Zimbabwe: Police Clamp down on Tobacco Companies

Source from:  Zimbabwe Independent  01/24/2014

FOR not carrying legal health warnings on some of their brands, British American Tobacco Zimbabwe Ltd and other non-compliant companies could soon find themselves between a rock and a hard place as police clamp down on street sales of some of the groups' brands over the companies' failure to comply with a Statutory Instrument governing cigarettes and health warnings.

Staff Writer

Statutory Instrument: 264 (2002) of 2002 governs the sale and marketing of tobacco and tobacco related products. Among other things, it outlines the rules and regulations guiding the selling of cigarettes, packaging required and health warnings.

Savanna Tobacco, the manufacturers of the Pacific brand of cigarettes, have complied. So have its other competitors, Fodya, the makers of the Mega Brand of cigarettes.

The authorities' beef with BAT is that the group is using a South African health warning which reads: "Warning: Smoking Can Kill You ", among others that are used in the South African tobacco industry.

According to the Statutory Instrument, Zimbabwean cigarette manufacturers have to use the mandatory Zimbabwean health warning which reads: "Danger: Smoking Is Harmful to Health."

For instance, Savanna and Fodya have been innovative and packaged loose cigarettes, targeting the low-end of the market. The packs bear legal health warnings.

BATZ spokesperson Shingai Rhuhwaya said her company was fully compliant with SI 264 (2002).

"The packaging and labeling of our products is fully compliant with the requirements of Public Health (Tobacco Control) Regulations, Statutory Instrument 264 of 2002," said Rhuhwaya.

But other provisions of SI 264 also govern the sale of loose cigarettes, an area BAT does participate in, hence is viewed to be non-compliant.

In e-mailed responses to businessdigest's queries, police spokesperson Senior Assistant Commissioner Charity Charamba on Wednesday said "The police have always enforced all the laws. This operation is not targeting companies but all consumers who have a tendency of repacking the products in contravening provisions of Statutory Instrument 264 of 2002."

Charamba said ZRP was not obliged to respond on why it conducted certain operations as "we always conduct these operations in line with the dictates of the law".

Health authorities elsewhere have been pushing for sterner warnings on cigarette packs.
 Authorities in developed countries want tobacco companies to play by the rules and ensure the products are well labeled.

Three years ago the United States' Food and Drug Administration (FDA) introduced graphic warning labels that will be required on all cigarette packaging and advertising.

The labels include images of a diseased lung, sickly teeth and gums and a chest with a large scar.

The pictures will be accompanied by messages such as, "Warning: Cigarettes cause fatal lung disease" and "Warning: Smoking can kill you."

This was the first change to tobacco warning labels in close to three decades, bringing the US warnings closer in line with labels in 30 other countries in Europe, Asia and Latin America.

A Savanna Tobacco spokesman said: "We manufacture all our products locally, and all our products are compliant with the laws of the land. We are, and have always been, a company that strives to comply with the law while fulfilling our consumer's and trade partners' needs."

An official statement from Fodya Private Ltd on businessdigest's queries reads: "Fodya Private Ltd cannot comment on behalf of the industry but in terms of our assessment, our consumers remain the focal point in our business and it is in that spirit that we applaud total enforcement of the instrument as it ultimately protects the consumer in terms of hygiene, freshness, control of potential contagious diseases which can easily be transmitted when cigarettes are sold in single sticks."

"We imported machinery in the mid 2000s to allow for differentiation in our sales strategy as we had identified changes in our consumers buying behaviour and this led us to launch our unique 2s packaging. This 2s packaging is what we sell to our vendors. We also sell the same packaging within other channels in the market as well. And yes it is in compliance with the instrument."

Although the American government was the first to require health warnings on cigarettes, it has lagged behind dozens of other nations that now use visually shocking, graphic warning labels to better convey the message that cigarette smoking harms health.

Africa on the other hand is lagging behind and might never catch up to the levels of warnings seen in developed countries in the near future.
 Many feel BAT, which plays in global markets affected by most of these stringent health warnings, is not playing ball in Zimbabwe on the compliance front.

Analysts feel that British American Tobacco plc, the parent company of the Zimbabwean company and the world's second-largest tobacco company by sales after Altria Group, the former Philip Morris International, could do a hell lot more on the health labels given its global market reach.

According to Bloomberg, BAT Plc had a market capitalisation of GBP 58,457/US$95,3 billion as at Tuesday this week.

The group has a market-leading position in over 50 countries and operations in around 180 countries.

Back home, BATZ, which has a market capitalisation of US$278,5 million, is not reflecting in its compliance levels. Its competitors such as Savanna Tobacco, who came into the market in 2003, a year after the instrument was gazetted are complying on all its products. Fodya started operations much later than Savanna and yet is compliant.
 Non-compliant tobacco companies such as BATZ could see their products disappear from the street as police clamp down on street vendors selling unmarked cigarettes which authorities view as illegal in line with Statutory Instrument 264 (2002).

Others close to the developments say BAT's failure to comply with the legal instrument lends credence to news the company could be remodeling its business into distribution.

Other players say because it is cheaper to make packaging and cigarettes in SA, the multinational would not want to factor in such costs as these would eat into margins on the product, making the local consumer pay a higher premium on a comparable product.

After BAT scaled down on its Zimbabwean operations and resorted to outsourcing various brands from its global network, some of the products began to bear South African health warnings instead of Zimbabwean ones.

BAT is said to be manufacturing the Madison 30 pack in South Africa for sale in Zimbabwe and has stopped cut rag operations for Mozambique, an indication the firm could soon be exiting the Zimbabwe market. The company also did not comment on which of its products it was importing from its global network.

But the group says it is leveraging the machine capacity installed in one of its hub factories to offer consumers the innovation of a Madison 30s pack format.

The company claims its manufacturing facility in Zimbabwe continues to produce at full capacity in the 20s and 10s formats, a claim yet to be verified. Enditem