Korea: JTI, BAT Defy State Anti-smoking Drive

Source from:  The Korea Times 10/28/2015

Two foreign tobacco makers - Japanese Tobacco International (JTI) and British American Tobacco (BAT) - have stirred a controversy here after launching new products available at prices that are nearly two thirds of the average cigarette price of 4,500 won per pack.

The companies made the prices possible by reducing the number of cigarettes in a pack. A pack normally contains 20 cigarettes. But JTI's Camel, which hit the market this week, contains 14 and the price was lowered to 2,500 won. BAT adopted a similar scheme in April, releasing two kinds of Dunhill containing 14 cigarettes a pack, which sell for 3,000 won.

These schemes are widely viewed as the companies' desperate efforts to boost cigarette consumption in the face of more stringent anti-smoking regulations. The average price per pack jumped 2,000 won in January due to revised tax laws, under which tobacco companies must pay higher taxes. From December 2016, tobacco companies will have to print graphic cigarette warnings on every pack of cigarettes.

JTI said the company's sales in Korea dropped 6-7 percent in the wake of the tax hike, which pressed the company to raise product prices by 2,000 won. BAT reported a sales drop of 12-13 percent for the same reason.

Cutting the price at the expense of reducing the number of cigarettes contained in a pack is not illegal. Nevertheless many market observers frown at the scheme.

They said the scheme will leave many people - both smokers and non-smokers - exposed to greater health risks, especially young adults and juveniles who, in the wake of the price hike, have felt burdened to buy cigarettes.

The government is also not happy with this. The Ministry of Health and Welfare sees the scheme as a grave threat to public health and wellbeing.

Health ministry officials said Tuesday they will find measures to put the brakes on the campaign. They said the ministry will revise related laws to ban tobacco companies from selling a pack containing less than 20 cigarettes.

"It will take half a year to revise the related laws. By doing so, the government will show its commitment to curbing smoking," said a health ministry official.

Mindful of regulatory backlash, the two companies said the controversial products are limited editions launched for promotion, not regular products. Enditem