• Menthol and flavoured cigarettes are widely available in low and middle-income countries (LMICs) many of which have high smoking rates
• LMICs have young populations – flavours appeal to young people, who may not understand the harms of flavoured tobacco
• Recently high-income countries have put bans in place; at the same time there has been marked growth of menthol market share in some LMICs
• There is a lack of regulation to reduce the appeal of flavours e.g. plain packs and advertising bans at point-of-sale or near schools
• Targets for new and improved bans include flavour capsules, and flavour references on packaging and cigarette sticks
• A ban on all flavourings may be easier and more effective in preventing product substitution
• A lack of data, especially in low-income countries, hinders the development of good regulation
• Multinational tobacco companies can threaten income from tobacco exports if governments attempt to put tobacco controls in place

This page covers flavoured tobacco, including menthol cigarettes, in low and middle-income countries (LMICs).¹²

Background

Flavoured tobacco products are available in various forms around the world, including products previously only used in particular regions or countries. For example in Indonesia, the vast majority of smokers use kretek, clove-flavoured cigarettes,³⁴ and they are now available in other countries.⁵⁶

Flavoured tobacco is used in waterpipe, a device which originated in middle-eastern countries and is increasingly popular elsewhere, including among young people.⁷

Here we focus on what are often called ‘conventional’ products, like cigarettes and cigarillos, which are sold by large transnational tobacco companies (TTCs): Philip Morris International (PMI), British American Tobacco (BAT), Imperial Brands (IMB, previously Imperial Tobacco) and Japan Tobacco International (JTI) (JTI also owns Nakhla in Egypt, which produces flavoured waterpipe) We summarise findings from Tobacco Control Research Group (TCRG) research on the extent of flavoured and menthol cigarette use in LMICs and the development of the market for ‘capsule’ products (cigarettes with flavour capsules in the filter).

We describe specific challenges for LMICs, including flavour regulation and evidence gathering. We then summarise flavour market evidence and research, first relating to LMICs in general and then by World Health Organization (WHO) region and individual countries (where available).

• For general background and evidence, including information on the global market, and details of specific bans and associated industry interference, see Flavoured and Menthol Tobacco.

For details of product regulation at country level, see the searchable database on the Tobacco Control Laws website, published by the Campaign for Tobacco Free Kids (CTFK). For countries that are parties to the WHO Framework Convention on Tobacco Control (FCTC) progress towards implementation of relevant articles, including newer products, is detailed in the FCTC implementation database

Specific challenges for LMICs

LMICs with no ban often have other major tobacco control policy gaps that are not necessarily menthol/flavour related but worsen the negative impact of menthol/flavours.⁸ One such policy is plain, or standardised, packaging,  which can include restrictions on flavour descriptors as well as colours on packaging which are known to signify flavour (e.g. green for menthol).⁹ However, plain packaging policies have yet to be implemented in many countries, including some high-income countries, so this would be a significant challenge in LMICs. Another relevant policy is the prohibition of marketing, especially near schools.¹⁰

Governments have more conflicts of interest in tobacco growing areas as they receive much needed foreign currency for tobacco exports,  and multinational companies can threaten this income stream if governments attempt to put tobacco controls in place.⁸¹¹  However, apart from rare exceptions the tobacco industry contributes little overall to the balance of payments.¹²¹³

Regulatory challenges

The WHO published brief guidance on the regulation of menthol and flavoured tobacco which summarised some regulatory options including restrictions on: the sale of menthol branded products,  the use of menthol at noticeable levels (giving a ‘characterising flavour’),  or banning any menthol ingredients.¹⁴  The report points to likely opposition from the tobacco industry in countries or regions with an established menthol market.¹⁴ This was the case with the European Union (EU) menthol ban which only came into full force in 2020, after the tobacco industry had successfully lobbied for a delay. Testing for characterising flavour is more difficult and expensive than a ban on ingredients; this makes banning menthol as an ingredient particularly efficient for LMICs.

The WHO noted that:

“A ban on all flavour agents that increase tobacco product attractiveness, rather than focusing on menthol exclusively, can provide an alternate route to restricting menthol, and may prevent the unwanted introduction of menthol substitutes.”¹⁴

Research and data

As of 2021, when TCRG researchers conducted a review of evidence on menthol/flavour in LMICs,¹⁵ there were very few research papers from countries in Eastern Europe, the Eastern Mediterranean region, and Africa.

Lack of data means that it is hard to monitor markets and company shares in specific countries.  Market research service Euromonitor (which receives project funding from Philip Morris International) includes no low-income countries and is proprietary, making it expensive and hard to access even for the middle-income countries which are included.

More research is needed on menthol and flavour in LMICs to help governments monitor the tobacco industry and its products, as recommended by the WHO: “An evidence base using data collected from the region of interest can provide more direct support for regulation.”¹⁴

Market in LMICs

Evidence suggests menthol and flavoured tobacco products are widely used in LMICs.  Data from the International Tobacco Control (ITC) Policy Evaluation Project suggests that menthol is smoked by more than 20% of smokers in several middle-income countries. Although the dates vary (see the note above on data challenges) this research gives an indication of the scale of the problem. The highest rates were found in Zambia (42% in 2014) and Thailand (35% in 2012). Kenya and India also had over 20% menthol smokers, with China just under just under that level.¹⁶

A study from Johns Hopkins University, between 2015 and 2017, found a range of flavoured and capsule cigarettes on the market in those LMICs with the highest number of smokers: Bangladesh, Brazil, China, India, Indonesia, Philippines, Russia, Thailand, and Vietnam.¹⁷

The main TTCs operating in these countries (PMI, JTI, and BAT) mostly sold menthol or mint flavours. China National Tobacco Corporation (CNTC) sold  a mix of flavours.¹⁷

There is also evidence from a number of studies that menthol and flavour tobacco use is rising, either as a proportion of the market or substantively.  Evidence from TCRG research shows that after the implementation of the European Union (EU) menthol ban in 2020, there was a marked increase in the share of menthol/flavoured products in some LMICs.¹⁵ A study of cigarette packs in Brazil, Indonesia, the Philippines, Russia, Thailand, and Vietnam, between 2013 and 2016, found that the number of flavour capsule variants on the market was growing.¹⁸ Most were mint and menthol flavour but with others the flavour was unclear from the product name.¹⁸

A number of studies have identified related marketing activities.  Marketing strategies for flavour capsules are likely driving their global growth particularly among young people in LMICs.¹⁹

TCRG’s review  of tobacco industry strategies underpinning the growth of menthol/flavoured tobacco use in LMICs  highlighted widespread marketing in stores (including retailers near schools), on billboards, on TV, online and via brand ambassadors. The packaging of flavoured and menthol products, legally displayed in stores, was  found to be colourful with non-conventional, appealing names for flavours.¹⁵

Tobacco companies also use symbols on cigarette sticks to indicate that they contain capsules.²⁰ Researchers studying this form of marketing in LMICs have described the space on a cigarette as “valuable communicative real estate” for tobacco companies, which could be better used to display public health messages.²⁰

Research and data from specific regions and countries is summarised below. We refer in many places to TCRG research based on 2019 cigarette market data from Euromonitor. In this data ‘high market share’ means 20% or more of the total cigarette market in that country in 2019. ‘High market share growth’ means that the share doubled between 2005-19 and was growing from 2017.¹⁵ We link to regional and country profile pages on TobaccoTactics, where available.

Africa

Nigeria has high menthol/flavour market share and high market share growth.¹⁵

Cameroon has high market share, the only other country in the region for which this data was available. (For Egypt see Eastern Mediterranean region below.)¹⁵

Tanzania

JTI sells a menthol cigarette called Sweet Menthol through its subsidiary in Tanzania. It describes this product as “the leading local mainstream menthol brand”.²¹

Zambia

JTI owned brand Sweet Menthol is the third most popular cigarette in Zambia.  It is cheap and is usually sold as single sticks.²²  On its webpage for Zambia, JTI describes itself  as a leaf farming company, and does not mention that it sells cigarettes in the country. A locally owned company, Roland Imperial,  also sells menthol cigarette brands.²³

ITC survey data showed a high prevalence of menthol smokers in Zambia, with 43% of smokers choosing the product.²⁴ Menthol was most commonly used among younger smokers, those with a middle income, and those that don’t smoke every day. Over a third of smokers indicated that they thought menthol cigarettes were less harmful than non-menthol.²⁴

Kenya

ITC survey data from Kenya also suggests a high prevalence of menthol smokers.²⁴²⁵ In 2018, 21% of smokers with a regular cigarette brand smoked menthol or sweet menthol (although Euromonitor estimates that only 7% of cigarette sales are menthol).¹⁵  More women smoke menthol than men in Kenya, and two thirds of smokers believed that menthol is less harmful than other cigarettes.²⁴²⁵

Ethiopia

In 2015, Ethiopia enacted a total flavour ban on all forms of tobacco.

• For details see Flavoured and Menthol Tobacco

This was a pre-emptive ban as flavour sales were low. However there has been a lack of enforcement at the retail level.⁸ Flavoured products are not made in Ethiopia and more collaboration with customs is needed to prevent illicit importation.⁸ There is also a lack of awareness that the ban includes waterpipe products.¹⁴

Since 2017, two years after the ban was enacted, JTI has owned 70%  the state owned tobacco company, NTE.²⁶

Latin America

Menthol cigarettes are popular in Latin America, and increasingly so in some countries.¹⁵ Guatemala and Peru have high market share and high market share growth. There is high market share in Columbia and the Dominican Republic, and high market share growth in Argentina, Bolivia and Costa Rica.¹⁵

Use of flavour capsule cigarettes is particularly high in Chile and Mexico.²⁷  According to BAT’s annual report in 2014,  sales of  flavour capsule cigarettes had increased in the region despite price rises, while overall cigarette sales were down.²⁸

A study of over 1,000 retailers located close to schools in Latin American cities (Argentina, Bolivia, Brazil, Chile and Peru) found that the majority (85%) sold flavoured cigarettes, and most (71%) sold capsule versions.¹⁰ (Similar findings were reported in Uruguay, a high income country, immediately before the implementation of plain pack regulations in 2020.)²⁹

These products were frequently displayed near the point of sale, or confectionary. Some stores also had advertisements and price promotions.¹⁰ Unconventional flavour descriptors such as “fusion blast” and “ruby ice” were very common.³⁰

Brazil

Survey data from 2016-2017 among adult smokers in Brazil found that over 50% supported a ban on menthol and over 60% supported a ban on all additives.³¹ Support did not vary across sociodemographic groups. When menthol smokers were asked what they would do if menthol cigarettes were banned, a third reported they would quit, around 20% would reduce the amount they smoked and a similar number would switch to non-menthol cigarettes. Slightly fewer said they would still find a way to get menthol cigarettes.³¹

ITC survey data from the same period suggested that 8% of smokers with a regular cigarette brand smoked menthol.³² 13% believed that menthol cigarettes were less harmful than non-menthol cigarettes, and over a third reported that they were smoother on the throat and chest.  Nearly two thirds  of surveyed smokers supported a complete ban on all cigarette additives, including flavourings.³²

An online sample of women aged 16- 26 (smokers and non-smokers) preferred packs with flavour descriptors.³³

• The tobacco industry has used a range to tactics to undermine and delay Brazil’s menthol ban. For details see Flavoured and Menthol Tobacco

Chile

In 2013, Chile sought to implement a law banning substances that cause higher levels of addiction, harm or risk, leading to tobacco industry resistance and interference.¹⁴

• For details see Flavoured and Menthol Tobacco

Mexico

Studies of retailers in Mexican cities, found that the majority sold menthol and flavoured products, and more than half of stores situated near schools sold flavour capsule cigarettes.³⁴³⁵ Many flavoured cigarettes have descriptors which suggest there is a flavour, but the type of flavour is unclear: chemical analysis of dual flavoured cigarettes suggested flavours were menthol and another flavour, for example fruit.³⁶

A study in Mexico City found that colour and flavour descriptors on cigarette packs made the products more appealing, and some smokers believed they would taste better.³⁷

Guatemala

A study of convenience store retailers in Guatemala found that all sold flavoured tobacco products.³⁸

The majority (88%) of indoor tobacco advertisements in Guatemala were found to be for capsule cigarettes.³⁸

South East Asia & Western Pacific

There is high market share of menthol/flavour in India, Malaysia, Philippines and Thailand, and high market share growth in Vietnam.¹⁵  A 2010 study noted that governments in the region had no legislation banning exotic flavours of cigarettes and cigarettes with new flavours had appeared in Cambodia, Indonesia, Malaysia and the Philippines.³⁹

Philippines

Menthol has been advertised to appeal to young women in the Philippines since the 1970s with menthol brands common for many decades.⁴⁰ PMI, JTI, BAT and Korea Tobacco & Ginseng (KT&G) all sell flavoured capsule cigarettes in the Philippines.⁴¹

Menthol packs studied in the Philippines were harder than non-menthol (for capsule protection) giving a quality feel. Flavoured capsule brands had a greater technological appeal,⁴¹ and packs were rated as more attractive by young adults.⁴²

Blue and white packs were perceived to be less harmful than other colours, as were the descriptors ‘light’ and ‘cool’, whereas the term ‘strong’ was perceived as more harmful.⁴²  Researchers called for greater action and support for banning flavour additives.

Malaysia

In Malaysia, menthol cigarette marketing has been aimed at young people and women.  In the 1980s Brown and Williamson’s Newport menthol cigarettes were marketed in Malaysia with youthful American images and were sold at a cheap price point.⁴³ An internal document from 1993 reveals how the company was developing sweet and fruit flavours for the Malaysian market. ⁴³⁴⁴ A 2003 study noted that the menthol variant of Cartier Vendome (a BAT brand at the time) was described as ‘pearl tipped’ so likely to appeal to women.⁴⁵

In 2013, vanilla, mint and fruit flavoured cigarettes were on sale, and strawberry cigarette packs with pink packaging were documented.⁴⁶

China

In China ‘flavour capsule’ was found to be one of the most common cigarette terms used in online tobacco marketing.  One website explicitly linked flavour capsules with female smokers.⁴⁷

Indonesia

In Indonesia the dominant cigarettes are kreteks which are flavoured with cloves.  Industry attempts to introduce their own cloved flavoured products had failed at least to 2004.⁴⁸  In 2009 PMI and BAT acquired two domestic manufacturers which allowed them access to the kretek market.⁴⁹ In 2009 PMI launched the first super slims kretek for women and Marlboro black menthol for young men.  By 2012 BAT had launched several kretek brands. Both companies were aware that kreteks  are particularly carcinogenic due to the presence of toxic chemical compounds: Anethole, Coumarin and Eugenol.⁴⁹

In Indonesia the flip lid of the cigarette packet was used by Esse (owned by Korean Tobacco & Ginseng, KT&G) to promote the brand with phrases evoking flavour, like “sweet surprise” and “its honey”.  Research found seven cigarette brands with capsules.  Flavours included mint, menthol, berry and honey.⁵⁰

Eastern Mediterranean

There is high market share growth in in Pakistan and Egypt .¹⁵

• See also Waterpipe for information on the role of flavours in promoting these products.

Eastern Europe

Data shows that in Russia menthol/flavour has both a high market share and high market share growth.¹⁵

Other LMICs in the region with high market share growth are Ukraine, Bosnia Herzegovina, Belarus, Azerbaijan, Kazakhstan and Uzbekistan.¹⁵

Relevant Links

WHO Advisory note: banning menthol in tobacco products (2016)

WHO Case studies for regulatory approaches to tobacco products: menthol in tobacco products (2018)

WHO FCTC decision on banning waterpipe flavour (2016)

A global map of menthol bans is available on Tobacco Atlas: Product Sales

TobaccoTactics Resources

• Flavoured and Menthol Tobacco
• Menthol Cigarettes: Industry Interference in the EU and UK

TCRG Research

A growing menace: menthol and flavoured tobacco products in LMIC, M. Zatonski, K. Silver, S. Plummer, R. Hiscock, Tobacco Induced Diseases, 2022;20(April):39, doi:10.18332/tid/146366
STOP research summary (May 2022)

Marketing of flavour capsule cigarettes: a systematic review, C. Kyriakos, M. Zatonski, F. Filippidis, Tobacco Control, Published Online First: 18 January 2022, doi: 10.1136/tobaccocontrol-2021-057082[/ref]

Flavour capsule cigarette use and perceptions: a systematic review, C.N. Kyriakos, M.Z. Zatoński, F.T. Filippidis, Tobacco Control, Published Online First: 04 October 2021, doi: 10.1136/tobaccocontrol-2021-056837

For a comprehensive list of all TCRG publications, including research that evaluates the impact of public health policy, go to TCRG publications.

References

The post Flavoured and Menthol Tobacco in LMICs appeared first on TobaccoTactics.

Background

ITIC has offices in Azerbaijan, Kazakhstan, the Philippines, Russia, Ukraine, the United Kingdom (UK), the United States (US), and works in many more countries around the world.
Two years after its inception, ITIC reported that its principle asset was in providing its sponsors “a seat at the policy-making table.”⁵²

Relationship with the Tobacco Industry

Until 2017, ITIC received funding from all of the transnational tobacco companies (TTCs): Philip Morris (PMI), Japan Tobacco International (JTI), British American Tobacco (BAT), and Imperial Tobacco.⁵³
In May 2017, the UK’s Financial Times reported that ITIC asked tobacco representatives to resign from its board and would no longer accept sponsorship from tobacco companies.⁵⁴
This move followed criticism in 2015 from Dr Doug Bettcher, Head of Non-Communicable Disease at the World Health Organization, who “urged all countries to follow a non-engagement policy with ITIC” because of ITIC’s relationship with the tobacco industry:

“ITIC has published extensively in favour of the tobacco industry’s false positions on excise taxation, investment and illicit trade in tobacco products…ITIC have used their international conferences.. to lobby government officials against tobacco taxation.” ⁵⁵

Two years later in May 2017, ITIC President Daniel Witt stated:

“The anti-tobacco campaigns became too great a distraction from ITIC’s mission, and this was a necessary step to safeguard ITIC’s reputation and ensure its long-term effectiveness.⁵⁴

This page details some of ITIC’s tobacco related activities since the turn of the 21st century.
See International Tax and Investment Center – A History of Tobacco Industry Facilitation for information on ITIC’s activities during the 1990s.

Tobacco Industry Facilitation

Hosting High Level Meetings

ITIC has hosted high level meetings with officials, members of national and regional governance organisations, and international institutions, thereby providing tobacco industry allies access to individuals and organisations it could otherwise be difficult to access directly – for example, access has been given to representatives of the World Bank (WB) and International Monetary Fund (IMF),⁵⁶ Members of the European Parliament (MEPs), senior officials of the European Commission,⁵⁷and representatives from global governments⁵⁷⁵⁸⁵⁹

Advising and Lobbying Governments on Tobacco Taxation Policy

Evidence shows that ITIC has met with and advised high-level government representatives worldwide,⁶⁰⁶¹ including:

• Advising the Ukrainian Tax Committee in 2008 to model tobacco tax rates after Russia, a country with a high smuggling rate.⁶⁰
• Advising the Ukrainian government on operation and customs control of duty free retail outlets and published reports on tobacco taxation, including one report in Eastern Europe urging that accession countries be given a longer time to implement tax increases to make sure that tobacco remains “affordable”.⁶²
• Sponsoring conferences on tobacco tax policy including a 2008 seminar on Eastern European tobacco taxation in Hungary, where 40 government officials from new EU member states attended.⁶³

The World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC) is a global public health treaty intended to reduce the burden of disease from tobacco.
Article 5.3 of the FCTC strongly advises that public policy should be free from the vested interests of the tobacco industry and its associates.⁶⁴ By facilitating meetings and conferences which allows the tobacco industry undue access to policymakers and government officials and provides opportunity to influence policy, ITIC has contravened Article 5.3.

Lobbying Against Tobacco Taxation in Private Meeting Ahead of COP 6

On 12 October 2014, the morning before the Sixth Conference of the Parties (COP) of the FCTC, ITIC hosted an exclusive event in Moscow for representatives from Ministries of Finance.⁶⁵ This was a violation of Article 5.3.
In an attempt to stall anticipated tobacco taxes, set to be agreed upon at the COP, the ITIC briefing was open to “invitation-only” officials and aimed to “ensure there is a balanced approach to important excise taxation issues”.⁶⁶
In a private invitation sent to select delegates from around the world, ITIC urged Ministers of Finance to insist that “the government delegations the COP include representatives from their Ministries of Finance and/or Tax Administrations who can lead the debate from the fiscal perspective” (see Image 1).
The meeting, held at a luxury resort in Moscow in collaboration with the Eurasian Economic Commission, included a “Review of Best and Worst Practices of Tobacco Excises” as well as a “Panel Discussion on the Next Steps”.⁶⁶

Regular Meeting with Africa Tax Dialogue

Africa Tax Dialogue meetings provide a forum for ITIC to effectively represent tobacco industry interests on matters of tax and illicit trade in Africa, and allows its representatives direct access to the policy makers and Ministers of Government who attend the meetings.⁵⁷⁵⁸At the African Tax Dialogue meeting in Tanzania in July 2014, ITIC’s president Daniel Witt and Senior Advisors Jeffrey Owens and Sijibren Cnossen were brought together alongside the Tanzanian Minister of Finance Saada Mkuya Salum, where they took part in a special workshop on ”Combating Illicit Trade of Excisable Goods”.⁵⁸

Meetings About the EU Tobacco Products Directive

ITIC-facilitated meetings on behalf of the tobacco industry have been used to lobby against further regulation of tobacco and smoking, such as the EU Tobacco Products Directive (TPD):

• In 2009, ITIC received additional funding from BAT, JTI and Philip Morris for a conference on tobacco smuggling (“Anti-Illicit trade of tobacco products”) between 4-6 November in Brussels. ITIC representatives spoke, along with speakers from the EU Anti-Fraud Office (OLAF), and other law enforcement agencies. It was chaired by Elizabeth Allen, who retired from British Customs in March 2009.⁶⁷
• In May 2011, the Kangaroo Group hosted a Forum on Intellectual Property, Counterfeiting and Piracy, which was addressed by ITIC president Daniel Witt. The Kangaroo Group, based in Brussels, is a business lobby association comprising of representatives of the European Parliament, Commission and Council, academia, media and the business sector.⁶⁸. Its members include: JTI, Philip Morris, BAT and Imperial Tobacco as well as the Confederation of European Community Cigarette Manufacturers (CECCM).⁶⁹ During his address, Witt reiterated the industry position that the introduction of plain packaging for tobacco products “should be carefully looked at on the grounds that they could very well worsen the problem, making life easier for counterfeiters to flood EU markets with cheap fakes.”⁷⁰
• In December 2011, Witt penned an article with Edit Herczog from the European Parliament’s Industry, Research and Energy committee, which warned that “If new laws are not carefully considered in terms of how they may impact the black market, rather than tackling smoking, they may end up transferring the wellbeing of EU citizens to the hands of criminals.”⁷¹
• In July 2012, ITIC also participated in the World Customs Organisation (WCO) Global Excise Summit in Brussels.⁷²

PMI Commissioned Research Reports on the Illicit Tobacco Trade

Funded by PMI, ITIC has partnered with Oxford Economics, which describes itself as one of the world’s leading independent global advisory firms, to product reports on the illicit tobacco trade in Asia.

Asia 11 – Illicit Tobacco Indicator 2012

In September 2013, Oxford Economics published the findings of its Asia-11 study that it conducted with ITIC on behalf of Philip Morris Asia (an affiliate of PMI), in order to quantify the illicit trade in 11 Asia Pacific markets.⁷³
Asia-11 refers to a group of markets which includes Australia, Brunei, Hong Kong, Indonesia, Malaysia, Pakistan, Philippines, Singapore, Taiwan, Thailand, and Vietnam.
The report claimed that:⁷⁴

* 66.5 billion (9%) cigarettes consumed in the countries surveyed were illicit – either illegally imported (5.6%) or illegally manufactured locally (3.4%);

*Brunei, Hong Kong, Malaysia and Singapore, countries with high tobacco taxes, had the highest volumes of illicit cigarettes – over 25% in 2012;

* Governments were losing billions of dollars lost tax revenue due to illicit trade.

The Asia-11 report was critiqued by the Southeast Asia Tobacco Control Alliance (SEATCA). SEATCA argued that the Asia-11 report was biased in favour of the tobacco industry because:

* the big four transnational tobacco companies are members of ITIC (one of the authors);

* the report was funded by Philip Morris International;

*the report’s conclusions were in line with the industry’s rhetoric that illicit trade is an ever increasing problem and that public health interventions like tax increases should be modest.

Furthermore, a peer-reviewed study published in the journal Tobacco Control attempted to validate Oxford Economic’s and ITIC’s estimate that 35.9% of tobacco consumed in Hong Kong in 2012 was illicit. Using data from government reports and publically available routine data, the authors of the Tobacco Control article estimated that illicit cigarette consumption was between 8.2% and 15.4% of the total cigarette consumption in Hong Kong in 2012.⁷⁵
The OE/ITIC report was written by Elizabeth Allen. Since her retirement from Her Majesty’s Revenue and Customs (HMRC) in March 2009, Allen carried out three successive policy development reviews for the UK Government’s Office as well as acted as a consultant and programme advisor for ITIC.⁷⁶

Asia 14 – Illicit Tobacco Indicator 2013

In September 2014, on behalf of PMI, Oxford Economics and ITIC published Asia-14, Illicit Tobacco Indicator for 2013.⁷⁷
Asia-14 refers to a group of markets, which includes all of the aforementioned countries in the Asia-11 report plus, three additional countries, Cambodia, Laos and Myanmar.
Oxford Economics and ITIC claimed that in 2013:

• 10.9% of cigarettes consumed in Asia-14 were illicit;
• Illicit consumption rose in 7 out of the 11 markets examined in the previous Asia-11 report;
• Government tax losses totalled 3.9 billion US dollars.

Again, SEATCA offered a critique of the PMI funded report undertaken by Dr Hana Ross, an expert on the economics of tobacco control.⁷⁸⁷⁹ Ross claimed that the figures and statistics presented in the Asia-14 report were “incorrect”, “unverified/unverifiable”, “not comparable across countries” and “inconsistent with results from other studies” in the region.⁷⁹
In particular Ross criticised the report’s lack of transparency in relation to its Empty Pack Survey (EPS) methodology used to estimate levels of illicit:

“The Empty Packs Survey (EPS), which is a crucial component of the “IT Flows model” upon which most of the report is based, does not fully disclose its sampling frame, the timing of data collection, the criteria for distinguishing legal and illegal packs, and other crucial survey parameters, even though the validity of data generated by the survey are very sensitive to such issues.”

“No information is provided about the packs that could not be classified as illegal or legal with certainty, and whether or not the collected packs are available for reinspection.”

EPS methodology involves the collection of discarded packets in order to identify non-domestic packs which have not paid the country specific duty. This methodology has been criticised for its inability to distinguish between different types of foreign tobacco – legal cross-border duty-free product and that which has been illegally smuggled into the country – thereby leading to overestimations of illicit.⁸⁰

Asia 16 – Illicit Tobacco Indicator 2014

In October 2015, again on behalf of PMI, Oxford Economics and ITIC published Asia-16, Illicit Tobacco Indicator for 2014, however, access to the full report requires a membership log in account. Nevertheless, a report for Hong Kong alone is available online. (Image 2)⁸¹
Asia-16 refers to a group of markets, which includes all of the aforementioned countries in the Asia-14 report plus, two extra countries Macao and South Korea.
In late 2015, press coverage of the Asia-16 report in the Philippines and Macau highlighted the potential bias of the reports and referred to previous critiques of the Asia-11 and Asia-14 reports offered by SEATCA.⁸²⁸³

Asia Illicit Tobacco Indicator 2015

In December 2016, Oxford Economics and ITIC released a 4th report on behalf of PMI, entitled Asia Illicit Tobacco Indicator 2015. The report includes data from the Asia-16 markets well as the additional market of New Zealand.⁸⁴

Establishing Academic Groups

Academy of Public Finance – Vienna University of Economics and Business

Having established “successful” tax training programmes in Azerbaijan and Kazakhstan, in 2012 ITIC expanded its training courses into 12 countries across the Eurasia region. ⁸⁵ These were conducted in collaboration with the Institute for Austrian and International Tax Law at Vienna University of Economics and Business, the International Finance Corp and the accountancy firm, Ernst and Young. Together, the institutions launched the Academy of Public Finance as a public/private initiative, offering policymakers and administrators training in three core areas of taxation over two years.⁸⁶⁸⁷
In its September 2013 monthly Bulletin, ITIC confirmed that the Academy of Public Finance had received start-up funds from Japan Tobacco International (JTI), stating:

“We are most grateful to JT International who provided expert advice on practical tax matters and made a two-year sponsorship commitment to finance the start-up and secretariat infrastructure that will be based at Vienna University of Economics and Business.”⁸⁵

Leading the development of the Academy of Public Finance was Dr. Jeffrey Owens, Professor and current Director of the Global Tax Policy Center (GTPC) at the Institute for Austrian and International Tax Law.⁸⁸ Owens, who previously worked on tax matters at the Organisation for Economic Co-operation and Development (OECD) and as a government advisor on tax and business issues has served as a “distinguished fellow” at ITIC since May 2012.⁵⁹

The Africa Tax Institute

According to its website, ITIC has been working with 20 African countries since 2000 and has claimed that “in a large part, the ITIC policy recommendations on excise reform have been enacted and are part of the current law in Kenya and Ghana.”⁵⁹A key partner in ITIC’s operations in Africa is the Africa Tax Institute.⁸⁶
The Africa Tax Institute (ATI) is a research group based in the Department of Economics, University of Pretoria, South Africa, which claims to be “devoted to training, research, and technical assistance in the areas of tax policy and tax administration on the African continent.”⁸⁹
In June 2015, the ATI announced collaboration with the GTPC at the Vienna University of Economics and Business,⁹⁰ thereby expanding the Academy’s influence and reach on the continent.
ITIC maintains a strong presence in the ATI through the Advisory Board, where senior ITIC Economics Advisor Sijibren Cnossen holds a position.⁹¹
Sijibren Cnossen, a Professor of Economics at Maastricht University, the Netherlands⁹¹⁹² and a Professor of Economics at the University of Pretoria has also served as an advisor to the OECD and advised governments on tax system and policy issues.⁹³ ATI’s director, Riël Franzsen of the Faculty of Economic and Management Sciences at the University of Pretoria, has also assisted ITIC in a role as “Senior Advisor”.⁹⁴

Africa Tax Dialogue in Mozambique

In June 2015, ITIC announced that all three – Owens, Cnossen and Franzsen – would sit on the organising committee, representing ITIC for the 7th Africa Tax Dialogue in Maputo, Mozambique 17-19 November 2015.⁹⁵

Lobbying Against Plain Packaging

ITIC’s tobacco industry funded 2011 report, The Illicit Trade in Tobacco Products and How to Tackle It, has been used to lobby policy makers against plain packaging proposals in Brussels, Australia and the UK.

• At a meeting on intellectual property, counterfeiting and piracy in Brussels in 2011, Daniel Witt, President of ITIC, called on policy makers to assess any potential impact on aggravating illicit trade that measures such as the introduction of plain packaging for cigarettes may have.⁹⁶ (for more detail, see below).
• It was cited in the submission to the Australian consultation on plain packaging by Amcor, the world’s largest packaging company.⁹⁷.
• Philip Morris used the report in its submission to the UK 2012 consultation on plain packaging to arouse concern amongst policy makers by linking smuggling, organised crime and terrorism with detrimental impacts on local communities and children:

“The criminal gangs that smuggle and sell the vast majority of the nearly nine billion illicit cigarettes (and HRT Rolled Tobacco equivalents) consumed in the UK each year operate in the hearts of local communities. Illicit cigarettes are not the only things these criminal groups bring to local neighbourhoods: they also bring smuggled alcohol, guns, drugs, and violence.(131) The man on the corner selling cigarettes to kids from the boot of his car is not acting alone – his sales fund serious organised crime and terrorism.(132)” ⁹⁸

While footnote (132) refers to the ITIC report, footnote (131) is a reference to a quote from Peter Sheridan in an article in the Daily Mail.⁹⁹ Sheridan is a former policeman often cited for his experience and expert knowledge of the fight against smuggling. His links to BAT were not disclosed by PMI.

PMI Identified ITIC as a Key Media Messenger

In 2013 leaked internal tobacco industry documents, including powerpoints, revealed the extent of PMI’s anti-Plain Packaging campaign in the UK during the previous year. The leaked documents cover the crucial time leading up to, and during the UK’s first public consultation run by the British Government in 2012.
As part of its strategy, PMI identified key media messengers that it wanted to use to promote its arguments. It identified ITIC as an international media messenger.
For more information see PMI’s Anti-PP Media Campaign and PMI’s “Illicit Trade” Anti-Plain Packaging Campaign

Complaints to NGOs, Academics and Peer-Review Publishers

In 2016 ITIC sent a series of complaints to NGOs (SEATCA, Action for Smoking and Health London, and the Smokefree Parnerhsip in Brussels) ,¹⁰⁰¹⁰¹ academics¹⁰² and the peer-review journal Tobacco Control, all of whom had criticised ITIC’s activities. ITIC’s complaints made three inter-related claims:

1. ITIC’s research should be considered credible despite its industry links;
2. ITIC is not a lobby group;
3. Public health organisations ought to engage with ITIC given its tax expertise.

SEATCA published an open letter response to ITIC which you can read .

Recruits High-Level ex-Tax Officials

In May 2015 the former Head of Corporate Tax at HMRC, Dave Hartnett, was criticised for taking a position as a Director at ITIC alongside representatives from the tobacco industry.
Hartnett had previously been involved in disputes over “generous” tax deals with global corporations and had been condemned for his advisory work with HSBC, an international corporate bank, since leaving HMRC.⁵⁵
Health campaigners expressed concerns that Hartnett should have declared his role, as he chaired meetings for ITIC and presented at its conferences less than two years after leaving his senior civil servant position.⁵⁵ In a statement, Hartnett claimed that he was, along with other “leading figures in taxation”, a nominal director of ITIC:

“I am not paid for that role with ITIC… I am not an executive director and do not in any way direct the strategy or business of ITIC. I know ITIC as a not-for-profit research and education organisation, which supports the development of tax systems in less developed countries.”⁵⁵

Subsequently, the World Bank announced it was pulling out of a tax conference funded by several of its transnational tobacco company supporters given mounting concerns about ITIC and its role in undermining health policy.⁵⁵

Backlash Against ITIC

In May 2015, the tobacco control community successfully pressurised the World Bank to withdraw its financial support for the 12th Annual Asia Pacific Tax Forum in New Delhi, which was being organized by ITIC and therefore indirectly sponsored by tobacco companies.¹⁰³ In May 2017, the UK’s Financial Times reported that ITIC asked tobacco representatives to resign from its board and no longer accepts sponsorship from tobacco companies.⁵⁴

TobaccoTactics Resources

• International Tax and Investment Center – A History of Tobacco Industry Facilitation
• Oxford Economics
• Framework Convention on Tobacco Control
• Peter Sheridan
• PMI’s Anti-PP Media Campaign
• PMI’s “Illicit Trade” Anti-Plain Packaging Campaign
• Digital Coding & Tracking Association(DCTA)

Relevant Link

Tax and Investment Center Website

TCRG Research

• ‘It will harm business and increase illicit trade’: an evaluation of the relevance, quality and transparency of evidence submitted by transnational tobacco companies to the UK consultation on standardised packaging 2012, K.A. Evans-Reeves, J.L. Hatchard, A.B. Gilmore, 2015, Tobacco Control, 24(e2), e168-e177, doi:10.1136/tobaccocontrol-2014-051930
• Industry-funded International Tax and Investment Center responds to criticism by attempting to muddy the waters, K.A. Evans-Reeves. A. B. Gilmore, BMJ Blogs: Tobacco Control News and Views Online, 24 June 2016

References

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