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Key Points

• The Philippines is an island nation in Southeast Asia consisting of over 7,000 individual islands. It is part of the World Health Organization’s Western Pacific Region.
• Its population was 115.6 million as of 2022. The previous year, adult tobacco use prevalence was 19.5%.
• The Philippines ratified the World Health Organization Framework Convention on Tobacco Control in 2005. It has not signed the Protocol to Eliminate Illicit Trade in Tobacco Products.
• PMFTC Inc. – a joint venture between Philip Morris International and the Fortune Tobacco Corporation, the tobacco business of local conglomerate LT Group – has the largest share of the Philippine cigarette market. Japan Tobacco International accounts for most other sales.
• Recent tobacco industry tactics in the Philippines include attempting to influence the committee responsible for overseeing tobacco control in the country; corporate social responsibility, particularly during the COVID-19 pandemic; and establishing relationships with public officials, including at the very top of government.

The Philippines has made some progress on tobacco control, especially since the introduction of the reforms known as the Sin Taxes in 2013. These both greatly simplified tax structures and significantly increased excise on tobacco and alcohol products, with a substantial share of the new revenue being channelled into universal healthcare.¹ Tobacco use prevalence, which stood at 29.7% in 2009, had fallen to 23.8% by 2015, and again to 19.5% by 2021.²³ However, rising incomes and subsequent smaller increases in tobacco taxes have made cigarettes more affordable, slowing further progress.⁴ Other challenges include an illicit tobacco market larger than the global average;⁵ the growing popularity of newer nicotine and tobacco products (particularly e-cigarettes) amongst young people;⁶ and ongoing tobacco industry presence on the inter-agency committee responsible for implementing tobacco control regulation in the country.⁷ Philippine domestic law continues to fall short of what is required by the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) across a number of areas.⁸

Tobacco Use in the Philippines

In 2022, the population of the Philippines was 115.6 million.⁹ According to the 2021 Global Adult Tobacco Survey (GATS), tobacco use prevalence amongst Filipino adults was 19.5%.³ Prevalence is much higher amongst males (nearly 35%) than females (just over 4%).³ Amongst adolescents aged between 13 and 15, 12.5% were using some form of tobacco in 2019.¹⁰ Again, prevalence for males (over 18%) is higher than for females (nearly 7%).¹⁰

In the 2021 GATS, just over 2% of Filipino adults reported current use of e-cigarettes (3.6% males; 0.5% females).³ However, use of e-cigarettes is considerably higher amongst youth. In the 2019 Global Youth Tobacco Survey, the corresponding figure was over 14% – higher than for conventional cigarettes (10%).¹⁰ More than 20% of boys aged between 13 and 15 reported using e-cigarettes, compared to 7.5% of girls.¹⁰ Smokeless tobacco use in the Philippines also appears to be greater amongst the young: in 2019, 3% of young people reported current smokeless tobacco use, compared to 1.5% of adults in 2021.¹⁰³

There were an estimated 95,600 deaths attributable to tobacco use in 2019, accounting for nearly 15% of all mortality in the Philippines that year.¹¹ According to a 2018 study, the economic burden of tobacco use in the Philippines in 2012 was just under PHP₱270 billion (US$15.1 billion according to the purchasing power parity exchange rate) – equivalent to 2.5% of national GDP. This includes both direct costs resulting from tobacco use (e.g., hospitalisations and medication) as well as indirect costs (reduced productivity due to disability and mortality). The same study found that diseases attributable to tobacco use accounted for nearly 5% of total health expenditure.¹²

Tobacco in the Philippines

Market share and leading brands

PMFTC Inc. (PMFTC) dominates the Philippine cigarette market, with a market share of around 61% in 2022.¹³ PMFTC is a joint venture between Philip Morris International (PMI) and the Fortune Tobacco Corporation, the tobacco business of local conglomerate LT Group.¹⁴

Japan Tobacco International (JTI) has a market share of 38%, thanks to its 2017 acquisition of local company Mighty Corporation.¹³¹⁵ Together, PMFTC and JTI account for virtually all of the licit cigarette sales in the country.¹³

PMI’s flagship brand Marlboro is the most popular brand of cigarette, with a share of nearly 33% in 2022. In second place is another PMFTC brand, Fortune International, with a share of nearly 17%. JTI’s Winston is third, with a market share of around 14%. All other brands have market shares of less than 10%.¹⁶

• For more information on the tobacco industry in the Philippines, please see the Tobacco Supply Chain Database.

At nearly 23%, the Philippines has one of the largest market shares for menthol cigarettes in the world.¹⁷¹⁸ Menthol cigarettes have been marketed in the Philippines since at least the 1970s, including in campaigns targeting young women.¹⁹ In more recent times, the menthol market share has increased year on year since 2014. Similarly, though the market for flavour capsule cigarettes is much smaller than for menthol, it has also been growing steadily, with yearly increases since 2015.¹⁷ These products are often more attractive to youth and young adults than conventional cigarettes; menthol in particular is associated with increased smoking initiation.¹⁸

• For more information, please see the page on Flavoured and Menthol Tobacco in LMICs.

Tobacco farming and child labour

Since the early 1960s, tobacco production in the Philippines has remained roughly stable, at between 40,000 and 70,000 tonnes a year. However, between 1981 and 1993 it increased to between 74,000 and 118,000 tonnes. Conversely, between 2006 and 2009 it dipped below 40,000, to a low of 32,000 tonnes in 2008.²⁰

Figure 1: Tobacco production, 1961 to 2021.²⁰ Source: UN Food and Agriculture Organization/Our World in Data | CC BY

Research has demonstrated that tobacco growing is not a profitable enterprise for most farmers. Despite this, farmers continue to grow tobacco due to a belief in its profitability and the reliability of the tobacco market; its perceived resilience to bad weather compared to other crops; and, in particular, access to credit.²¹ Filipino farmers interviewed for a study published in 2019 stated that tobacco farming allowed them to take out loans to which they would not have had access had they been growing other crops. Loans were also used to cover non-agricultural expenses such as school fees, buying food, and paying off other loans.²¹

As part of the Sin Tax reforms, 15% of the revenue collected from tobacco taxes is allocated to tobacco-growing communities to promote economically viable alternatives.²² However, this remains a challenge. Farmers have cited lack of capital, difficulties accessing credit, an absence of technical support and a perceived lack of markets for other crops as reasons for not transitioning away from tobacco.²¹

Tobacco is also one of 13 commodities produced in the Philippines which feature on the U.S. Department of Labor’s 2022 List of Goods Produced by Child Labor or Forced Labor.²³ However, comprehensive and up-to-date information on child labour in Philippine tobacco farming is not available.

Tobacco and the economy

The Philippines is a net importer of raw tobacco, importing about US$243 million of raw tobacco in 2022, compared to exports of around US$184 million.²⁴²⁵ However, the country is a net exporter of cigarettes, with exports in the same year of over US$232 million, compared to about US$22.6 million in imports.²⁶²⁷

Illicit trade

Illicit tobacco was estimated to form around 16% of the market in the Philippines in 2018.⁵ Though this is above the likely global average of 11 to 12%, it has changed little since 1998.⁵²⁸ Though industry-funded studies found significant increases in the Philippine illicit tobacco trade following the introduction of the Sin Taxes in 2013, there is no independent evidence to support this.⁵

Tobacco and the environment

The WHO reports that curing in tobacco agriculture is a leading cause of demand for wood from native forests in the Philippines.²⁹

Farmers cultivating the native batek variety of tobacco in the southern Philippines have been documented as using several toxic agrochemicals to control pests. These include some listed as hazardous by the WHO, such as cypermethrin and methomyl.³⁰

It has been estimated that between 30 and 50 billion cigarette butts are littered every year in the Philippines – 12.5 million on the resort island of Boracay alone.³¹ Boracay was closed for six months in 2018 for environmental rehabilitation, resulting in billions in lost revenues for both government and the private sector.³¹³²

• For more information on the tobacco industry’s environmental impact, please see Tobacco and the Environment and the long read on Plastics, the Environment and the Tobacco Industry.

Roadmap to Tobacco Control

The Philippines ratified the WHO FCTC in 2005 and the treaty entered into force later that year.³³³⁴ WHO FCTC ratification was a catalyst for strengthening tobacco control laws in the country and reducing industry influence on policy.³⁴ However, the Philippines is not a party to the Protocol to Eliminate Illicit Trade in Tobacco Products.³⁵

The Tobacco Regulation Act of 2003 (RA 9211) is the country’s main tobacco control law, covering areas such as smoking in public places; tobacco advertising, promotion and sponsorship; and sales restrictions. Subsequent legislation built on the 2003 law, introducing further regulation on issues such as designated smoking areas, advertising and the packaging and labelling of tobacco products.³⁶

However, given that RA 9211 was enacted just three months before the Philippines signed the WHO FCTC, Filipino tobacco control advocates have argued that the law was both timed and designed to pre-empt the Convention. This has resulted in tobacco control regulations which, nearly 20 years later, still fall some way short of WHO FCTC requirements.⁷³⁷ Designated smoking areas are still permitted in indoor offices and workplaces; restaurants; and cafés, pubs and bars. Restrictions on tobacco advertising, promotion and sponsorship remain incomplete. And at 50.6% of the retail value of the most popular brand of cigarettes, tobacco taxation is significantly below the 75% threshold recommended by the WHO.⁸

The tobacco industry, led by the Philippine Tobacco Institute (PTI), has also used RA 9211 as justification for delaying the introduction of more WHO FCTC-compliant measures (such as graphic health warnings), arguing that such measures contravene existing Philippine law.³⁷³⁸

In August 2020, the joint House Committees on Trade and Industry and on Health approved a bill regulating manufacture, sale and use of e-cigarettes and heated tobacco products (HTPs).³⁹ This bill reversed an earlier decision to raise the purchase age from 18 to 21 and restrict flavourings to tobacco and plain menthol. It also shifted responsibility for regulation of these products from the Food and Drug Administration to the Department of Trade and Industry. Eight days after the bill was approved, the first of four stores dedicated to PMI’s flagship HTP IQOS opened for business.⁴⁰

This bill was a precursor to the Vaporized Nicotine and Non-Nicotine Products Regulation Act, which eventually became law in July 2022. E-cigarettes in hundreds of different flavours reportedly flooded the Philippine market in the months following the passage of the law.⁴¹ Leading Filipino tobacco control advocates argue that the law has undermined recent gains in tobacco control.⁴⁰

For more details, please see the following websites:

• Legislation by country/Jurisdiction – Philippines, Tobacco Control Laws, Campaign for Tobacco Free Kids
• Philippines, WHO FCTC Implementation Database, WHO FCTC Secretariat
• Country profile – Philippines, World Health Organization, WHO report on the global tobacco epidemic 2023

Tobacco Industry Interference in the Philippines

Recent tobacco industry tactics in the Philippines include attempting to influence the committee responsible for overseeing tobacco control in the country; corporate social responsibility, particularly during the COVID-19 pandemic; and attempts to influence policy, including by establishing relationships at the very top of government.

Conflict of interest

The Philippines’ main tobacco control law, RA 9211, requires the government to implement a “balanced policy”, given that:

“It is the policy of the State to protect the populace from hazardous products and promote the right to health and instill health consciousness among them. It is also the policy of the State, consistent with the Constitutional ideal to promote the general welfare, to safeguard the interests of the workers and other stakeholders in the tobacco industry.”⁴²

However, the first principle of the implementation guidelines for Article 5.3 of the WHO FCTC states that “There is a fundamental and irreconcilable conflict between the tobacco industry’s interests and public health policy interests.”⁴³ Any requirement for “balance” can only therefore hinder progress on tobacco control and undermine public health.

This may be seen in the composition of the Interagency Committee on Tobacco (IAC-T), a multisectoral body established by RA 9211 responsible for overseeing implementation of the legislation.⁴² One seat on the IAC-T is reserved for the National Tobacco Administration (NTA) – a government agency that sits within the Department of Agriculture – which has a mandate to “Promote the balanced and integrated growth and development of the tobacco industry to help make agriculture a solid base for industrialization.”⁴⁴

Another seat is reserved for a representative of the tobacco industry, specifically the Philippine Tobacco Institute (PTI), an association whose members over the years have included PMFTC and JTI, among others.^42454647 The PTI has a long history of undermining tobacco control measures, including successfully managing to reduce the size of graphic health warnings on tobacco products, opposing tobacco tax reforms and litigating over tobacco control regulations against public bodies such as the City of Balanga and the Department of Health.⁴⁶⁴⁸⁴⁹

Tobacco control advocates have called repeatedly for the removal of the PTI from the IAC-T, citing conflict of interest and alleging that it uses its position to actively weaken tobacco control policies.⁴⁶⁵⁰⁵¹ The WHO has supported this position, stating that the composition of the Philippine IAC-T “is blatantly in conflict with WHO FCTC Article 5.3”, which requires parties to protect their public health policies against the commercial and other vested interests of the tobacco industry.⁵²

Corporate social responsibility

As of 2023, there was still no ban on tobacco industry corporate social responsibility (CSR) in the Philippines.⁸ The tobacco industry has taken advantage of this shortcoming to try to enhance its reputation and influence both policy makers and the general public.

From 2017 to 2021, PMI spent nearly US$38 million on CSR in the Philippines. Nearly US$31 million of this total was spent in 2020 and 2021 alone.⁵³ Much of this funding is channelled through the Jaime V. Ongpin Foundation (JVOFI), a development NGO and partner of “Embrace”, PMFTC’s CSR programme.⁵³⁵⁴ During 2020, in the first months of the COVID-19 pandemic, JVOFI distributed ambulances, ventilators, PCR machines for COVID-19 testing, personal protective equipment, food supplies and rapid test kits throughout the country.⁵⁴

PMI was far from the only tobacco industry player carrying out this kind of work: by mid-April 2020, the LT Group – PMI’s partner in joint venture PMFTC – had spent PHP₱200 million (around US$4 million) on COVID-19 assistance.⁵⁴ The LT Group implements such initiatives in the Philippines via its CSR arm, the Tan Yan Kee Foundation.⁵⁵ Also in April 2020, Japan Tobacco International (JTI) donated 20,000 face masks to hospitals in the province of Batangas, where its manufacturing facilities are located.⁵⁴

An investigation published by the media and business intelligence organisation Eco-Business in 2021 revealed that a number of congressional representatives were involved in the distribution of COVID-19 relief donated by the tobacco industry and its associates.⁴⁰ These donations also coincided with several debates in Congress which addressed regulation for newer nicotine and tobacco products (see section “Roadmap to Tobacco Control”).⁴⁰³⁷

Both PMI and JTI also lobbied the Philippine Ministry of Finance for permission to continue their operations as normal during lockdown, though cigarettes were not considered to be an essential item.⁵⁴ In an April 2020 press release, JTI argued that lockdown restrictions were forcing smokers to buy illicit tobacco; were resulting in lower tax revenues for government; and were harming retailers, especially small and family-run businesses.⁵⁶ Restrictions on the transport and delivery of tobacco products were subsequently lifted.⁵⁷

This shows how industry arguments around the illicit trade were accepted by Filipino policy makers, allowing tobacco companies to operate even during an outbreak of a lethal respiratory disease to which smokers are more vulnerable.⁵⁸

• For more on tobacco industry activity during the pandemic, please see the COVID-19 Tobacco Tactics page and the COVID-19 monitoring database.

Unnecessary interaction with high level officials

Hailing from the Ilocos region, where tobacco is a major cash crop, President Ferdinand “Bongbong” Marcos Jr. has met with PMI at least twice since becoming president in June 2022.⁴¹⁵⁹ The most recent of these meetings was a lunch he and First Lady Liza Araneta-Marcos hosted for PMI executives – including CEO Jacek Olczak – at the Malacañang Palace in November 2022, the first time a company CEO has been received at the Philippine presidential palace. Also present were PMFTC president Denis Gorkun and LT Group CEO Lucio Tan III.⁴¹

PMFTC’s director for global communications stated that the aim of the meeting was to outline the company’s plan “to expand our economic footprint in the Philippines.”⁴¹ PMI is reportedly investing US$150 million in the expansion of a manufacturing plant in Tanauan, Batangas. The new wing of the factory is to be used for the production of BLENDS, tobacco sticks used exclusively in PMI’s BONDS, a more affordable version of its flagship HTP IQOS.⁴¹

In 2012, the then Senator Marcos was photographed during a Senate debate on the Sin Taxes speaking to a lawyer representing PMFTC.⁶⁰⁶¹

Relevant Links

• The Toll of Tobacco in the Philippines, Campaign for Tobacco-Free Kids, 2023
• Tobacco Industry Interference Index 2022: The Philippine Report on the Implementation of the WHO Framework Convention on Tobacco Control, HealthJustice, 2023
• Global Adult Tobacco Survey, Fact Sheet, Philippines 2021, Republic of the Philippines Department of Health, Philippine Statistics Authority, WHO Philippines et al
• Global Youth Tobacco Survey, Fact Sheet, Philippines 2019, Republic of the Philippines Department of Health, Epidemiology Bureau, WHO Western Pacific Region et al
• Tobacco Industry Monitor – Philippines, Southeast Asia Tobacco Control Alliance, 2024

Tobacco Tactics Resources

• Flavoured and Menthol Tobacco in LMICs

References

The post Philippines Country Profile appeared first on TobaccoTactics.

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Key Points

• Viet Nam is a country located in South East Asia, part of the World Health Organization’s regional office for the Western Pacific (WPRO).
• It has a population of 98.2 million, with tobacco use prevalence of 24.9%.
• Viet Nam ratified the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) in 2004. It has not joined the Protocol to Eliminate Illicit Trade in Tobacco Products.
• The Vietnam National Tobacco Corporation (Vinataba), a state-owned company, has the largest share of the national cigarette market, at nearly 58% in 2022.
• Of the transnational tobacco companies (TTCs), British American Tobacco (BAT) has by far the largest share of the market in Viet Nam, with Imperial Brands in second place. Philip Morris International (PMI), Japan Tobacco International (JTI) and others have smaller market shares.
• The tobacco industry has deployed a range of tactics to protect its interests in Viet Nam, including lobbying policy makers, use of third parties, complicity in the illicit trade in tobacco products, and spreading misleading information.

Although Viet Nam has made significant progress on tobacco control in recent years, it continues to face major challenges. Tobacco prevalence amongst men remains very high.⁸ There is ongoing industry influence on policymaking, particularly on issues such as price and tax of tobacco products.⁶² The state-owned company Vinataba enjoys special privileges from the Vietnamese state, and has long claimed a position as an affected stakeholder on matters of tobacco control.⁶³⁶⁴ There has also been interaction between the transnational tobacco companies (TTCs) and the Vietnamese state, including during the Conference of the Parties (COP) to the WHO FCTC.⁶⁵

Tobacco Use in Viet Nam

In 2022, the population of Viet Nam was 98.2 million.⁶⁶ According to a WHO age-standardised prevalence estimate, based on all national survey data between 1990 and 2019, overall prevalence of current tobacco use was just over 25%.⁸ There is a major gender difference, with current male tobacco use at over 48%, compared to just over 2% for females.⁸ Smoking has been an important aspect of social behaviour amongst Vietnamese men for many decades; offering cigarettes is considered to be a show of good manners.⁶²

As of 2019, less than 3% of adolescents aged 13 to 17 were current tobacco users (i.e. they had either smoked cigarettes or used waterpipe on at least one day of the 30 days prior to the survey).⁶⁷

In the Global Adult Tobacco Survey (GATS) 2015, overall prevalence for traditional bamboo waterpipe was 6.7%. This was higher for people aged between 45-64 (8.9%) and those living in rural areas (8.3%).⁶⁸ Smoke from Vietnamese waterpipes tends to have very high nicotine content: the tobacco typically used is Nicotiana rustica, known locally as thuốc lào, which can contain up to 9% nicotine compared to 1-3% in standard tobacco leaves.⁶⁹

There were an estimated 97,100 deaths attributable to smoking in 2019.⁷⁰ This means that smoking accounted for over 15% of mortality in the country for that year.⁷⁰ In 2011, the last year for which figures are available, the cost of tobacco use to the Vietnamese economy was estimated at nearly US$1.2 billion.⁷¹ This was almost 1% of national GDP that year and around US$425 million more than the tax revenue the government received from the industry.⁷¹

A 2022 study suggested that use and awareness of e-cigarettes in Viet Nam is relatively low.⁷² However, the Vietnamese market for newer nicotine and tobacco products is expanding. According to market analysis by Statista, in 2022 the e-cigarette market was worth around US$22 million, up from US$7.7 million in 2014, and projected to reach US$24.7 million by 2027.⁷³ Research conducted in June 2020 indicated that e-cigarettes were being sold mainly by speciality retailers and most of the brands available were Chinese imports. Brands popular in Western countries – such as BAT’s Vuse, Imperial Brands’ Blu and JUUL – were rare.⁷⁴

According to Tobacco Control Laws – an archive of global tobacco control legislation maintained by the Campaign for Tobacco-Free Kids – as of May 2023, there were no restrictions on use; advertising, promotion and sponsorship; or packaging and labelling of e-cigarettes.⁷³⁷⁵ This lack of regulation, combined with Viet Nam’s relatively large population and high tobacco prevalence, make it an extremely attractive target for transnationals selling e-cigarettes and other newer nicotine and tobacco products.⁷⁵⁷⁴

Tobacco in Viet Nam

Market share and leading brands

In 2022, market research company Euromonitor International estimated the Vietnamese tobacco industry to be worth VND₫104,094.9 billion – approximately US$4.4 billion.⁷⁶ The state-owned Vietnam National Tobacco Corporation (Vinataba) has the largest market share, accounting for nearly 58% of the cigarette market in 2022.¹³ Vinataba’s range of brands includes Vinataba, Viet Nam’s most popular cigarette.⁷⁷ Established in 1985, Vinataba has long enjoyed special privileges and recognition from the Vietnamese government.⁶³ In addition, the government retains the right to appoint Vinataba’s chair and CEO.⁶⁴

Transnational tobacco companies (TTCs) producing and distributing tobacco products in Viet Nam are required to establish joint ventures with Vinataba.⁶⁴ Amongst the TTCs, British American Tobacco (BAT) has by far the largest market share, accounting for nearly 29% of the cigarette market in 2022.¹³ BAT has more than doubled its share of the market since 2001, and dominates the mid-range and premium market sectors with brands such as Craven A, White Horse and State Express 555.⁷⁷⁷⁸⁷⁹ Imperial Brands has a market share of 7% with one brand, Bastos. Similarly, Philip Morris International (PMI) has a share of 3% with one brand, Marlboro. The remaining companies account for another 3.5% of the market.¹³⁷⁷

• For more information on the tobacco industry in Viet Nam, see the Tobacco Supply Chain Database.

Tobacco farming and child labour

From 2000 to 2020, the area of land dedicated to growing tobacco in Viet Nam fell by nearly 49%.⁸⁰ However, crop yield per hectare has more than doubled, meaning that in 2020 Viet Nam produced over 29,000 tonnes of tobacco leaf – around 200 tonnes more than in 2000.⁸⁰ Nonetheless, this is a steep drop from 2010, when Viet Nam harvested 56,530 tonnes of tobacco from an area of 31,484 hectares.⁸⁰

Viet Nam’s most recent National Child Labour Survey, conducted in 2018, identified more than a million children in a situation of child labour.⁸¹ Of these, more than half were working in the agriculture sector – though the report does not mention tobacco growing specifically.⁸¹ However, Vietnamese tobacco was one of the products identified in 2022 by the U.S. Department of Labor as having been produced by child labour, in violation of international standards.⁸²

• For information on tobacco industry responses to accusations of complicity in child labour, please see the pages on CSR: Child Labour and the Eliminating Child Labour in Tobacco-Growing Foundation (ECLT).

Tobacco and the economy

Viet Nam is a net importer of tobacco leaf. According to UN Comtrade, in 2021, it imported US$242 million in unmanufactured tobacco, compared to just over US$9 million in exports.⁸³⁸⁴ Comtrade data also states that Viet Nam is a net exporter of cigarettes: US$182 million in 2020, compared to just over US$63,000 in imports.⁸⁵⁸⁶

However, these figures differ significantly from customs declarations found on Datamyne, which suggest that Viet Nam is a net importer of cigarettes. According to Datamyne, the value of Vietnamese cigarette imports in 2020 was nearly US$537 million, compared to exports of nearly US$270 million.⁸⁷ The import and export figures for raw tobacco are also different: according to Datamyne, Viet Nam imported close to US$337 million in raw tobacco in 2021, compared to around US$17.6 million in exports.⁸⁷

Illicit trade

According to the Vietnamese government, 54.7 million packs of illicit cigarettes were seized between 2013 and 2018.⁸⁸ It estimates that the illicit tobacco trade accounts for 15% of the national market.⁸⁸ This is roughly consistent with research conducted in late 2017 by the Development and Policies Research Center, which concluded that illicit cigarettes accounted for nearly 14% of total cigarette consumption in Viet Nam.⁸⁹

By far the most popular illicitly traded cigarettes in Viet Nam are the brands Jet and Hero, which together account for around 85% of the illicit market. Both are manufactured by the Indonesian company Sumatra Tobacco Trading Company and then smuggled to Viet Nam.⁹⁰⁶² Both Jet and Hero sell for significantly higher prices – between 30% and 60% – than the average legal brand of cigarettes in Viet Nam.⁶²

• For more information on the tobacco industry in Viet Nam, please see the Tobacco Supply Chain Database.

Roadmap to Tobacco Control

Viet Nam ratified the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) in 2004.⁹¹ However, it has not yet joined the Protocol to Eliminate Illicit Trade in Tobacco Products.

The main tobacco control law in Viet Nam is the Law on Prevention and Control of Tobacco Harm, passed in 2012. It is the country’s first ever comprehensive tobacco control law and a major public health milestone.⁹² It established smokefree spaces; increased the size of graphic health warnings on tobacco products; restricted tobacco advertising, promotion and sponsorship; and set up the Tobacco Control Fund, a sustainable source of funding for tobacco control initiatives paid for by a dedicated tax on tobacco.⁹²⁹³ More than ten subsequent decisions, decrees and joint circulars have built on this law and further strengthened tobacco control.⁹⁴ This includes the National Strategy on Tobacco Harm Prevention and Control, which set specific targets to reduce tobacco use prevalence from 2013 to 2020.⁹⁵

For more details, please see the following websites:

• Legislation by country – Viet Nam, Tobacco Control Laws, Campaign for Tobacco Free Kids
• Viet Nam, WHO FCTC Implementation Database, WHO FCTC Secretariat
• Country profile – Viet Nam, World Health Organization, WHO report on the global tobacco epidemic 2021

Tobacco Industry Interference in Viet Nam

Tobacco industry tactics used in Viet Nam include lobbying policy makers, use of third parties, complicity in the illicit trade in tobacco products, and spreading misleading information.

Influencing policy

For the Southeast Asia Tobacco Control Alliance (SEATCA), the Vietnamese state’s majority ownership of Vinataba clashes with its duty to regulate the tobacco industry.⁶⁴ Vinataba has long claimed a position as an affected stakeholder on tobacco regulation, allowing it a seat at the table in discussions on issues such as taxation and illicit trade.⁶⁴

There has also been some exchange of personnel between the government and Vinataba, with high-ranking executives at Vinataba appointed to powerful positions in government – particularly at the Ministry of Industry and Trade (MOIT) – and vice-versa. Several senior officials left government to subsequently assume roles in Vinataba.⁹⁶ Vinataba’s General Director (as of August 2023) was formerly deputy director of the Department of Light Industry, which is controlled by the MOIT.⁹⁷ Vinataba’s Secretary of the Party Committee and Chairman of the Member’s Council is a former vice director of the Industrial Policy and Strategy Institute, a government entity.⁹⁷

Vinataba’s influence is most obvious when it comes to price and tax. Cigarettes in Viet Nam are among the cheapest in the world: as of 2020, the price of a 20-pack – even of a premium brand – was less than one U.S. dollar.⁸ In 2021, taxes accounted for under 39% of the retail price of the most popular brand of cigarettes – well short of the 75% recommended by the WHO.⁸ Research by the World Bank has concluded that Viet Nam’s tobacco taxation policies have made cigarettes more affordable. Per capita income in Viet Nam has risen considerably in recent decades, outpacing the increase in the price of cigarettes, and increases in tobacco taxes have not been sufficient to close the gap.⁶²

In 2017, the Ministry of Finance proposed switching to a mixed excise tax system, with a flat rate of VND₫1,000 – around four U.S. cents – imposed on top of the usual ad valorem tax on the factory price of tobacco products.⁶² This would have made little difference to the affordability of cigarettes; health officials had argued for increase of between VND₫2,000 and VND₫5,000.⁶² Vinataba, along with the Vietnam Tobacco Association, opposed the move, claiming it would lead to difficulties in tobacco production and business operations and increase the risk of smuggling.⁶² At the time of writing, Viet Nam had yet to introduce the mixed tax regime.⁹⁸

The industry has also lobbied for the diversion of funding away from the Tobacco Control Fund – which is supposed to be used for public health purposes – and towards combatting illicit trade. Vinataba has made requests of this nature to various ministries and local governments.⁶⁴ In 2017, the International Union Against Tuberculosis and Lung Disease (The Union) sent a letter to the U.S. Ambassador in Viet Nam, urging him to reconsider the Embassy’s facilitation of meetings between Philip Morris International (PMI) and Vietnamese government ministers, on the grounds that PMI would attempt to raise fears over illicit trade and seek diversion of funds away from the Tobacco Control Fund and towards anti-smuggling measures.⁹⁹ SEATCA reported the same year that the MOIT had endorsed a recommendation from the tobacco industry to divert half of the Tobacco Control Fund towards enforcement activities against illicit trade.¹⁰⁰

The tobacco industry has also interacted with the Vietnamese delegation to the Conference of the Parties to the WHO FCTC.⁶⁵ During COP6, held in Moscow in October 2014, PMI executives met with the Vietnamese delegation. Analysis of the delegation’s interventions by tobacco control groups observing the COP showed that they frequently mirrored positions held by PMI.⁶⁵ For example, they argued that higher tobacco taxes would fuel the illicit trade and that the FCTC should be excluded from trade disputes, as well as opposing uniform parameters on legal liability for tobacco companies.⁶⁵ Likewise, at COP7, held in Delhi in November 2016, PMI held meetings with members of the Vietnamese delegation away from the conference venue.⁶⁵

Use of third parties

In June 2020 the R Street Institute, an American public policy thinktank, sent a letter to the Vietnamese prime minister and deputy prime minister urging them “to consider pragmatic regulations that allow Vietnamese citizens broad access to reduced-risk products.”¹⁰¹ It also argued that inserts in cigarette packets should be permitted in order to market such products to current smokers; that it should be possible to place “relative-risk labels” on these products; and that maximum nicotine levels should be high enough “to achieve nicotine delivery similar to combustible cigarettes”.¹⁰¹

Endorsing the use of e-cigarettes and heated tobacco products (HTPs) as cessation tools, the letter refers specifically to IQOS – PMI’s flagship HTP brand (though PMI has also sold e-cigarettes under the IQOS brand).¹⁰¹ From 2014 until at least 2022, R Street received funding from Altria – the primary asset of which is Philip Morris USA, the largest tobacco company in the United States.^{102103104105106}

In the same month, Factasia also sent a similar letter to the Vietnamese prime minister.⁹⁷ Factasia describes itself as “an independent, not-for-profit, consumer-oriented advocate for rational debate about – and sensible regulation of – the rights of adult citizens throughout the Asia-Pacific region to choose to use tobacco or other nicotine related products.”¹⁰⁷ It acknowledges receiving funding from PMI, as well as the Tobacco Vapor Electronic Cigarette Association (TVECA), an e-cigarette trade association. However, it denies acting as a mouthpiece for the tobacco industry.¹⁰⁸

Complicity in smuggling

There is evidence that the tobacco industry has smuggled its own products into Viet Nam. Internal British American Tobacco (BAT) documents from the 1990s show how BAT and its subsidiary smuggled State Express 555 (SE555) cigarettes manufactured in the UK into Viet Nam.¹⁰⁹¹¹⁰

BAT had been attempting to establish a presence in Viet Nam since the late 1980s, though with considerable difficulty. Negotiations on the terms of a joint venture with Vinataba were extremely slow, while a ban on foreign imports in 1990 meant that BAT would either have to license a Vietnamese company to manufacture its products locally or purchase equity in a local factory.⁷⁸

Smuggling facilitated BAT’s entry into the Vietnamese market in two ways.⁷⁸ Firstly, by circumventing the import ban, BAT managed to create brand awareness amongst Vietnamese smokers and obtain a competitive advantage prior to any opening of the market.⁷⁸ Secondly, by highlighting loss of tax revenue due to illicit trade, BAT was able to use smuggling as leverage in its negotiations with Vinataba.⁷⁸ An internal BAT document from 1993 states “We have the high ground [in negotiations with Vinataba] given the excellent quality of distribution, presence, and value of the GT [i.e. smuggled] product.”¹¹¹

The same BAT document states that “Both versions [i.e. licit and illicit cigarettes] will have a role to play in the further building of the brand and the ‘system’ profitability”.¹¹¹¹¹² Indeed, BAT continued to smuggle its own products into Viet Nam even after signing an agreement in 1994 which licensed Vinataba to manufacture SE555 locally.⁷⁸ BAT carefully controlled the price of both the licit and illicit SE555, with the smuggled cigarettes fetching higher prices because they were perceived to be of higher quality.¹⁰⁹ BAT finally signed a US$40 million joint venture with Vinataba in 2001, for construction of a brand new leaf-processing plant in Dong Nai province.⁷⁸¹¹³ This was followed by a further agreement in 2006, under which 150 million packs per annum of Pall Mall and Viceroy would be manufactured for the domestic market, as well as another 50 million packs per annum for export.⁷⁸ Even then, illicit BAT products did not disappear from the Vietnamese market. As recently as 2017, illicit SE555 were still selling at 169% of the value of the licit version.⁸⁹

Spreading misleading information

Most existing estimates of the illicit tobacco trade in Viet Nam are based on industry data and rely on methods which are opaque, undisclosed or difficult to replicate over time.⁶² While the government estimated in 2020 that illicit trade accounted for 15% of the national market, and independent research from 2017 put that figure at 13.72%, tobacco industry estimates are significantly higher.⁸⁸⁸⁹ Japan Tobacco International Vietnam, for example, states that “the rate of smuggled cigarettes is quite high (more than 20%) on the market”.¹¹⁴

Oxford Economics (OE) put the share of total illicit consumption at 23.4% in 2017.⁶² An economic advisory agency with links to the tobacco industry going back to the early 2010s, OE produced yearly reports on the illicit trade in Asia between 2012 and 2017 which were funded by PMI and based on PMI-approved terms of reference.^{115116117118119120}

These reports have been criticised in the strongest terms by Dr Hana Ross of the University of Cape Town, writing for the Southeast Asia Tobacco Control Alliance (SEATCA):

“The common denominator to all pieces of this study is PMI and its TORs [terms of reference] with all of the multiple parties in the report’s chain of production. This is a way for PMI to control the final results—by controlling the input, the data analysis, as well as publication, distribution, and promotion.”¹²¹

This exaggeration of the scale of illicit trade is a well-documented means of fighting tobacco control measures such as graphic health warnings, plain packaging and increased tobacco taxes. However, there is no evidence to show that tax increases have led to an increase in the illicit trade in Viet Nam; on the contrary, the illicit trade declined even after a 5% increase in the ad valorem tax rate in January 2016.⁸⁹

• For more information see Illicit Tobacco Trade

Relevant Links

• Global Adult Tobacco Survey (GATS) Viet Nam 2015, GATS Viet Nam Working Group
• Vietnam 2023 Tobacco Industry Interference Index, Global Center for Good Governance in Tobacco Control
• Vietnam 2021 Tobacco Industry Interference Index, Global Center for Good Governance in Tobacco Control
• Asian State-Owned Tobacco Enterprises: Challenges & Opportunities in Implementing WHO FCTC Article 5.3, Southeast Asia Tobacco Control Alliance (SEATCA)
• Vietnam: Overview of tobacco control legislation, use and taxation, World Bank Group
• Evidence Matrix: Vietnam, Tobacconomics
• Inside Philip Morris’ campaign to subvert the global anti-smoking treaty, A. Kalra, P. Bansal, D. Wilson, T. Lasseter, The Philip Morris Files, Reuters

Tobacco Tactics Resources

• Western Pacific Region
• Waterpipe
• Price and Tax
• Tobacco Smuggling
• Oxford Economics
• R Street Institute
• Factasia

TCRG Research

• Developing more detailed taxonomies of tobacco industry political activity in low-income and middle-income countries: qualitative evidence from eight countries, B.K. Matthes, K. Lauber, M. Zatoński, L. Robertson, A.B. Gilmore, BMJ Global Health 2021;6:e004096.
• Gaining access to Vietnam’s cigarette market: British American Tobacco’s strategy to enter ‘a huge market which will become enormous’, K. Lee, H.V. Kinh, R. Mackenzie, A.B. Gilmore, N.T. Minh & J. Collin, 2008, In: Global Public Health. 3, 1, p. 1-25.

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 Viet Nam Country Profile appeared first on TobaccoTactics.

Taxation on tobacco products is by far the most effective – and cost-effective – public health measure to reduce tobacco consumption.¹²² Consequently, the tobacco industry has a vested interest in undermining tax measures, and a history of tax-related interference.

The tobacco industry uses a range of tactics to interfere with and undermine policies aimed at protecting public health. The use of legal challenges, direct lobbying and indirect interference via third parties are well documented. In addition, companies have developed multiple, often sophisticated, ways to avoid paying taxes to governments and maintain their profits.

Tax Avoidance

Research from 2014, published as part of the International Tobacco Control (ITC) policy evaluation project, found that tobacco companies have reduced their tax liability by stockpiling and repositioning their products.¹²³

Work by the Investigative Desk, with TCRG researchers (2020), exposed many more tactics used by transnational companies include shifting dividends; notional interest deduction; profit shifting; royalty payments; and group relief.¹²⁴¹²⁵ Using specific financial practices they are able to reduce their tax contributions, including in lower income countries where governance is weak or there is a risk of corruption.^124125126

Companies making huge profits selling tobacco products across the globe, including BAT and PMI, are able to avoid paying tax with the help of networks of UK based subsidiaries. Some of these subsidiaries are “based in areas with opaque tax regimes and secretive financial systems”.

For more information read the following reports by the Investigative desk/Bath TCRG:

• Big Tobacco, Big Avoidance,
• Big Tobacco, Big Avoidance: How subsidiaries can help the global tobacco industry avoid tax
• Big Tobacco, Big Avoidance: What role do BAT’s UK subsidiaries play in facilitating tax avoidance?
• Big Tobacco, Big Avoidance: PMI’s questionable financial flows

Tax Evasion & Illicit Trade

As well as the unethical use of tax avoidance, major transnational tobacco companies have also been found to be directly involved or complicit in illegal practices. This notably includes the illicit tobacco trade. Internal industry documents show how BAT and PMI in particular relied on smuggling their own products from the 1960s onwards.¹²⁷¹²⁸ They did this in order to evade taxes, enter new markets, maintain and increase market share, circumvent tobacco control and trade protection measures, and undermine the rule of law.¹²⁷¹²⁸ Since then evidence indicates that transnational tobacco companies have continued to be complicit in illicit trade.^{129130131132133}

Tobacco Industry Arguments Against Taxation

In order to prevent countries from adopting any major tobacco tax reform, the industry repeatedly, and successfully, uses arguments which exploit concerns around the political economy of taxation.

Those concerns have been summarized by the WHO as the SCARE tactics:¹³⁴

S Smuggling and illicit trade

C Court and legal challenges

A Anti-poor rhetoric or regressivity

R Revenue reduction

E Employment impact

As experience from multiple countries shows, most of these arguments are unsubstantiated and exaggerated.¹³⁴

See examples of arguments against tax used by the tobacco industry in the UK.

Price and Tax

Taxes only work to reduce consumption if they are passed on in the form of higher prices to smokers. Tobacco companies use price as a key part of their marketing strategies.

Read more on the pages on Price and Tax and Tobacco Industry Pricing Strategies

Relevant Links

• Tobacconomics, based at the University of Illinois at, produces a cigarette Tax Scorecard on tax policy performance in 160 countries.
• See also the World Health Organization (WHO) web pages on Taxation.
• For countries that are parties to the Framework Convention on Tobacco Control (FCTC) progress against Article 6 on price and tax is detailed in the FCTC implementation database.
• For up to date information on tobacco regulation, see the Tobacco Control Laws website, published by the Campaign for Tobacco Free Kids (CTFK).

TobaccoTactics Resources

• Price and Tax
• Tobacco Industry Pricing Strategies

TCRG Research

Big Tobacco, Big Avoidance, S.Vermeulan, M. Dillen, R. Branston, The Investigative Desk, 4 November 2020. Available from the University of Bath website

Industry profits continue to drive the tobacco epidemic: A new endgame for tobacco control?, R. Branston, Tobacco Prevention & Cessation, 2021;7(June):45, doi:10.18332/tpc/138232

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 The Tobacco Industry and Tax appeared first on TobaccoTactics.

Figure 1: Tobacco Industry Pricing Strategies (TCRG original research)

Here we describe each strategy with examples from HICs and LMICs.

• See also the Price and Tax main page.

Differential shifting of taxes

Instead of fully passing on the taxes on tobacco products to consumers, the industry may decide to shift taxes to different brands and/or different tobacco products:

• Overshifting: takes place when the TI increases the price of products above that required by the tax increase. The burden of the tax increase (and more) falls entirely on the consumers rather than the producers.
• Undershifting: occurs when the industry absorbs tax increases (to some extent), thus delaying/preventing the intended tobacco price rises. In this scenario, the producers bear at least part of the cost of the tax increase. This is one of the most frequently employed pricing strategies of the industry and has been identified in multiple countries worldwide.

Differential shifting of taxes is the most frequently employed strategy of the tobacco industry (TI). In many HICs, the TI persistently increases tobacco prices by overshifting tax increases on on premium products (those at the higher end of the market) but undershifting on ‘budget’ products (in the lowest price segments) in order to keep their prices low. This results in an increasing price gap between premium and budget products. This pattern has been observed in the UK,¹³⁷¹³⁸ Ireland,¹³⁹ and several other European countries;¹⁴⁰ the US;^141142143 and New Zealand.¹⁴⁴¹⁴⁵.

In contrast to HICs, undershifting is a more commonly used tactic in LMICs, as witnessed in South Africa,¹⁴⁶ Mexico,¹⁴⁷¹⁴⁸ Indonesia,¹⁴⁹ Turkey,¹⁵⁰ Thailand,¹⁵¹ Bangladesh,¹⁵² Pakistan,¹⁵³ and Mauritius.¹⁵⁴

Research in LMICs has highlighted that tobacco companies in these countries deliberately chose to undershift their products. Their primary goal appears to be expanding their markets as opposed to increasing their profits. Therefore, tax increases are mostly absorbed by the tobacco companies for brands across all price categories.

This pattern varies slightly in China, which is a state-owned tobacco monopoly market, and  the state has a pivotal role in setting both prices and taxes. Between 2009 and 2015, the state decided against increasing prices, which resulted in reduced profits for the industry. However there were no changes in the rates of cigarette consumption.¹⁵⁵

There is evidence to suggest that when the near-monopoly environment of the tobacco industry is under threat from changes in market dynamics (e.g. from legal or illicit low-cost providers) this will also change the observed industry pricing strategies over time. For example, in South Africa there was a switch from overshifting to undershifting in 2010, which coincided with increased competition from domestic low-cost producers and a rapid increase in illicit trade.¹⁵⁶

Evidence also indicates that tobacco manufacturers tend to absorb smaller tax increases, while larger increases in tax rates force them to raise their prices in order to maintain profits. ¹⁵⁷¹⁵⁸

Introducing new brands, segments or products

It has been observed that in markets where multiple types of tobacco products are available, the increase in taxes on one product can encourage consumers to substitute or down-trade to cheaper alternative products, such as roll-your-own (RYO). This consumer behaviour has been observed in the UK,^159160161 Spain,¹⁶² and Thailand,¹⁵¹, as a result of the tobacco industry’s launch of cheaper substitutes.

These include new and cheaper factory made (FM) as well as RYO products, including cheaper variants of existing products and new price segments, and increase the opportunities for smokers to down-trade instead of quitting. In some countries, this tactic is used to target women and young people.¹⁶¹ This industry strategy helps retain customers who no longer want, or are unable, to pay for higher priced products. At the same time, they continue to offer premium products that allow the industry to profit from those who are willing to pay higher prices for ‘luxury’ brands.

There is evidence of similar brand substitution in Bangladesh between 2006-2017.¹⁵² At the same time there was also a shift from bidis to FM cigarettes, indicating growth in people’s incomes and shifting preferences.¹⁵² Therefore, the manufacturers of tobacco created two different pathways for consumer to maintain sales volumes and profitability: by offering low-priced cigarettes, they generated new sales by encouraging a shift from bidis (which are generally independently made and very low priced); and low-priced FM offered smokers of premium cigarettes a cheaper option instead of quitting.

Price discrimination and price related promotions

Selling the same product at different prices to different customers, often through targeted price-related promotions, can keep products affordable across all income groups following a tax increase. This helps to prevent price-sensitive users from quitting or reducing consumption, ensures potential new customers are not deterred by high prices, but allows the industry to take advantage of those less sensitive to price.

Evidence from the US, Canada and the UK, highlights the industry’s targeted promotional activities.¹⁶³ These are targeted at price-sensitive consumers with certain products discounted through coupons, bulk purchase offers on cartons, or free gifts. Different prices of the same product are also offered to consumers in different store types and locations, such as Native American reservations in the US and Canada.^164165166 As a result, smokers are able to avoid the full impact of taxes by buying cartons or purchasing from lower tax jurisdictions. This strategy is also beneficial for the tobacco industry as it maximises their profits by minimising the effect of tax increases.¹⁶⁷

Price smoothing

Following tax increases, tobacco companies ‘smooth’ price by implementing price rises throughout the year by employing smaller, more frequent increases. This ensures that smokers never face a sudden, large, price increase, which could encourage quitting. Therefore, this effectively minimises the public health impact of tax increases. This strategy has been used in the UK, alongside undershifting.¹⁶⁸ The smoothing period was longer for cheaper product categories of FM, rather than RYO tobacco.¹⁶¹¹⁵⁹

Shrinkflation

Companies may reduce, or ‘shrink’, the number of sticks in a pack from, or the weight of tobacco per pack. This disguises price rises and prevents the cost of a packet of tobacco from being tipped over a certain psychological level. The higher cost per cigarette does not become immediately obvious to most smokers. In the UK, tobacco manufacturers masked price increases by charging the same pack prices that were charged before the tax increase. This was achieved by reducing the size of a FM pack from the standard 20 sticks to 19, 18 or even 17 sticks per pack and the size of a RYO pouch of tobacco from the typical 12.5 to 10 grams.¹⁵⁹ This strategy was more common in the ‘budget’ and mid-priced products. Thus, despite the rise in price per stick, the real pack prices of the cheapest FM and RYO products remained static in the UK between 2012 and 2017.¹⁶¹

Changing product attributes or production processes

The industry can exploit tobacco tax structures that levy different tax rates based on different product characteristics (e.g. length, weight, price, or product type). Companies may change the physical attributes of their products, or alter the production methods, in order to achieve lower tax rate brackets or categories.

In the UK, cigars were subject to relatively lower taxation than cigarettes and exempt from some of the restrictions covering all of the European Union (EU).¹⁵⁹Tobacco companies took advantage of these differences in legislation by launching economy cigars and low-priced cigarette-like filtered cigarillo products from 2010.¹⁶⁹ Marketing under existing cigarette brand names in 2020 helped them to circumvent the EU menthol ban.¹⁶⁹

Tobacco companies may also effectively reclassify their own products in order to avoid higher taxes. In the US, from 2009 to 2013, tax on RYO tobacco was higher than for pipe tobacco – so the industry relabelled RYO as pipe tobacco, reducing its tax liability. As a result, sales of RYO tobacco fell while sales of pipe tobacco increased.¹⁷⁰¹⁷¹

It has been argued that a complex taxation system, with differential tax rates for each type of product, favours this pricing strategy. For example, up until 2009, Indonesia had an elaborate multitiered tax system, with varied tax by different product types (such as cigarette or kretek), by mode of production as well as by the manufacturing facilities. This favoured smaller scale production facilities, and provided a tax incentive for companies to split production between large numbers of small-scale producers.¹⁷²

TobaccoTactics Resources

Price and Tax

Menthol Cigarettes: Industry Interference in the EU and UK

Price Cap Regulation

Pricing as a CSR Tactic

Relevant Links

The Price We Pay: Six Industry Pricing Strategies That Undermine Life-Saving Tobacco Taxes, STOP report,  exposetobacco.org
Video in English, Urdu and Indonesian 

TCRG Research

How has the tobacco industry passed tax changes through to consumers in 12 sub-Saharan African countries? Z.D. Sheikh, J.R. Branston, K. Zee, A.B Gilmore, Tobacco Control Published Online First: 11 August 2023, doi: 10.1136/tc-2023-058054

Tobacco industry pricing strategies for single cigarettes and multistick packs after excise tax increases in Colombia, Z.D. Sheikh, J.R Branston, B.A. Llorente et al, Tobacco Control, Published Online First: 31 May 2022, doi:10.1136/tobaccocontrol-2022-057333

Tobacco industry pricing strategies in response to excise tax policies: a systematic review, Z.D. Sheikh, J.R. Branston, A.B Gilmore, Tobacco Control, Published Online First: 09 August 2021, doi:10.1136/tobaccocontrol-2021-056630

Impact of tobacco tax increases and industry pricing on smoking behaviours and inequalities: a mixed-methods study, T.H. Partos, R. Hiscock, A.B. Gilmore, et al, Public Health Research, April 2020, 8(6):1-74, doi:10.3310/phr08060

Standardised packaging, minimum excise tax, and RYO focussed Tax rise implications for UK tobacco pricing, R. Hiscock,  N.H. Augustin, J.R. Branston, A.B. Gilmore, PLoS One, February 2020, doi:10.1371/journal.pone.0228069

Cigarette-like cigarillo introduced to bypass taxation, standardised packaging, minimum pack sizes, and menthol ban in the UK, J.R. Branston, R. Hiscock, K. Silver, et al, Tobacco Control, August 2020, doi:10.1136/tobaccocontrol-2020-055700

Tobacco industry strategies undermine government tax policy: evidence from commercial data, R. Hiscock, J.R. Branston, A. McNeill, et al , Tobacco Control, 2018, doi:10.1136/tobaccocontrol-2017-053891

Tobacco industry strategies to keep tobacco prices low: evidence from industry data, A. Gilmore, R. Hiscock, R. Branston et al, Tobacco Induced Diseases, 2018;16(1):115. doi:10.18332/tid/84000

Understanding tobacco industry pricing strategy and whether it undermines tobacco tax policy: the example of the UK cigarette market, A.B. Gilmore, B. Tavakoly, G. Taylor, H. Reed, Addiction, July 2013, doi: 10.1111/add.12159

UK tobacco price increases: driven by industry or public health?, R. Hiscock, J.R. Branston, T.R. Partos, A. McNeill, S. C. Hitchman, A.B. Gilmore, Tobacco Control, 2019, doi:10.1136/tobaccocontrol-2019-054969

Understanding the vector in order to plan effective tobacco control policies: an analysis of contemporary tobacco industry materials, A.B Gilmore, Tobacco Control 2012, doi: 10.1136/tobaccocontrol-2011-050397

What is known about tobacco industry efforts to influence tobacco tax? A systematic review of empirical studies, K.E. Smith, E. Savell, A.B. Gilmore, Tobacco Control 2013, doi:10.1136/tobaccocontrol-2011-050098

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 Tobacco Industry Pricing Strategies appeared first on TobaccoTactics.

This is illustrated by BAT’s activities in New Zealand and Australia in 2010-11.

In 2010, British American Tobacco New Zealand proposed fixed minimum tobacco prices. It made the case that this could prevent tobacco companies competing on price, and thus prevent them attracting children via cheap prices.¹⁷³ This was framed as a way to protect children from smoking. It was sanctioned by David Crow, then CEO of BAT Australia and a Director of BAT in New Zealand.

Corporate Social Responsibility initiatives are used by the tobacco industry to help avoid effective regulation, by proposing voluntary measures or minor policy changes.

The New Zealand parliamentary select committee rejected fixing a minimum price on the grounds that an aggressive tobacco tax regime was a more appropriate answer. Minimum prices help increase industry profits but do not increase public revenue. An effective tax regime will bring public health benefits while simultaneously benefiting public (rather than just the industry) finances.¹⁷⁴¹⁷⁵

A press conference in May 2011 confirmed that the company  was not serious about the minimum price proposal. BAT threatened to flood Australia with half-price cigarettes and make the government liable for billions of dollars in compensation if forced to remove branding from cigarette packets. The Australian Daily Telegraph quoted Crow saying:

“When you look at the four Ps (product, price, place and promotion), pricing’s the big one and that’s the only one we have left. We will end up fighting on price.”¹⁷⁶

He went on to say that the cheap prices:

“basically means more people will smoke, more kids will smoke (…) It’s going to backfire and go bad and lead to more people smoking, which is just mad if you’re sitting at a government desk”.¹⁷⁶

Australia’s Health Minister Nicola Roxon dismissed BAT’s claims as baseless, saying: “Big tobacco are fighting to protect their profits, but we are fighting to save lives.”¹⁷⁶

TobaccoTactics Resources

• Price and Tax
• Plain Packaging

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 Pricing as a CSR Tactic appeared first on TobaccoTactics.