GLOBAL TOBACCO REGULATION OVERVIEW IVAN GENOV RESEARCH ANALYST 31 MAY 2018
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1 IVAN GENOV RESEARCH ANALYST 31 MAY 2018
2 Three tiers of regulations affecting the industry 2 Core Advertising and sponsorship bans Descriptor bans Tax-driven excise increases Standard Public smoking bans POS display bans Graphic health warnings Next generation Plain packaging Flavour bans Variant limits Turbo taxation Birth year ban
3 The next generation of regulations begins to enter the mainstream 3 Plain packaging: Actual and by stealth Growing momentum for flavour bans and menthol in particular Limitations to single variant or type Turbo taxation to smash the core smoker Birth year ban: Soft prohibition Along with other potential measures such as filter restrictions, on-stick messaging, ingredient bans, nicotine removal or capping, and acridity levels.
4 What could be possible EU TPD III regulations? 4 Worst case scenario-> Pack warnings 100% picture and text (plain packaging) Nicotine levels Pack and size variant bans Flavours Others First wave of limits Slim cigarettes and big packs banned Ban extending to other tobacco products Fixed pricing, filter restrictions E-cigarettes (containing nicotine) Heated Tobacco Maximum volume for non-nicotine containing e-liquids; Plain packaging A unified restrictive framework <-Could be more liberal towards RRPs
5 Plain packaging: Rapidly emerging as the greatest industry threat 5 Decimates the ability to retain a compelling brand identity Supply side effects Consolidation of manufacturing facilities Seeking of ever higher efficiencies (Industry 4.0) Contract manufacturing Demand side effects Commoditization throughout the supply chain Price sensitivity Illicit trade
6 Graphic health warnings: Plain packaging by stealth 6 Ranking Cigarette graphic health warnings rankings Average front and back of packaging Country 1 90% Nepal and Vanuatu 3 85% India and Thailand % Australia 6 80% Sri Lanka and Uruguay 8 75% Brunei, Canada, Laos and Myanmar 14 65% EU, Turkey, Brazil % Japan, Israel 153 (last) 0% Botswana, North Korea, Tuvalu, USA Source: Canadian Cancer Society (October 2016)
7 Plain packaging: From a wild dream to becoming the norm 7 Plain Packaging Legislation In Effect Australia, France, UK, Norway, Ireland, New Zealand* Legislated For Hungary (active for new brands, full market from 2019), Slovenia Under Formal Consideration Canada, Uruguay, Thailand, Singapore, Belgium, Romania, Turkey, Georgia, Finland, Sweden, Brazil, Chile, South Africa, Nepal, Sri Lanka, Taiwan China, US, Indonesia Not Currently Foreseeable
8 2017: Plain packaged volumes 8 In effect The combined cigarette volumes of countries that have implemented or already legislated for plain packaging was over 110 billion sticks
9 2030: Projected plain packaged volumes 9 1 trillion sticks 50% World volumes (ex. CN) In effect
10 Menthol and flavour bans are getting traction around the world 10 Currently examining the role of flavours including menthol Certain states have already gone a step further Brazil upheld a decision to ban flavours in 2018 Ethiopia banned flavoured tobacco and menthol in 2015
11 Current flavour and menthol bans 11 Flavour bans Menthol bans
12 2030: Flavour and menthol ban projection billion ->1.2 trillion: unflavourable sticks Flavour bans Menthol bans
13 US FDA: Shifting the tobacco trajectory through nicotine reduction 13 Opportunity for companies producing low-nicotine products Recognition of the continuum of risk FDA puts nicotine at the centre of future regulatory efforts The deadline for submitting PMTAs is extended by 4 years SPECTRUM government research cigarettes
14 Modified risk products: Limited at present, big future potential 14 CIGARETTES SNUS HTP PHARMA NICOTINE CESSATION E-CIGARETTES/ VAPOUR PRODUCTS AS TOBACCO SCENARIO 3 POTENTIAL SCENARIOS FRAGMENTED WORLD SCENARIO CONTINUUM OF RISK SCENARIO BAT is also expected to submit a MRTP The risk reduction appeal of snus has been limited
15 Raising the legal tobacco purchase age: Tobacco 21 and beyond 15 Is the current worldwide standard Japan and Thailand have already implemented more restrictive laws More than 80 million US citizens are covered by the new law Could be a precursor of incoming birth year bans
16 Tobacco Endgame: More real than ever 16
17 Marijuana legislation: A huge opportunity 17 ~US$160bn industry (legal and illegal) Close to a fourth of the entire tobacco category North America is at the forefront of legalising recreational marijuana Tobacco companies are investigating this emerging business opportunity
18 Thank you Ivan Genov, Drinks & Tobacco Linkedin.com/in/ivanigenov For more, visit Euromonitor.com
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