Big Tobacco gets a big boost from the pandemic


In recent weeks, tobacco companies Philip Morris International, Japan Tobacco, Imperial Brands and Altria Group all raised their sales or profit targets, saying the industry had done better than expected, mostly in the United States and Europe. Imperial said staying home in the pandemic gave people more chances to smoke and more cash to spend.

Overall, tobacco sales, which have been declining for years, are still falling, many people are still trying to quit, and the picture is mixed globally. For example in Britain, a study published in October by researchers at University College London found that attempts by smokers to quit jumped in April. Sales have been hit in countries such as South Africa, where tobacco sales were banned for five months from late March as part of the response to COVID-19.

But in some COVID lockdowns, the decline slowed down.

For example, in the United States tobacco sales by volume fell 2 per cent in the eight months to October 24, according to Nielsen data. That’s smaller than an average drop of just over 3 per cent in the previous two years.

Slowing US sales of e-cigarettes also have benefited conventional smokes. E-cigs rose only 2 per cent over the period versus about 70 per cent on average in the previous two years. By February this year, nearly 3000 people in the United States had been hospitalised or died with what’s known as E-cigarette or Vaping use-associated Lung Injury (EVALI), according to the Centres for Disease Control and Prevention (CDC).

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A US government ban on most flavours of pre-filled nicotine cartridges used in e-cigarettes has made them less attractive tobacco substitutes for some people, according to Investec analyst Alicia Forry. But that’s not the only reason she said tobacco volumes have picked up in the United States – cheaper gasoline is another, for instance.

It’s people thinking “‘my bill isn’t usually this low, let’s throw in an extra three packs of cigarettes, I know I’ll get around to smoking them at some point,'” Forry said.

British American Tobacco told Reuters its US cigarette performance had been helped by government stimulus payments, which have boosted disposable incomes, as well as working from home and “pantry-loading” – stocking up on necessities.

Other factors tobacco firms cited include: reduced international travel, which has helped domestic sales in some countries, and tighter border controls, which reduced cigarette smuggling. Philip Morris said it saw demand pick up more as lockdowns eased and people smoked socially.

Alimentation Couche-Tard, which owns convenience stores in North America and Europe, said in September it had seen strong demand for cigarettes and other tobacco products between April and July, with many smokers buying multipacks and cartons.

From the United States and Britain to Israel and South Africa, studies have shown the coronavirus pandemic has brought with it increased feelings of depression and anxiety and in some cases, more substance abuse and smoking.

In a May survey of pandemic-related stress among more than 900 smokers in the Netherlands, 19 per cent of respondents said they smoked more, and 14 per cent said they were smoking less. A survey of more than 5000 smokers from April to May in Brazil found more than a third said they smoked more during the pandemic.

Tobacco has long been a central coping mechanism for people with mental illness or in stressful situations like war or prison.

“Many people with mental illness, ranging from mild depression to alcohol dependence, to serious illnesses such as schizophrenia, smoke more when they’re stressed, and smoke more when they’re getting more sick,” says Laura Hirshbein, a psychiatrist and psychiatry professor at the University of Michigan.

British American Tobacco told Reuters its US cigarette performance had been helped by government stimulus payments, which have boosted disposable incomes, as well as working from home and “pantry-loading” – stocking up on necessities.Credit:Nic Walker

Essential items

The industry has lobbied to try to keep output going during the pandemic.

For instance in Russia, which according to the WHO has one of the largest adult smoking populations in Europe, the manufacture of tobacco products was temporarily suspended on March 30 after the government omitted cigarettes from a list of essential items.

The JT Group said Russia’s Council for the Development of the Tobacco Industry, an industry association, had written to the government to try to prevent “negative consequences” of the suspension. Eduard Vorontsov, head of the group, told Reuters a lengthy suspension risked disrupting supplies of legally produced tobacco.

A representative of Deputy Prime Minister Victoria Abramchenko confirmed that she had recommended regional authorities add tobacco to their lists of essential items in early April.

In countries including France, Italy and Spain, tobacconists were deemed “essential” and stayed open in lockdown. In the United States and Britain, tobacco was on sale in stores that sell other necessities such as groceries.

And in the United States, people can also access coupons to buy cigarettes at a discount through apps on Android cell phones from firms including Altria and BAT – a promotional effort first reported by the Campaign for Tobacco-Free Kids, which last month called on Alphabet Inc’s Google to prohibit such apps.

Asked about the coupons, Altria said its “responsible marketing practices” are consistent with previous years; BAT also said digital coupons were established before the pandemic. Google, which runs the Google Play store on Android phones, says it does not allow apps that sell tobacco or encourage use by minors and that it has reviewed the apps, which are rated Mature, and found no evidence of policy issues.

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In the United States, the CDC says calls to the national 1-800-QUIT-NOW number jumped less sharply than they have in previous years after a regular media campaign.

Still, the impulse to smoke more may soon burn out. Imperial, which reported full-year results this week, says it expects tobacco’s decline to resume in earnest next year. And Eddy, who is single, says she hopes to quit again soon.

“Once dating is available again, I’d like to be done,” she said.

Reuters

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News Corp accused of using science to promote tobacco products


More smoke and mirrors from Rupert Murdoch, as News Corp gets all “scientific” with Big Tobacco, writes Rhys Muldoon.

WITH PROFITS down, News Corp, like many media companies, has had to find new revenue streams.

Earlier in the year, News Corp lost $1.5 billion in just three months. It was so serious, Rupert Murdoch himself, as executive chairman, decided to forego his entire bonus. And those losses keep climbing.

The Australian, a newspaper that has apparently run at a loss since 2008, according to former editor Chris Mitchell, has just found a new revenue stream – Big Tobacco. News Corp has signed a deal, according to an anonymous source, that is “well into six figures”.

Unsurprisingly, the company involved is Philip Morris. This is “unsurprising” as Rupert Murdoch was on the board of Philip Morris for a mere 12 years or so. And it wasn’t all one-way traffic. Many Philip Morris executives have been on the board of News Corp.

Tobacco advertising has been virtually non-existent for many years. Gone are the days of brands like Black and White (‘5 extra smokes for blokes!’), Escort (‘Join the Escort Club!’) and Virginia Slims (“You’ve got your own cigarette now, baby!”) Now cigarette advertising has to be more discrete. And discrete it is. So discrete, one of the “articles” contains the line ‘While the best thing any smoker can do is quit tobacco and nicotine altogether…’ Sound Okay? Sure.

But it goes on:

It then goes on to berate ‘policymakers, regulators and health authorities’, asking that they listen to ‘…facts, evidence and science-based alternatives…’ You’ve probably guessed it. It’s an ad for e-cigarettes.

While the Murdoch press has regularly been accused of being “anti-science” regarding climate change, science is front and centre with these “articles”.

‘A better future starts with faith in science’ reads the first headline. It then bangs on about how amazing computers are for a while, telling us that knowledge and technology will overcome threats like malware and viruses. Then we get: ‘Australians understand this. Sometimes our politicians don’t.’

We are then informed that:

Uh-huh. We then get into the aforementioned berating of those science hating regulators.

‘Follow science to the moon’. ‘If our minds are open to advances in science, nothing is beyond us’. Thus opens another “article”.

This one is a meditation on science making the impossible possible and how so many of those darned experts got it wrong. Men like Lord Kelvin, who proclaimed: “Heavier-than-air flying machines are impossible.”

We then are reminded that we went to the moon.

Then the same Philip Morris sponsored research is quoted and we get into an identical argument for e-cigarettes.

We are warned:

This third and final example (don’t worry, there are plenty of others) is headlined: ‘Even car safety copped a belting.’

This one is a poem to the wonders of car safety and how the seatbelt and science have saved many, many lives. ‘In the event of a car accident, the safest place a person can be is in their car with a seatbelt attached.’ Helpful stuff.

Then we get:

And you know what comes next – more berating of government, health authorities and regulators.

This one even goes so far as to add:

All of these “articles” look like regular articles. There is a small mention in grey, stating: ‘Content produced in partnership with Philip Morris’. There is one thing noticeably absent: an author. Where there is normally a by-line, it simply says (in that soft grey) ‘Partner Content’.

It’s not often you see such unabashed praise for science in a Murdoch newspaper, but you certainly do here. It’s the best science money can buy.

Rhys Muldoon is an Independent Australia columnist, actor, writer and director. You can follow Rhys on Twitter @rhysam.

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EXPERT REACTION: Australia’s Plain Tobacco Packaging


Plain packaging for tobacco in Australia may not have had the desired effects of encouraging smokers to quit and discouraging new smokers from adopting the habit, according to Aussie researchers. They compared Australia with New Zealand, who didn’t introduce plain packaging until 2018, and found the plain packaging policy in Australia did not affect smoking prevalence, although it led to smokers spending less on the habit. Smokers spent less mainly because they switched to cheaper brands, the researchers say, and as that cut the cost, they actually ended up smoking more.

Simon Chapman AO is an Emeritus Professor at the Sydney School of Public Health, University of Sydney.

“This paper compares changes between Australia and New Zealand in smoking prevalence, smoking frequency and expenditure on smoking between 2002 and 2017. Its main focus considers whether the introduction of Australia’s plain packaging law at the end of 2012 had greater impact in Australia compare to the similar raft of tobacco control policies operating in both nations, and concludes it did not.

Unfortunately, the study contains a major flaw. The authors write ‘the price of tobacco (or tax) and education are expected to influence smoking behaviour… We do not include these control variables [in our model] owing to a high correlation with the time trend…’ This omission fatally undermines the validity of this study. The authors seem unaware that New Zealand implemented a major 10% compounding tobacco tax increase in January in each of 2011-13, while Australia had no real tax increases between 29 April 2010 and 1 December 2013*.

The decline in Australia’s smoking prevalence following the introduction of plain packs in 2012 was comparable to that in New Zealand even though NZ had huge tax increases around that time. Tobacco tax is universally acknowledged as being the single most important variable in driving down tobacco use, which is why the tobacco industry has always lobbied hard against tax rises.

However, the intensity of its global lobbying against plain packaging was unprecedented: it fears plain packaging like no other policy.

The old maxim ‘garbage in … garbage out’ sadly has claimed yet another study victim.”

(*Tax has also increased annually in Australia every 1st September since 2014, however, as above, tax levels were flat over the 43-month period preceding and immediately following the introduction of the plain packaging policy.)

—————

Professor Sanchia Aranda is CEO of Cancer Council Australia.

“Cancer Council has worked extensively in tobacco policy control for several decades and applauds the decision of Australian governments to introduce and defend Australian plain packaging legislation.

Independent research for the Australian Government has shown that plain packaging has been one of the most effective measures in reducing smoking in Australia. accounting for approximately one quarter of the total decline in average smoking prevalence rates between December 2012 and October 20151.

The study published in Nature uses some incorrect assumptions, including the assumption that the timing of the introduction of plain packaging is the sole difference in the tobacco control policy between Australia and New Zealand, when in fact, the timing of introduction of tax increases is also a key difference between the two countries.

Tobacco taxes started going up each year in New Zealand at the same time that Australia was in the process of introducing plain packaging, three years before the start of Australia’s annual real tax increases.

The analysis in this paper takes no account of the earlier introduction of the New Zealand tax increases, the largest in the country’s history. Decades of research have shown that tobacco tax increases have the strongest effect on smoking behaviour. Without accounting for this in the study, this paper does not provide reliable insights in the effects of plain packaging policy.

No single measure will ever be entirely responsible for reductions, however the evidence from well-designed studies shows that plain packaging is contributing to Australia’s comprehensive approach to reducing smoking in this country.”
Chipty T. Study on the Impact of the Tobacco Plain Packaging Measure on Smoking Prevalence in Australia. Appendix 1 to Australian Government Post-Implementation Review Tobacco Plain Packaging. 2016. Available from: http://www.health.gov.au/internet/main/publishing.nsf/Content/study-pp-measure.

Professor Aranda has declared the following conflict of interest: Cancer Council has worked extensively in tobacco control policy for several decades, which included advocating for plain packaging. Our policy and recommendations are guided by extensive reviews of the available evidence.

—————

Maurice Swanson is Chief Executive of the Australian Council on Smoking and Health, an independent coalition, working with the community, organisations and governments in the fight against tobacco.

“This research is fundamentally flawed and incomplete because it does not take account of the fact that tobacco taxes increased significantly each year in New Zealand at the same time Australia was introducing plain packaging, and importantly three years before the start of Australia’s annual tax increases of 12.5%.

The authors admit their modelling was not able to accommodate the effect of price increases and therefore this is excluded from their analysis, despite increasing tobacco tax being the most potent way of reducing the prevalence of smoking.

The data they present shows clearly that smoking prevalence, and the numbers of cigarettes smoked per week in Australia, fell in the years following the introduction of plain packaging in Australia.

There is good evidence from Australia and elsewhere that plain packaging works, which is why the tobacco industry opposes it so fiercely.

Plain packaging has the potential to prevent millions of premature deaths around the globe as part of a comprehensive program. It is most unfortunate that the authors used flawed and incomplete modelling that reached an erroneous conclusion.”

—————

Professor Wayne Hall is a Professor at the National Centre for Youth Substance Use Research, The University of Queensland.

“The paper exemplifies the challenges in assessing the effects of introducing plain cigarette packaging in Australia.

Evaluations to date have examined changes in cigarette smoking prevalence before and after the policy change. They have been conducted either by advocates of the policy or by researchers who were funded by the tobacco industry. Their findings have aligned with the policy commitments of the evaluators.

The current study applied a difference in difference method of analysis to data for 5 years after plain packaging and included New Zealand as a control nation. In addition to smoking prevalence, the authors also examined changes in expenditure on tobacco and in the quantity smoked.

They found no reduction in smoking prevalence. They also found a reduction in expenditure on tobacco and a small increase in the number of cigarettes smoked per week. They interpret their results as suggesting that plain packaging has not reduced the prevalence of cigarette smoking five years after its introduction and that it has marginally increased cigarette consumption as smokers have switched to smoking cheaper unbranded cigarettes.

The findings will provoke debate that should help us to better understand what impacts plain packaging has had on cigarette smoking and public health in Australia.”

—————

Professor Ron Borland is a Professor of Psychology in Health Behaviour and Deputy Director of the Melbourne Centre for Behaviour Change at The University of Melbourne.

“This is truly a terrible paper. It is very high on equations and technical terms, but is based on weak data and assumptions that are manifestly inappropriate. If I understand what they have done, they have used summary estimates of their outcomes from public sources, not attempted to control for error, and in some cases, created variables that I doubt are computable from the data they have and showed no significant effects of a dummy interaction term they claim to be Plain Packaging.

For example, they compute average number of cigarettes per day consumed from the HILDA household expenditure survey which tracks household expenditure, not individual consumption. The notion that NZ is a near perfect control when one controls for a few economic variables is highly questionable, while some tobacco control policies have been similar, there are marked differences. So to assume any difference between the two is due to plain packaging alone is inappropriate.

On a more general level, the impact of smoking among a population who continue to smoke in the face of strong public education was always going to be small, and they do point out that some of the previous evaluations of plain packaging have likely overestimated effects through lack of appropriate controls (inevitable for this kind of research).

However, contrary to their claims, they have not advanced the situation at all. In most respects their methods are weaker as they use composite population data without, as far as I can see, using the estimators of accuracy that accompany many of these measures. This means they have less power than some of the studies they criticise.

Their claims of adverse effects on increased consumption are unfounded.

The results are also weird in that there appear to be discontinuity points in both countries when they should only be in Australia around the change.

Surely the analysis should have been looking for a three way interaction with a change in trend line at the point of Plain packaging introduction in Australia and no shift in trend in NZ, which could have been done by removing the secular trend before, and looking at changes from this trend line post by country.

I am no more informed as a result of reading this paper as I was before about effects of the Plain Packaging intervention in Australia.”

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This country banned tobacco sales to fight COVID-19. The result was a crime wave


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The COVID-19 pandemic is stressful for almost everyone, everywhere. But one country’s rules for combating the virus added a huge dollop of extra stress for smokers—and for the national treasury.

That country is South Africa, where tobacco sales have been banned since lockdown first took hold at the end of March. Alcohol sales were also banned, then allowed as the lockdown eased, then banned again as infection rates increased, and the lockdown was hardened.

But the prohibition on cigarettes has remained throughout, until today—it will be lifted from Monday at midnight, as South Africa relaxes its lockdown in response to a drop in new cases (the alcohol ban will also be lifted.)

Botswana and regions of India had already dropped their tobacco bans a couple months previously, leaving South Africa the only country in the world that still had one.

The result, according to researchers and anti-crime activists, was a classic supply-demand distortion, creating an explosion in the illicit cigarette trade that kept satisfying most smokers while depriving the authorities of much-needed tax revenue. Meanwhile, the ban on smokes did not stop South Africa from developing more than half of Africa’s infections.

“Restrictions on the sale of tobacco will be lifted,” President Cyril Ramaphosa said Saturday evening, as he announced the relaxation of many lockdown restrictions. Some media outlets had signalled the upcoming move earlier in the week, but South Africa’s 8 million smokers, and its 30 billion rand ($1.7 billion) tobacco industry, were not getting their hopes up.

After all, Ramaphosa announced in late April that the ban would soon be lifted. But then, under pressure from other senior lawmakers in his African National Congress (ANC) party, he suddenly changed his mind.

“We’ll have to wait and see when the regulations are published,” says Sinenhlanhla Mnguni, chair of South Africa’s Fair-Trade Independent Tobacco Association (FITA), on Saturday, immediately after Ramaphosa’s new announcement. “Of course, the president has previously announced the lifting of the tobacco ban only to then have the decision reversed.”

But why was there a tobacco ban in the first place?

Shifting reasons

Controversial as it was, the justification for South Africa’s alcohol ban was always quite straightforward: The country has a significant drinking problem, and alcohol consumption puts a lot of people in the hospital—both drinkers and people hurt by their actions. While the alcohol ban was devastating for one of the world’s top wine-producing countries, it eased the strain on a health care system that needs to focus on the coronavirus threat.

However, the official justifications for the tobacco ban shifted over time.

Initially, shops were banned from selling all but essential items, in order to minimize the time people spend there; cigarettes were not deemed essential.

A month later, when President Ramaphosa had to perform his embarrassing U-turn by lifting the ban, Cooperative Governance Minister Nkosazana Dlamini-Zuma—the politician in charge of South Africa’s anti-COVID efforts—explained that this was because of “health-related” reasons. Specifically, she referred to the phenomenon of people sharing cigarettes, and thus spreading the virus.

In May, the ban was intensified with a new rule directly targeting smokers. If caught with cigarettes, they would have to show receipts proving they bought them before the ban took effect. Police Minister Bheki Cele threatened people with fines or arrest if they could not produce the receipts.

Most people see Dlamini-Zuma, the ex-wife of former President Jacob Zuma, as being behind the ban.

In the mid-1990s, when she was serving as health minister in Nelson Mandela’s administration, Dlamini-Zuma was responsible for legislation that regulated smoking in public places—a move that successfully slashed the country’s smoking rates. This year, many allege, she was continuing her anti-smoking crusade under the guise of coronavirus regulations.

“Nkosazana Dlamini-Zuma has always been a vocal anti-tobacco campaigner. This is pretty much in line with her views on the topic,” said FITA chair Mnguni.

Yusuf Abramjee, whose recently launched Tax Justice SA organization opposes the ban, accuses Dlamini-Zuma and her colleagues of “pushing their own anti-smoking agenda.” He called this “against the constitution and the right for people to choose.”

Dlamini-Zuma’s department disagrees that she was the driving force behind the ban.

“This is nothing to do with any crusade,” said spokesman Lungi Mtshali, who stresses that the cabinet was collectively responsible for the ban, and says the tobacco and alcohol bans have both achieved the aim of protecting South Africa’s health care system.

Legal challenges

The question of the tobacco ban’s constitutionality is an open one—as is the tightly linked question of its effectiveness in protecting the health care system.

Pierre de Vos, a professor at the University of Cape Town’s law faculty and one of the country’s foremost constitutional scholars, does not see the ban as lawful.

South Africa’s Disaster Management Act gives the government leeway to do whatever is needed to combat a declared disaster, which, de Vos explained, in this case means anything that can limit the spread of the coronavirus or lower the death rate.

“The problem with the tobacco ban is that there doesn’t appear to be an immediate link between the ban and either stopping the spread of coronavirus or lowering the death rate,” de Vos said. “The government has conflated that argument with a general public health argument. They made the argument—which is obviously a good argument—that it is bad for your health to smoke. But that is irrelevant for the coronavirus. [Banning tobacco] doesn’t mean it will stop people from getting it or, even if they get it and had stopped smoking for a month or two, that they’d survive. There’s no evidence for that.”

Dlamini-Zuma insists the medical evidence is there. But she has been hit with multiple legal challenges from the tobacco industry.

The first was a lawsuit from FITA, the group representing South Africa’s domestic tobacco producers, which argued that the ban was irrational and therefore unlawful. In what de Vos sees as a bad call, the Pretoria High Court decided in Dlamini-Zuma’s favor in late June, ruling that the decision to implement the ban had been rational—even if it was unreasonable. It also rejected FITA’s argument that tobacco is an essential product.

FITA was granted leave to appeal on Friday, the day before Ramaphosa announced the ban would be lifted—Mnguni said the organization has not yet decided its next move. Meanwhile, the Western Cape High Court was due to soon give its ruling in a similar suit, this time brought by the South African arm of British American Tobacco (BATSA).

BATSA, which got a British respiratory expert to testify that scientific evidence does not support the ban, did not respond to requests for comment on its case.

Illicit trade

A common element of both cases was the argument that the tobacco-sales ban simply pushed the trade underground. This is backed by both statistical and anecdotal evidence.

According to a June survey by the University of Cape Town’s Research Unit on the Economics of Excisable Products (REEP), around 27% of smokers tried to quit during the lockdown, a third successfully. But of those who continued to smoke, 93% managed to keep buying cigarettes despite the ban.

The main difference was that the illicit market was charging almost 250% more than official sellers were charging pre-lockdown. And what’s more, the survey pointed to a 430% increase in people regularly sharing cigarettes, because of those inflated prices.

“People are smoking whatever they can get their hands on,” said Zanyiwe Mavubengwana, a community member in the Masiphumelele township south of Cape Town. “Those things, you’re not sure if they are good for your lungs. It’s even worse for families, because more money is going out.

“Sharing will never end in our community,” she continued. “They can ban cigarettes or alcohol, but we will always share whatever we have…People will put in a rand or two rand each for that one cigarette.”

The market’s shift underground has horrified Yusuf Abramjee, a veteran anti-crime campaigner, and his Tax Justice SA group. “With the ban, the government has played right into the hands of organized crime syndicates,” he said. “We know you can buy cigarettes on social media platforms, at traffic lights, on corners.”

Tax Justice SA, which backed BATSA in its case against the government, estimates that the tobacco ban has cost the tax authorities around 35 million rand ($2 million) each day—a figure that fact-checkers found to be mostly accurate. Overall, that means around 1.4 billion rand in lost tax revenue.

“We need that money for the health system,” Abramjee said. “The money is going directly into the pocket of criminals.”

As for the source of the cigarettes people continue to buy, REEP said in its survey report that South Africa’s independent producers—specifically, FITA’s members—had “benefited disproportionately from the sales ban. They have greatly increased their share of the market within our sample, and sold their cigarettes at hugely inflated prices.”

“The multinationals have been the biggest losers during the lockdown period. Their markets have been captured by local companies and, to a lesser extent, by imported cigarettes, significantly reducing their market share,” the report read.

Mnguni, FITA’s chair, claims the REEP study was inaccurate.

“There’s no such thing as brand loyalty in the lockdown period,” he said. “Cigarettes are being exported from the country, and the fact that some find their way back in doesn’t necessarily mean the manufacturers are benefiting. We know once the ban is lifted, people will smoke their regular brands.”

“Post the lockdown, it’s going to take years to recover from the illicit trade,” said Abramjee.

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