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Don Hedley, tobacco industry analyst at Euromonitor International, discusses the recent legislations instated across the globe regarding tobacco, the laws to come, and what they mean for the industry. Hedley states that there are five factors working against the tobacco industry:
The Framework Convention on Tobacco Control (FCTC) is driving many of these factors. The FCTC is a legislation, ratified by 171 countries around the world. One of the stated aims of the FCTC is increasing pack prices, which in turn is slowly decreasing the demand for cigarettes. However, other factors also come into play when pack prices are increased, including:
Smoking bans are another FCTC stated aim, which is proven to work to some effect. In the US, in areas where smoking bans have been passed, per capita consumption of smoking tobacco is 5-20% lower than usual.
Point-of-Sale bans are a relatively new legislative idea, which has yet to gain a global hold. Flavour bans, however, are quite common. In the USA, the Food and Drug administration has banned candy and sweet flavoured cigarettes and cigars under the pretense that the sweet taste might encourage children to smoke.
Flavour bans have opened an array of issues, including Indonesia’s claim that the USA’s banning of cloves (and not menthol) is against the principals of trade. Indonesia is an exporter of cloves. There is also a fear that burley tobacco will be banned due to the way it’s processed. Some flavourings are used to dull the harshness of the blend.
Plain packs are another recent idea; the thought is that packs should have nothing else on them but the brands’ name and the warning label. There is a law in Australia set to be implemented in 2012 that does just that.
Although the anti-smoking lobby would like to ban tobacco altogether, the FDA in the US cannot actually ban the sale of cigarettes. However, the future does hold more bans – outdoor bans, display bans, and possibly even car bans- due to the fact that children travel in them.