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December, 2009

Indonesian government to limit cigarette production

Jakarta - The Indonesian government plans to limit domestic cigarette production as of 2015 to total only around 260 bn pieces in line with its 2007-20 Tobacco Product Industry (IHT) roadmap, an official said.

"The growth of cigarette production will be flat or up a bit at around 3 to 5 bn cigarettes a year," the director of tobacco and beverage industries of the industry ministry recently stated. He said cigarette production in 2008 reached 240 bn and is expected to total 245 bn cigarettes in 2009. Based on the roadmap, he said, the industry would focus on the aspect of manpower supply and income balance the short-term (2007-10) period. The excise system meanwhile will be made simpler through grouping of factory categories, specific imposition of excise duty, and the handling of illegal cigarettes, he said.

The government has set the excise duties for tobacco products at an average of 15%, which will be effective as of January 1, 2010 while import tariff of tobacco products will be set at 40% with an excise duty of Rp325 per cigarette, he said.

According to records up to 6.1 mn people including 2 mn farmers are involved directly or indirectly in the tobacco/cigarette product industry. In addition to it, there are also 1.5 mn clove farmers relating to the industry and 600,00 workers in cigarette making industry, one mn cigarette retailers and 1 mn workers in cigarette-related industries such as printing, advertisement, distribution and transportation services. Based on the industry ministry`s data the number of cigarette makers in the country now reaches 3,250 units and 95% of them categorized under small-and medium-sized industries.

The value of cigarette excise duty in 2009 reached Rp860 bn and in 2010 is expected to increase to around Rp1.1 tn or around two percent from the target of cigarette excise revenue for 2010 set at Rp55.9 tn. Starting in 2010, the number of cigarette makers and tobacco plantation companies to receive the cigarette excise duty involves 19 regions up from five regions before. A government spokesman comments the funds were meant for increasing campaign on awareness of tobacco farmers on health issue, diversification commodities and improvement of institutions.

Japanese men smoking at record low
Tokyo - The smoking rate among men in Japan has fallen to a record-low 36.8% since the survey of its kind was launched in 1986, while the rate among women stood at 9.1%, dropping below 10% for the first time since 2001, the Health, Labor and Welfare Ministry recently announced. The rate among the men and women in total was 21.8% in the survey conducted a year ago, down 5.9 percentage points in five years. The ministry attributed the smoking rate decrease to rising health consciousness and introduction of "taspo" smart cards in July last year, which are only issued to people aged 20 or older and enable holders to buy cigarettes at vending machines.

Cigarette producers sue to reduce size of graphic images
Istanbul - Tobacco manufacturers PhilSA, Philip MorrisSA and British American Tobacco (BAT) have filed a lawsuit with the Turkish Council of State to shrink the mandatory size of new graphic images which will be obligatory to print on cigarette packages starting on Jan. 1, 2010.

By current regulations, the images must cover at least 65% of tobacco packaging, the companies note, arguing that this will make it virtually impossible to put their brand logos on the packages. The companies also argue that the new obligation infringes on their commercial freedoms as bestowed by international trade rules.

United Kingdom
Ciggy competition heats up
London - JTI raised the prices on its British cigarette brands, such as number one seller Mayfair, by a price of a 20-pack by 10-12 pence in late November. The maker of Benson & Hedges and Silk Cut cigarettes in Britain said market share gains had prompted it to go ahead with price rises of nearly 3% as it looks to take the lead on pricing from rival Imperial as well as to help offset higher leaf costs. According to the company, JTI's increased focus on cheaper brands had seen its mid-price Mayfair beating Lambert & Butler to top spot in the British market with a monthly share of 14.4% in August, while JTI's Sterling was the top value brand ahead of Imperial's JPS. The price rises will add 12 pence to a pack of Sterling, which will now cost around 4.47. The value end of the British market, which includes Sterling, Imperial's JPS and Windsor Blue, and BAT's Pall Mall, is the only sector of the British market in growth amid a slowly declining overall market. The world's largest cigarette group, Philip Morris International, has around 7% share of the British market with its products being distributed by Imperial, while No. 2 BAT has around a 6% share.

Tobacco International - December, 2009

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