Ireland: War on Smoking Means Uncertain Future for Tobacco Companies

Source from:  Irish Independent 08/08/2013

THE TOBACCO industry, unlike any other, is the one sector where the Government is not afraid to annoy multinationals. Irish cigarettes sales, once largely a job for indigenous companies, are now dominated by big international players.

And though doctors and parents around the country may be rejoicing at Health Minister James Reilly's war on smoking – he wants a tobacco-free Ireland by 2025 – those players are less than pleased.

The Irish industry is dominated by Japan Tobacco International (JTI), which holds about 50pc of the market. Its brands include Camel, Benson and Hedges and Silk Cut. The company came to Ireland in 2009 with the acquisition of the Gallagher Group, an Irish company founded in 1857 by Derry man Tom Gallagher.

It now has more than 100 permanent Irish employees. Based in Tallaght, it directly supplies 3,700 retailers and generates more than €700m per annum in taxes.

The other two big players are John Player and PJ Carroll, who hold around 40pc and a tenth of the market respectively.

John Player's ultimate parent is UK-headquartered Imperial Tobacco Group, which produces about 320 billion cigarettes a year. The company is best known in Ireland for its eponymous John Player cigarettes, as well as Lambert and Butler, Regal, Drum tobacco and Rizla rolling papers.

Carrolls, also originally an indigenous company, was bought by British American Tobacco – also UK-headquartered – in 1998. Its factory was for decades the largest employer in Dundalk. The company sells Major, Rothmans and Dunhill among others.

The latest blow to the industry is the widely reported new proposals from the Department of Health, which would see the introduction of strict packaging rules for cigarettes and tobacco products. This follows years of crackdowns on tobacco sales, including rising excise taxes – an estimated 80pc of the price of a pack of cigarettes now goes to the State – as well as growing counterfeit smuggling and a ban on sports sponsorship.

But as one of the key revenue generators for the State, with about 23pc of all excise duties collected in 2011 coming from tobacco, this is an industry with the means to fight back.

Together, Ireland's three largest tobacco sellers make up ITMAC, the Irish Tobacco Manufacturers' Advisory Committee.

ITMAC is a lobby group, which regularly makes representations to the Government on budgetary issues and proposed new tobacco regulations.

However, the Government may be considering the wisdom of these meetings. A recent consultation between ITMAC and Enda Kenny, Finance Minister Michael Noonan and Justice Minister Alan Shatter to discuss illicit tobacco trade attracted widespread scorn, with Fianna Fail leader Micheal Martin calling the meeting "a tacit endorsement of big tobacco and all the damage it does". Enditem