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March, 2008


Smoke-free Oktoberfest?
Bavaria - The home state of Munich’s Oktoberfest festival has adopted an anti-tobacco law that - unlike other German bans on smoking in public places - will not even allow for smoking sections to be set up within these premises. Smoking will be allowed in outdoor areas such as beer gardens and on restaurant terraces.

Health Minister asks Finance Minister to increase taxes on tobacco products
New Delhi - With increasing concern with respect to the effects of tobacco on the country’s health, Union Health Minister Anbumani Ramadoss asked Finance Minister P Chidambaram in a letter to increase the taxes of all tobacco products so that higher prices can act as a deterrent.

The letter also called for a look into the taxation system on gutkas: currently, there exists a lump-sum tax scheme for gutka manufacturing under which they can deposit up to Rs 12 lakh a month as tax for each packaging machine.

In addition, Ramadoss has been at the forefront of a campaign for putting pictorial warnings on tobacco products to act as a further consumption deterrent.

Cess on cigarette to cut tobacco farming
New Delhi - Cigarette smokers may have to pay a cess of five paise for each cigarette they light, if a proposal of the Commerce Ministry to shift tobacco growers to other crops is included in the upcoming budget. India needs to reduce tobacco cultivation under an obligation to the World Health Organization, but requires Rs 2,422 crore to shift at least 50% of the nearly 97 thousand tobacco farmers.

United States
Court invalidates tobacco transportation law
Augusta - Recently, the Supreme Court invalidated sections of the US state of Maine’s law prohibiting tobacco sales to minors through the internet.

The court said the state cannot institute a regulation against transportation companies that deliver tobacco products directly to consumers as federal transportation law disallows the state from this course of action.

The decision could allow the transportation industry to move from under the current laws regulating tobacco product delivery in this time of the Internet. The federal law “says nothing about a public health exception,” Justice Breyer said.

Federal law currently bars individual states from regulating prices, routes or services of shipping companies. Currently, there are 31 states with laws that target the delivery of cigarettes to minors.

Maine’s law required delivery companies to intercept packages from unlicensed tobacco retailers and then to verify the buyer’s age, all of which took more time and money.

Delivery companies continue to fight Maine’s law while their biggest players have stopped shipping tobacco products directly to consumers to avoid illegal sellers and distributors from the Internet.

The ruling against Maine could enable the industry to challenge similar transportation laws in other states.

Colorado senate seeks to criminalize youth tobacco possession
Denver – Colorado youth may legally possess tobacco products even though they are banned from buying them, but that could change.

A bill passed by a Colorado Senate committee would ban people under age 18 from tobacco possession, allowing police to confiscate cigarettes, and other products from underage users. 35 states currently have laws making it illegal for minors to possess tobacco.

There would be no fines or jail time for minors caught with tobacco.

RJR tobacco cuts off free cigarettes
Raleigh - Smokers in the US state of North Carolina and 24 others will have to make it without free packs from the R.J. Reynolds Tobacco Co.

The company is ending its buy-some, get-some-free strategy to evaluate the promotion and pricing of Camel, Kool, and Pall Mall as sales begin to decline.

Though they are not discontinuing promotions all together, the company’s Chief Executive and Chairwoman Susan Ivey says that the “ultimate goal” is overall share growth, “but not at the expense of over promoting, over discounting and achieving short-term share gain at the expense of short-term profit.”

According to analysts, this strategy is risky because smokers are now accustomed to getting free packs and might switch brands when the freebies go away.

Cantor Fitzgerald Europe’s Chief Global-Market strategist Stephen Pope said that the savings on advertising or promotions “can be redirected to less-restrictive areas where there is a growing, not shrinking, customer base.”

Tobacco International - March, 2008

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