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The two tobacco giants Philip Morris International (PMI, owner of the iconic Marlboro brand) and British American Tobacco (BAT, owner of Lucky Strike) have been battling for their share of the European market, including the fast-growing market for a variety of smoke-free products. At the same time, these industry giants are allying against the EU’s plans to tighten tax regulations. Manufacturing and distributing e-cigarettes and heated tobacco products (HTPs) has been incentivized by generous taxation policies in the majority of member states, as well as around the world.
These so-called next generation products (NGPs), including oral products such as gums and nicotine pouches, are not covered by the current Tobacco Taxation Directive (TTD). The directive dates back to 2011, when alternatives to ordinary cigarettes were yet to rise in popularity.Smokeless products (which heat rather than combust the active substance, whether tobacco or liquid, in e-cigarettes) are still far from leading tobacco consumption. In 2021 they represented just 8 percent of the retail value (almost 100 billion euro) of all tobacco products in the EU, according to Tobacco Intelligence statistics. Furthermore, they are also banned in a number of countries outside of Europe.
However, Big Tobacco has increasingly advertised these products as safer substitutes in order to claim tax benefits, maintain low prices and ramp up sales to compensate for the decline of increasingly taxed traditional cigarettes. In Western Europe (the world’s second largest market after Asia-Pacific), cigarettes lost another 0.2 percent in sales value between 2019 and 2020, while NGPs gained over 11 percent, according to Euromonitor statistics. Europe as a whole represents one third of the global market of both HTPs and e-cigarettes.
According to a survey released last February by the European Commission’s Eurobarometer, 57 and 25 percent of respondents said that they switched to e-cigarettes and HTPs respectively, in order to stop or reduce their tobacco consumption. Among these respondents, 37 and 39 percent believed that e-cigarettes and HTPs respectively are less harmful, while 23 and 14 percent considered them cheaper. In order to avoid NGPs becoming a gateway to cigarette addiction (mainly among young people), the European Commission is considering controlling their circulation (as well as that of raw tobacco, also unregulated) through harmonised fiscal rules. At the same time, the Commission aims to revise excise duties across product categories and countries. Th…
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