Global Tobacco Category News and Information

September 1, 2009

The international tobacco industry is experiencing substantial challenges on several fronts. They include volume decline in mature markets, excise tax increases, growth in illicit trade, increasing regulation and lobbying from tobacco control groups. As an information initiative, NACS Insight will be focusing on these global challenges and the next three editions of Global Convenience Store Focus will be assisting the international convenience industry with clear analysis, insight and information on the very latest developments with articles, reports and Insight CTV video features.

The World Health Organisation’s Framework Convention on Tobacco Control (FCTC) is setting a global agenda for tobacco regulation. More prominent health warnings - text and graphic – have appeared on packaging in recent years. Further restrictions have included bans on advertising and smoking in public places. In 2008 FCTC guidelines were developed. These included recommendations to governments to limit their interaction with the tobacco industry, ban tobacco companies from publicising their social responsibility activity, and consider plain packaging and bans on the retail display of tobacco products.

Increases in excise tax rates in many higher-price markets. Illicit trade – smuggled, tax-evaded or counterfeit product – is a major problem. It is estimated to account for over 6% of global cigarette consumption – more than 300 billion cigarettes – losing governments some £11 billion in tobacco taxes in 2008 alone. Legitimate businesses are also losing millions of pounds in profits. This illegal market is mainly driven by higher taxes, particularly when taxes (and therefore prices) differ significantly between neighbouring countries. Weak penalties, lack of enforcement and poor border controls – and very high financial rewards for the criminals – add to the problem.

All these external factors are having a dramatic impact on the ability of tobacco manufacturers to effectively engage with customers and adult smokers at the point of sale. They also impact retailers’ ability to run their business. The next three editions will cover the following areas:

October edition

• Global Video Case Study: Focus on Ireland three weeks after going dark on July 1st. CTV interviews with retailers
• International opinion piece: what should the industry be focusing on to help retailers with their day-to-day operations? What is the industry’s best response? How can the industry better satisfy the needs of adult smokers in the "de-normalisation period"? How can retailers provide consumers with product information? How familiar are retailers with guidelines? How clear are the guidelines? What do adult smokers expect/value? What are the practical difficulties involved for retailers running their businesses?
• Research summary of existing and proposed legislation globally.

November edition

• Global Video Case Study: TV interviews with international retailers at Future of International Convenience event in London. What do retailers expect from the industry? What do they expect to happen in the future?
• Article: Comparison of different regulatory experience in different states/countries. New Zealand case study.
• Article: Global Tobacco Smuggling. International retailer interviews.
• Summary of grey market, global illicit trade together with impact on national government revenue.

December edition

• Article on solutions: Commentary on different display options under display restriction and relative costs, merit, etc.
• Interviews with tobacco companies for best practice.
• Launch of online Global Tobacco category resource centre summarising all the previous article, TV pieces in one place at NACS online/Insight.