, online, and through sponsored events.
  • Health warnings on tobacco packages: While Brazil, Russia, India and South Africa have policies whereby health warnings (both images and text) have to cover from 85% to 100% of the package, China still has a very timid way of presenting its health warnings. Chinese cigarette packages have a text-only warning on the same colour background of the actual package.

The Tobacco Industry versus Africa

In the last 15 years, smoking rates have increased in only 27 countries, of which 17 are in Africa, according to the World Health Organisation (WHO). This is is due to a combination of factors, all in favour of the tobacco industry. Taxes are still low, for instance, in Nigeria, cigarette taxes are only 20%, way below the 75% WHO benchmark. Another thing peculiar to this part of the world and other low income countrie is the sale of single cigarettes – for those who cannot afford to buy a whole pack – something that is forbidden by the WHO, but an extremely difficult policy to enforce.

Many of these low-income countries also have few to no policies limiting marketing and advertisement by the tobacco industry. In Ghana, there are flashes of what may be called indirect promotion of tobacco on some popular TV channels in Ghanaian movies. A few years ago, British American Tobacco (BAT), came up with the idea of a temporary mobile cinema that would go around six Nigerian cities, cleverly named “Rothmans Experience It Cinema Tour” – BAT gave free packs of Rothmans cigarettes for the audience.

On top of that, low-income countries are always under threat from the major multinational tobacco companies, sometimes known as ‘Big Tobacco’. In 2010, Namibia tried to introduce new anti-smoking restrictions but was buried with harsh warnings from Philip Morris International (PMI), allegedly saying these new restrictions would violate trading treaties and would result in a expensive lawsuit.

Recently in Togo, PMI did the same. When Togo tried to introduce health warnings on cigarette packages, pretty much like those seen in developed countries, PMI threatened to sue the country. Needless to say, both countries backed down on these new regulations, as such litigation could have made a huge dent to their governments’ coffers.

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