There has been a tremendous move to control tobacco products for health reasons over the course of the last two decades, not only in the U.S. but across the world. Mark Kehaya, chief executive officer of Alliance One International, a leading independent leaf tobacco merchant, spoke to growers on the tobacco control movement at the Tobacco Growers Association of North Carolina, during the group's Annual Meeting at the Southern Farm Show, Feb. 1 in Raleigh.
Kehaya is one of a handful of experts in this area and he presented some surprising observations.
In spite of challenges presented by the tobacco control forces, duty-paid cigarette sales in the global environment, increased by 32 billion sticks in 2011, he said, representing 1% growth for the year. Its true the tobacco control movement has had some successes in a number of regions. Volume in North America, Western Europe and Australasia did decline by 10% over the 4 years preceding 2011; volume in Eastern Europe declined 6% during the period and volume in Latin America declined by 5%. However, this was generally offset overall by 10% increases in volume in the Asian Pacific region and by 7% increases in the Middle Eastern region.
Kehaya noted this offers producers and businesses some trade opportunities, a scenario that might be unexpected, considering the scale and intensity of the wide-ranging, world-wide control efforts.
"In Brazil, which is obviously one of the largest producers of tobacco, they've now introduced a flavor ban," Kehaya said. "So, they can no longer flavor cigarettes. That is obviously having an impact on consumption."
"… Even in the U.S., in marketing, the FDA has banned certain descriptions of what you can use, so you can no longer talk about mild cigarettes or light cigarettes, and you have to use other connotations to try and get your message across."
Kehaya listed some of the other tobacco control methods and efforts in various countries. Note that his following points are not meant to be taken as all inclusive: they are just a sampling of tobacco control methods utilized;
• In Japan, Kehaya noted, tax driven price increases on tobacco are accelerating drops in volumes.
• Big European markets are using worsening operating environments, in the form of price increases, anti-tobacco sentiment, economic pressures and illicit trade.
• Russian regulation on cigarette sales are taking sales out of roadside kiosks and limiting them to larger stores.
• In Brazil, Kehaya noted, an ingredients ban has been imposed by the public health department.
• The Food and Drug Administration in the U.S. has banned descriptors in an effort to eliminate the promotion of light and mild cigarettes.
• Australia has introduced plain packaging for cigarettes, and limited the use of branding.