Global Update: Countries Around the World Begin Legislating E-Cigarettes

China e-cigarette news: From May 1 to May 7, 2014, some international tobacco companies began to disclose their performance for the first quarter of 2014 and the previous fiscal year; Ireland and Hungary strengthened the management of tobacco retail licenses; the UK and South Africa intensified efforts to crack down on smuggled cigarettes; tobacco leaves in Malawi and Zimbabwe are still being sold; countries around the world are beginning to legislate e-cigarettes. Performance Disclosure Japan Tobacco: In the fiscal year ending March 2014, domestic cigarette sales of Japan Tobacco increased by 3.3% compared to the same period in 2013, reaching 120.1 billion sticks. Japan Tobacco reported that the sales growth was due to a steady increase in market share and a one-time increase in demand ahead of the value-added tax. Its Mevius cigarettes remain the main driving force behind the company's market share growth of 1.4 percentage points, reaching 61%. The core revenue of Japan's domestic cigarette business was 676.2 billion yen, a 3.4% increase from the previous 12 months, and adjusted EBITDA increased by 7.4%, reaching 302.1 billion yen. Meanwhile, Japan Tobacco International's shipment volume for the 12 months ending December 2013 was 416.4 billion sticks, a decrease of 4.6% from the previous year's shipment of 436.5 billion sticks. This was mainly due to a significant contraction in the tobacco industry and some markets adjusting trade inventories, leading to a 4.6% decline in Japan Tobacco International's sales. The core revenue of Japan Tobacco International grew by 27.3%, reaching 1.2007 trillion yen, while adjusted EBITDA increased by 31.6%, reaching 451.6 billion yen. Japan Tobacco's revenue for the 12 months ending March 2014 was 2.3998 trillion yen, a 13.2% increase from the previous 12 months, while adjusted EBITDA grew by 20.9%, reaching 751.7 billion yen, and operating profit increased by 21.8%, reaching 648.3 billion yen. Altria: Due to a decline in cigarette sales and profits last year benefiting from reduced litigation and settlement costs, Altria Group's profits fell by 15% in the first quarter of 2014. The company's cigarette shipment volume fell by 2.5% to 29 billion sticks in the first quarter. Compared to the overall industry decline of about 4%, the company's adjusted trade inventory change showed a 3.5% decline in cigarette sales. Although the sales of its premium Marlboro brand fell by more than 2%, its market share in the US retail market increased by 0.2 percentage points to 43.8%. The company's market share in the US rose by 0.2 percentage points to 50.7%. As smoking rates are likely to continue to decline, Altria and other cigarette manufacturers are focusing on developing cigarette alternatives—such as e-cigarettes, cigars, snuff, and chewing tobacco—to ensure future sales growth. Brands like Copenhagen and Skull have seen adjusted sales growth of about 6%. Black & Mild cigar sales increased by less than 1%. Reynolds American: Due to a decrease in Reynolds American's cigarette sales and increased expenses related to expanding e-cigarette brands and legal fees, Reynolds American's profits fell by more than 28% in the first quarter of 2014. The company's first-quarter earnings were $363 million, or 67 cents per share, down from $508 million, or 92 cents per share, in the same period last year. Revenue excluding excise tax increased by nearly 3% to $1.93 billion. Its subsidiary Reynolds Tobacco sold 14.3 billion sticks, a year-on-year decline of about 4%, while the overall tobacco industry's cigarette sales are expected to decline by about 3%. Camel cigarette sales increased by 2.5%, while Pall Mall cigarette sales remained stable. These two brands account for over 60% of Reynolds' total cigarette sales. Other brands, including Winston, Kool, Twirl, and Salon, saw shipment volumes decline by about 13%. Due to increased tobacco taxes, smoking bans, health concerns, and social stigma, Reynolds and other tobacco companies are also focusing on developing alternatives such as snuff, chewing tobacco, and e-cigarettes. Its Vuse e-cigarette will undergo its first nationwide distribution in the US this summer. It is expected that in the second quarter, spending on this brand, currently only sold in Colorado and Utah, will increase. Retail Licenses Ireland: Reports indicate that to meet the government's annual requirement of 5 million euros, the cost of a tobacco retail license in Ireland will increase from a one-time annual fee of 50 euros to 500 euros. To achieve this goal, if someone exits the industry, the fee could potentially rise to 1,000 euros, a 200-fold increase. On April 25, the Irish Tobacco Machine Operators Association convened a special meeting to discuss the proposed legislation, stating that this legislation would severely impact the vending machine industry, which employs 145 people and creates an economic value of 175 million euros. If forced to pay large license fees, they would stop selling tobacco, which would also push more smokers to the black market. Hungary: The government-operated National Tobacco Trade Non-Profit Organization (NTTN) plans to hold the fifth bidding for the remaining 18 tobacco product retail licenses on May 8. In July 2013, Hungary established a government agency dedicated to issuing these licenses. After obtaining tobacco retail licenses in the first four bids held by the NTTN, there are currently about 5,800 national tobacco shops in Hungary selling tobacco products. The deadline for submitting applications for the fifth bidding is June 7, but it may be extended to July 7 upon request. #p#分页标题#e#Crackdown on Smuggling UK: On April 26, it was reported that a factory producing counterfeit cigarettes was discovered in Bury, Greater Manchester, where harmful compounds were added to the cigarettes. Additionally, three other related locations were also shut down. A total of 11 tons of cigarettes were seized, with evaded VAT and customs duties valued at 5 million pounds, and 15,000 pounds in cash was found on-site. The factory is being dealt with legally. Four men were detained but later released on bail. It is reported that the mastermind behind the factory is an organized international crime gang operating online, which imports cigarettes from tobacco-growing countries, processes them by adding white vinegar, flavoring, and other harmful substances to produce hand-rolled cigarettes. Smuggling of cigarettes in the UK is rampant, with the Treasury revealing that tax evasion amounts to over 1 billion pounds annually. Since 2008, UK authorities have been conducting sustained crackdowns on vendors selling smuggled cigarettes, with street vendors in London's Chinatown frequently being checked, but the results have been poor, and smuggled cigarettes remain widespread. Since last year, government authorities have focused their enforcement efforts on ports and airports as entry points. Customs has increased funding to install more advanced container scanning equipment and has intensified inspections of containers from countries like China and Malaysia, as well as random checks of luggage at airports and docks. Customs has increased penalties for smugglers who conceal or fail to declare cigarettes, imposing fines or legal action against EU and UK citizens found with large quantities or repeat offenders; foreign nationals from outside the EU are denied entry. It is reported that in the first quarter of this year, over 50 Chinese nationals were denied entry at UK airports, most of whom were found carrying illegal products, with smuggled cigarettes being the majority. South Africa: On April 24, during a multi-department operation to combat the illegal smuggling of cigars or cigarettes in the region, the South African government confirmed that it would double the penalties for this criminal activity. The new penalties include a fine of $1,800, confiscation of three times the income from the crime, and imprisonment for more than five years. Selling at prices below market standards constitutes a tax violation, and lacking a steel stamp or health warning is also a violation. If cigarette packaging does not indicate nicotine content or a phone number, it is considered illegal and subject to corresponding penalties. According to relevant authorities, approximately 8 million packs of illegal cigarettes were sold in South Africa in 2013, resulting in nearly $470 million in lost government revenue. Tobacco Leaf Sales Malawi: A high-level delegation of seven Egyptian tobacco buyers has arrived in Malawi. They are expected to reach deals with Malawian commercial tobacco buyers. The arrival of these tobacco buyers will intensify market competition, stimulating the tobacco market and driving up prices. This year, just one month after the tobacco market opened, farmers have already sold 22 million kilograms of tobacco, compared to only 12 million kilograms sold in the same period last year. Zimbabwe: Statistics show that 45 days after the official start of the tobacco auction season in Zimbabwe, tobacco prices remain very weak. As of April 24, the average auction price per kilogram was $2.62, down 31% from last year's average auction price of $3.79 per kilogram. The percentage of rejected tobacco bales has increased from 8.53% last year to 11.8% this year. The reasons for the rejection of tobacco bales include improper handling, as the tobacco leaves may be too moist or too dry, moldy, or various other issues. The selling price of tobacco depends on its quality. Lower-grade tobacco fetches lower prices, which is also a reason for the increase in rejected bales. E-Cigarette Regulation UK: A survey initiated by the UK Action on Smoking and Health organization shows that approximately 2.1 million people in the UK currently use e-cigarettes, far exceeding the 700,000 in 2012. The number of users has doubled in two years, indicating that more and more people are taking action to quit smoking. Experts remind relevant authorities to strengthen safety regulation of e-cigarettes. Regarding the purpose of using e-cigarettes, 71% of those who have quit traditional cigarettes say it is to help them quit completely, while 48% of those still smoking traditional cigarettes say they try e-cigarettes for the same reason. Among e-cigarette users, only about 1% have never smoked traditional cigarettes. Although e-cigarette manufacturers tout them as safe alternatives to traditional cigarettes, increasing research indicates that the safety of e-cigarettes is also a concern. For example, manufacturers often do not disclose the composition of nicotine solutions in e-cigarettes, making the health risks faced by consumers difficult to estimate. US: On April 24, the Food and Drug Administration (FDA) proposed to prohibit the sale of e-cigarettes to minors under 18, but does not restrict flavored products, online sales, or related advertising. This proposal is just the first step; if scientific evidence supports further action, they will take broader and stricter measures. Some e-cigarette companies have expressed concern about this, indicating that the door to strict regulation has not closed, and the government may still take further regulatory measures. The president of Lorillard Tobacco Company, which holds 80% of this market, stated that this proposal shows that the FDA is focused on scientific evidence, but the ultimate outcome will depend on public opinion. New York City implemented an e-cigarette ban on April 29, prohibiting the use of e-cigarettes in restaurants, bars, parks, beaches, and other public places. The New York City Council passed this bill on December 19, 2013, which was signed into law by former Mayor Bloomberg. Additionally, retailers will be prohibited from selling cigarette products or e-cigarettes to consumers under 21 starting May 18. Chicago also began implementing a ban on e-cigarettes on April 29, prohibiting their use in most indoor spaces. Due to varying regulations across states, federal regulatory agencies in the US have, for the first time, included the e-cigarette industry under federal regulations in late April, applying many of the same rules that apply to traditional cigarettes, including requiring operators to enforce age restrictions on purchases. Denmark: The health minister stated that children are also using strawberry-flavored and licorice-flavored e-cigarettes. Therefore, he has requested Parliament to discuss reasonable regulation of e-cigarette consumption. However, the health spokesperson for the Danish Social Democrats said it is too early to sound the alarm. "It is very difficult to regulate when our understanding of e-cigarettes is still so limited." Ireland: The Irish Health Management Authority announced on April 24 that starting May 1, the use and sale of e-cigarettes will be prohibited in medical facilities. The Irish Health Service stated that the existence of e-cigarettes poses a challenge to the policy of smoke-free campuses, creating safety hazards in the healthcare environment. Ensuring that medical institutions and surrounding areas become smoke-free zones is an integral part of reducing the overall harm of smoking in Ireland. Currently, the vast majority of public hospitals, primary healthcare institutions, and administrative agencies have achieved smoke-free goals, and the Health Service plans to implement a smoke-free policy in all medical institutions and departments by 2015. Singapore: E-cigarettes are prohibited in Singapore. According to the Tobacco (Advertising and Sales Control) Act, importing, distributing, or selling any products similar to tobacco, snacks, foods, toys, or items packaged similarly to general tobacco products is illegal, and violators will face severe penalties. Recently, someone was prosecuted and fined nearly 100,000 Singapore dollars for selling e-cigarettes online. #p#分页标题#e#

Malaysia: The Ministry of Health is drafting a new law to impose stricter regulations on tobacco products and smokers, including researching whether to prohibit the display of cigarette advertisements at sales counters and hiring female models to promote to consumers, in order to reduce the number of smokers in the country. Additionally, e-cigarettes may also be included in this new regulation.