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How big tobacco has survived death and taxes

The world’s five major tobacco companies are thriving, profitable and increasing sales, despite many predictions of the industry’s decline

https://www.theguardian.com/world/2017/jul/11/how-big-tobacco-has-survived-death-and-taxes

A casual observer could be forgiven for believing that the tobacco industry – for so long a fixture as permanent as its two main by-products, death and taxes – is itself on its last legs.

In the US, health officials have predicted that smoking rates in America could drop to as low as 5% by 2050, well within the lifetime of someone born today.

Last year, shareholders of UK-based Imperial Tobacco approved a decision to change the company’s century-old name to Imperial Brands, hinting at a move away from traditional cigarettes.

Even globe-straddling colossus Philip Morris International (PMI), owner of brands including Marlboro, has set its stall out for a “smoke-free” future, where nicotine addicts get their fix from vaping and other non-tobacco products.

Yet, for all of these predictions, one thing has remained unchanged: Big Tobacco is thriving, profitable and increasing its sales.

Excluding China, where the market is monopolised by the state, five major companies dominate the global tobacco trade – Philip Morris International (PMI), British American Tobacco, Japan Tobacco, Imperial Brands and Altria (the former US assets of PMI).

Between them in 2016, they shipped 2.27tn cigarettes, more than 300 for every man, woman and child on the planet, racking up combined sales of $150bn (£115bn). Their combined profits reached $35bn (£27bn), allowing investors in those companies to receive dividends of $19bn (£14.5bn).

Of these giants, one of the most powerful is British American Tobacco (BAT), the London-based firm that can trace its history back to 1902.

Run from Globe House, its headquarters next to the Thames river, BAT sells its brands in 200 countries and is market leader in 55 of them.

Far from looking to a future beyond tobacco, BAT is doing perfectly well as it stands.

At its annual meeting in March, chairman Richard Burrows toasted a “vintage year”, as profits rose to £5.2bn ($6.7bn) allowing the company’s shareholders to take a dividend worth an additional 10%.

The rewards were so great because BAT’s sales show no signs of the industry’s much-vaunted decline. The company sold 665bn cigarettes in 2016, nearly 100 for every human on earth and 2bn more than it sold the year before.

Cigarette sales among its so-called Global Drive Brands – Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans – jumped 7% to 346bn.

In the section of its accounts that details non-cigarette sales, which the company terms “next generation products”, there is nothing to see.

The numbers are so small that they are considered immaterial to its financial results and do not need to be disclosed under stock market rules.

Yet the company’s traditional business continues to generate big headlines and bigger numbers. By the end of the year, BAT is likely to have completed a landmark $49bn deal to buy the 57.8% of US tobacco giant Reynolds American that it does not already own. A simultaneous shareholder vote next Wednesday by both firms is expected to agree the deal at Reynolds HQ in Winston-Salem, North Carolina, and BAT in London.

If US tobacco sales really are set to fall off a cliff, that would be a monumental strategic misstep.

But while the percentage of Americans who smoke is on the wane, the US remains a market with huge potential.

That’s because the population is rising, meaning that even as smoking rates decline in percentage terms, the actual number of smokers is relatively static at about 45 million people.

US cigarettes are also relatively cheap compared with prices in the UK, leaving some scope for the company to raise prices without losing customers.

Reynolds and BAT will also look to the future by pooling research on smokeless products, hoping to capture that growing market, though that won’t be the big money-spinner any time soon.

And then there is the developing world, where the rate at which governments and public opinion are turning against tobacco differ dramatically from wealthier economies.

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A ‘defensive’ stock

BAT increased its revenues in every region bar Asia-Pacific last year, with the developing world doing more than its share of the heavy lifting.

Among the “key markets” listed in its annual report are Indonesia and Egypt – and for good reason.

The World Health Organisation projects smoking rates in Indonesia to increase by 2025, with the number of smokers growing from 73m to 97m based on current trends.

Egypt is another key market where smoking rates are projected to grow, with up to 21m Egyptians forecast to be smokers by 2025, compared to 14m in 2015.

One only has to look at BAT’s roster of investors for evidence of the confidence that well-informed institutions with deep pockets have in the future of cigarettes, even if that future is less bright in the West.

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It’s a list that features nearly every major investment company in the world, testament to the safe bet that tobacco giants such as BAT offer to investors.

Top of the share register is BlackRock, the all-powerful asset manager that has a stake in nearly every major listed company in the world, managing investors’ funds of approximately $5.4tn, more than the economy of Japan.

Some way further down the list is Woodford Investment Management, run by Neil Woodford, a figure held in awe in London for his uncanny ability to make money.

He famously invests a huge chunk of his portfolio in tobacco, explaining that he is not paid to make moral judgments but to make money for clients.

Tobacco is attractive to investors – including councils in the UK – because it is seen as a “defensive” stock, in other words a good place to invest money that you are not prepared to lose.

The shares rarely decline in value even when times are tough and also deliver a steady income from annual dividends.

The huge rewards on offer for investors mean that those who manage the great behemoths of tobacco are also handsomely rewarded.

BAT chief executive Nicandro Durante is no exception. He was handed a package of cash and shares worth $10m (£7.6m) last year, taking his earnings over six years to a cool $44m (£34m).

When fellow directors are included, the 14-strong BAT boardroom enjoyed a combined $18m (£14m) payday in 2016.

There are other perks. Durante gets free tax advice from the company, a personal driver and security for his homes, in London and Brazil.

Both executives and non-executives also have access to a walk-in GP clinic near BAT’s headquarters at Globe House in London, enjoying the benefits of a National Health Service that has been estimated to spend up to $6.5bn (£5bn) a year on smoking-related illnesses.

BAT’s board earn their corn as much for their network of connections as they do for their hard work.

Burrows is a former governor of Bank of Ireland, while senior independent director Kieran Poynter is a managing partner of Big Four accountancy PricewaterhouseCoopers and previously advised the UK’s Treasury.

Its non-executive directors boast a string of similar appointments at multinational companies. Savio Kwan, for instance, was chief operating officer of China’s largest internet business, Alibaba.

tob-deaths-tot

Ann Godbehere ran the finances of Northern Rock after its bailout and also serves on the boards of mining giant Rio Tinto, Swiss bank UBS and insurer Prudential.

Nor does the company’s network of influence end there.

While it does not donate money directly to British political parties, it does funnel cash to influential right-leaning thinktank the Institute of Economic Affairs.

BAT gives the IEA around $52,000 (£40,000) a year, a sum equivalent to about 5% what the organisation pays its staff, some of whom appear frequently in the media to criticise tobacco control legislation such as plain packaging.

Chief among those staff is director-general Mark Littlewood, a former press spokesman for the Liberal Democrats and one-time adviser to David Cameron.

Littlewood has been a vocal critic of tobacco control legislation such as the ban on smoking in pubs, as well as plain packaging.

The IEA has also received funding from Philip Morris International and Japan Tobacco International.

The BAT bosses

Nicandro Durante – chief executive

Nicandro Durante joined Brazilian subsidiary Souza Cruz in 1981, and rose through the ranks over three decades until he was appointed chief executive in 2011.

He had impressed the company’s senior management during a two-year stint as regional director for Africa and the Middle East, key areas of future growth for tobacco companies facing up to declining smoking rates in more developed economies.

Born to Italian parents in 1956 in Sao Paulo, he played football for the city’s Corinthians team in his teens before going into business.

Married with two children, Durante stopped smoking cigarettes in favour of cigars, but has no qualms about tobacco, which he described as a “very ethical” industry in a 2012 interview with the Financial Times.

In 2015, he fielded allegations from a former employee in Kenya that BAT bribed officials for various purposes, including the undermining of tobacco control laws.

BAT denies any wrongdoing. A spokesperson said: “We will not tolerate improper conduct in our business anywhere in the world and take any allegations of misconduct extremely seriously. We are investigating, through external legal advisors, allegations of misconduct and are liaising with the Serious Fraud Office and other relevant authorities.”

In 2016, Durante was handed a package of cash and shares worth $10m (£7.6m), taking his earnings over the past six years to a cool ($44m) £34m.

Richard Burrows – chairman

Addressing BAT’s shareholders earlier in 2017, Burrows toasted a “vintage year”, in which the company shrugged off bribery allegations in late 2015 to record rising profits.

Some investors were less keen on Burrows when he was named chairman in 2009.

Burrows had resigned as governor of Bank of Ireland, leaving the lender in dire straits, with big losses and mounting debt threatening its very survival.

Tens of thousands of the bank’s mortgage customers were plunged into negative equity and the lender eventually needed a state bailout that enraged many Irish people.

As the bosses of rival lenders faced public opprobrium for their stewardship of the country’s banking sector, Burrows got out just in time, landing the chairmanship of BAT in 2010.

But BAT wasn’t concerned by his record in banking, looking instead to his 22 years with Irish Distillers, during which time he was credited with turning Jameson whiskey into an internationally-recognised brand.

The Dubliner, 71, is a non-smoker who is married with four children and enjoys sailing and rugby.

He is also chairman of investment company Craven House Capital, whose assets includes beachfront land in Brazil. He is a non-executive director of Rentokil and Carlsberg.

Kieran Poynter – senior independent director

After a near 40-year career with global accounting giant PwC, which put him among the ranks of the UK’s best-paid accountants, Kieran Poynter joined BAT’s board as senior independent director.

He brought with him valuable connections, having served as an adviser to former UK chancellor of the exchequer Alistair Darling.

Poynter, a Chelsea FC season ticket holder, is a former director of the salubrious Royal Automobile Club, the gentleman’s club on London’s Pall Mall.

He also sits on the board of F&C Asset Management and IAG, the parent company of British Airways.

Ben Stevens – finance director

Ben Stevens looks after BAT’s money, and has spoken about how the company is growing market share and looking for acquisitions in Asia and North Africa.

Part of his role is trying to convince governments not to raise excise duty on cigarettes too quickly, according to an interview he gave with financialdirector.co.uk.

In the same interview, he referred to the need to have a “thick skin” because of the number of people “bashing tobacco companies”.

Stevens gave up smoking nearly 30 years ago, two years before joining the company. But said in 2013 that profits would come from “combustible tobacco” for the near future.

Proposal to tax heat sticks the same as cigarettes

A proposal to tax heat-not-burn tobacco products at the same rate as combustible cigarettes is before the National Assembly, the Korea Herald reported.

http://www.tobaccojournal.com/Proposal_to_tax_heat_sticks_the_same_as_cigarettes.54292.0.html

Legislation to revise three laws governing taxation of tobacco products reportedly has been introduced by Rep Kim Kwang-lim, a member of the Liberty Korea Party. All tobacco products are harmful and should be taxed at the same rate, according to the legislation. Heat-not-burn products are taxed at about half the KRW 3,323 (EUR 2.59) rate for combustible cigarettes, the Herald said.

High cigarette prices can really make you quit smoking

WHO says increased taxation on tobacco is least expensive and most effective tool in reducing smoking worldwide.

http://www.aljazeera.com/indepth/interactive/2017/05/high-cigarette-prices-quit-smoking-170525092939544.html

Tobacco remains one of the major risk factors for a number of chronic diseases, including cancer, lung and cardiovascular diseases. The World Health Organization (WHO) estimates that tobacco is responsible for the death of around seven million people across the globe every year.

Over the last two decades, there has been a significant reduction in the percentage of people smoking every day across the world, but the WHO says a lot more needs to be done to deter people from smoking cigarettes.

In a bid to curb consumption, governments have been enforcing stricter regulations on tobacco products and their usage.

Several countries are increasingly implementing strategies to tighten their tobacco policies in the hopes of deterring smoking, especially among young people.

Raising taxes on tobacco products is seen to be one of the least expensive and the most effective tools in countering the influence of tobacco companies. But it is also the least implemented, with only 10 percent of the world’s population currently living in countries with sufficiently high taxes.

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A 2010 WHO report found that 78 percent of those aged 15 years and over in the WHO member states were non-smokers.

By 2025, the number of non-smokers is expected to rise to around 5 billion out of a projected 6.1 billion people aged 15 and over.

Currently, nearly a third of all men are smokers, making the prevalence of smoking among men considerably higher than among women. Over the past 30 years, smoking among men has decreased by 10 percent.

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The price of a pack of cigarettes

Increasing prices and adding tax measures on tobacco products has been used to decrease the demand for cigarettes.

Many countries have successfully used tax policies to regulate the price of cigarette products. In Australia, a pack of cigarettes can cost up to $18, making it the most expensive country to buy cigarettes.

A report by the Australian Institute of Health and Welfare (AIHW) in 2016 found that the smoking rate in the country was at an all time low. In the last 20 years, smoking had decreased by almost 50 percent.

The study showed that less than 13 percent of Australians are daily smokers and fewer people are starting to smoke.

The report cites Australia as having one of the lowest smoking rates in the world, in part because of their implementation of increased taxes on tobacco products, plain packaging, and more restrictive smoke-free environment laws.

prices-cigs

Illicit trade in tobacco products

The tobacco industry and other interest groups argue that increased taxes on tobacco products allows an illicit black market trade in tobacco to thrive.

But the WHO says that high-income countries with taxes on tobacco products do not face widespread issues related to illicit trade, while low-income countries continue to do so, precisely because of weaker tobacco-control programmes and taxes. Nearly 80% of the world’s smokers live in low to middle-income countries.

cig-consumption

High cigarette prices can really make you quit smoking

WHO says increased taxation on tobacco is least expensive and most effective tool in reducing smoking worldwide.

http://www.aljazeera.com/indepth/interactive/2017/05/high-cigarette-prices-quit-smoking-170525092939544.html

Tobacco remains one of the major risk factors for a number of chronic diseases, including cancer, lung and cardiovascular diseases. The World Health Organization (WHO) estimates that tobacco is responsible for the death of around seven million people across the globe every year.

Over the last two decades, there has been a significant reduction in the percentage of people smoking every day across the world, but the WHO says a lot more needs to be done to deter people from smoking cigarettes.

In a bid to curb consumption, governments have been enforcing stricter regulations on tobacco products and their usage.

Several countries are increasingly implementing strategies to tighten their tobacco policies in the hopes of deterring smoking, especially among young people.

Raising taxes on tobacco products is seen to be one of the least expensive and the most effective tools in countering the influence of tobacco companies. But it is also the least implemented, with only 10 percent of the world’s population currently living in countries with sufficiently high taxes.

A 2010 WHO report found that 78 percent of those aged 15 years and over in the WHO member states were non-smokers.

By 2025, the number of non-smokers is expected to rise to around 5 billion out of a projected 6.1 billion people aged 15 and over.

Currently, nearly a third of all men are smokers, making the prevalence of smoking among men considerably higher than among women. Over the past 30 years, smoking among men has decreased by 10 percent.

The price of a pack of cigarettes

Increasing prices and adding tax measures on tobacco products has been used to decrease the demand for cigarettes.

Many countries have successfully used tax policies to regulate the price of cigarette products. In Australia, a pack of cigarettes can cost up to $18, making it the most expensive country to buy cigarettes.

A report by the Australian Institute of Health and Welfare (AIHW) in 2016 found that the smoking rate in the country was at an all time low. In the last 20 years, smoking had decreased by almost 50 percent.

The study showed that less than 13 percent of Australians are daily smokers and fewer people are starting to smoke.

The report cites Australia as having one of the lowest smoking rates in the world, in part because of their implementation of increased taxes on tobacco products, plain packaging, and more restrictive smoke-free environment laws.

Illicit trade in tobacco products

The tobacco industry and other interest groups argue that increased taxes on tobacco products allows an illicit black market trade in tobacco to thrive.

But the WHO says that high-income countries with taxes on tobacco products do not face widespread issues related to illicit trade, while low-income countries continue to do so, precisely because of weaker tobacco-control programmes and taxes. Nearly 80% of the world’s smokers live in low to middle-income countries.

Anti-smoking drive features tobacco tax hike

The government will increase the tobacco tax from July 4 in an effort to curb smoking, particularly among low-income smokers, according to the Public Health Ministry.

http://www.bangkokpost.com/news/general/1260018/anti-smoking-drive-features-tobacco-tax-hike

 

The tax hike is part of the wider enforcement of the Tobacco Products Act 2017 which will come into effect on the same day.

The ministry announced the tobacco tax hike as it rolled out an anti-smoking campaign themed “Tobacco, A Threat To Development” to mark World No Tobacco Day Wednesday.

The ministry also announced it will introduce tougher regulations on electronic cigarettes from the middle of the year.

The ministry said its campaign intends to hammer home the message that smoking incurs huge economic losses through the budget spent on treating people suffering from smoking-related illnesses.

The ministry said people need to become aware that smoking causes serious illnesses, including cancer. Smokers die 12 years sooner than their average lifespan and suffer a great deal of trauma from treatments for an average of two years before they die.

Meanwhile, the head of Chulalongkorn University’s Drug Dependence Research Centre, Jitlada Areesantichai, said there was no evidence to support the popular belief that smoking electronic cigarettes can help wean a person off smoking conventional cigarettes.

She said many e-cigarettes are imported and sold illegally, mostly through websites.

New models of e-cigarettes are also promoted, which motivates young people to try out the products. This leads to many more becoming addicted, she said.

The researcher noted the centre was currently studying the amounts of nicotine in the e-liquids which fill the various types of e-cigarettes.

Research conducted by the centre on consumers of e-cigarettes found the subjects started smoking the e-cigarettes from the age of 16 out of curiosity and because friends asked them to smoke.

She said youngsters took up smoking e-cigarettes because they thought it would make them look cool and believed it would help them give up smoking conventional cigarettes more easily.

However, the study found many remained hooked on conventional cigarettes.

How to cut smoking in poor countries

The recipe to get people to quit is well-known. Why are so many governments ignoring it?

http://www.economist.com/news/leaders/21722828-recipe-get-people-quit-well-known-why-are-so-many-governments-ignoring-it-how?frsc=dg%7Cc

IN SOME rich countries ex-smokers now outnumber those who still puff on. But in many poor countries smoking is on the rise, particularly among men. In parts of Africa more than a third of men smoke. In some Asian countries men are as likely to smoke as they were in America 50 years ago, back when the idea that tobacco is deadly was still news. After high blood pressure, smoking is now the world’s second-biggest cause of ill health and early death. Recent estimates put the annual costs from illness and lost productivity at $1.4trn, or 1.8% of global GDP. Almost 40% of this falls on developing countries, which are least able to afford it.

As the success in rich countries shows, there is no mystery about how to get people to stop smoking: a combination of taxes and public-health education does the job. This makes the abysmal record in poor countries a grave failure of public policy. The good news is that, following recent research, it is one that has just become easier to put right.

Death and taxes

In poor countries the tax rate on cigarettes is typically below 50%—and in some zero. These rates may not curb smoking much, because tobacco companies, which are sometimes monopolies, can cut their profit margins on cheaper brands and raise them on luxury ones to offset their losses.

Poorer countries could raise taxes, but they don’t because they have relied on market studies paid for by tobacco companies. These suggest that high taxes on cigarettes cause a surge in smuggling and, perversely, reduce overall tax revenues. Now, independent studies by the World Bank and others have shown that this conclusion is wrong. The black market is not as menacing as it seems and the revenues raised by higher cigarette taxes can help suppress it.

A growing number of countries, including the Philippines, Brazil, Turkey and Uruguay, are showing the way. The Philippines, for example, raised the tax on all types of cigarettes more than fourfold in 2012. As a result, prices of the cheapest brands, accounting for about two-thirds of all cigarettes, rose by more than 50%. In 2011-15 tobacco-tax revenues more than doubled, and the share of adults who smoked fell from 30% to 25%. By comparison, Britain took more than a decade to achieve the same change in smoking rates.

Crucially, some countries strengthened efforts to detect and curb smuggling at the same time. Black markets were often smaller than thought, with only 10-15% of all cigarettes sold illegally. When taxes went up, this share typically rose by just a few percentage points. In poorer countries tax evasion will be higher, but even then taxes will cut smoking and increase revenues if they are well administered.

The secret is to make the tax predictable and punitive. A uniform tax of, say, $1 a pack on all brands helps governments monitor compliance and predict tax revenues. As a rule, the World Health Organisation says, taxes should be at least 75% of the retail price of the most popular brand of cigarettes and rise with inflation and income growth.

The other step is to crack down on smuggling and tax evasion. Tax stamps that are difficult to counterfeit are a good start. Brazil, the Philippines and Turkey print encrypted codes on stamps in invisible ink. Kenya fits tobacco lorries with devices that transmit their routes to the authorities, helping them keep tabs on the merchandise. How to pay for extra law enforcement? Globally, tobacco-tax revenues are about $270bn a year, but less than $1bn of that is spent on anti-smoking policies. It is time for governments to help their citizens kick the habit—and earn some useful cash while they do it.

Study: China Struggles to Kick World-Leading Cigarette Habit

Most smokers in China, the world’s largest tobacco consumer, have no intention of kicking the habit and remain unaware of some of its most damaging health effects, Chinese health officials and outside researchers said Wednesday.

http://www.voanews.com/a/china-smoking/3879050.html

An estimated 316 million people smoke in China, almost a quarter of the population, and concerns are growing about the long-term effects on public health and the economy.

The vast majority of smokers are men, of whom 59 percent told surveyors that they have no plans to quit, according to a decade-long study by the Chinese Center for Disease Control and Prevention and Canadian researchers with the International Tobacco Control project.

Such numbers have prompted efforts to restrict the formerly ubiquitous practice. Major cities including Beijing and Shanghai having recently moved to ban public smoking, with Shanghai’s prohibition going into effect in March. In 2015, the central government approved a modest nationwide cigarette tax increase.

But Chinese and international health officials argue that more is needed, including a nationwide public smoking ban, higher cigarette taxes and more aggressive health warnings. Such actions are “critically important,” Yuan Jiang, director of tobacco control for the Chinese Center for Disease Control, said in a statement released with Wednesday’s study.

A public smoking ban appeared imminent last year. The government health ministry said in December that it would happen by the end of 2016, but that has yet to materialize.

“They have to figure out what’s important as a health policy,” said Geoffrey Fong of Canada’s University of Waterloo, one of the authors of Wednesday’s study. “Every third man that you pass on the street in China will die of cigarettes. …When you have cheap cigarettes, people will smoke them.”

In line with global trends, smoking rates among Chinese have fallen slowly over the past 25 years, by about 1 percent annually among men and 2.6 percent among women, according to a separate study published in April in the medical journal The Lancet.

Yet because of China’s population growth — 1.37 billion people at last count — the actual number of smokers has continued to increase. Rising prosperity means cigarettes have become more affordable, while low taxes keep the cost of some brands at less than $1 a pack.

Sixty percent of Chinese smokers were unaware that cigarettes can lead to strokes and almost 40 percent weren’t aware that smoking causes heart disease, according to the study, which was released on World No Tobacco Day, when the World Health Organization and others highlight health risks associated with tobacco use.

Judith Mackay, an anti-tobacco advocate based in Hong Kong, said China has made strides with the public smoking bans in some cities and a similar ban covering schools and universities, but that’s not enough.

“This is the first time there has been a report looking at the overall picture of where China stands,” said Mackay, senior adviser at Vital Strategies, a global health organization. “The reality is, it’s falling behind.”

Mackay blamed behind the scenes lobbying by China’s state-owned tobacco monopoly for impeding efforts to toughen tobacco policies. The State Tobacco Monopoly Administration did not immediately respond to a request for comment.

Government agencies and research institutes in China, Canada and the United States funded the study.

Stop Smoking: It’s Deadly and Bad for the Economy

Higher taxes on tobacco products reduce tobacco consumption and improve public health, while also increasing government revenues that can be used to fund priority investments and programs that benefit the entire population.

http://www.worldbank.org/en/news/infographic/2017/05/31/stop-smoking-its-deadly-and-bad-for-the-economy

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Tobacco kills 7 million a year, wreaks environmental havoc: WHO

Smoking and other tobacco use kills more than seven million people each year, the World Health Organization said Tuesday, also warning of the dire environmental impact of tobacco production, distribution and waste.

http://www.timeslive.co.za/world/2017/05/30/Tobacco-kills-7-million-a-year-wreaks-environmental-havoc-WHO

The UN agency said tougher measures were needed to rein in tobacco use, urging countries to ban smoking in the workplace and indoor public spaces, outlaw marketing of tobacco products and hike cigarette prices.

“Tobacco threatens us all,” WHO chief Margaret Chan said in a statement.

“Tobacco exacerbates poverty, reduces economic productivity, contributes to poor household food choices, and pollutes indoor air,” she said.

In a report released ahead of World No Tobacco Day on Wednesday, WHO warned that the annual death toll of seven million people had jumped from four million at the turn of the century, making tobacco the world’s single biggest cause of preventable death.

And the death toll is expected to keep rising, with WHO bracing for more than one billion deaths this century.

“By 2030, more than 80 percent of the deaths will occur in developing countries, which have been increasingly targeted by tobacco companies seeking new markets to circumvent tightening regulation in developed nations.”

Tobacco use also brings an economic cost: WHO estimates that it drains more than $1.4 trillion (1.3 trillion euros) from households and governments each year in healthcare expenditures and lost productivity, or nearly two percent of the global gross domestic product.

In addition to the health and economic costs linked to smoking, the WHO report for the first time delved into the environmental impact of everything from tobacco production to the cigarette butts and other waste produced by smokers.

“From start to finish, the tobacco life cycle is an overwhelmingly polluting and damaging process,” WHO Assistant Director-General Oleg Chestnov said in the report.

The report detailed how growing tobacco often requires large quantities of fertilisers and pesticides, and it warned that tobacco farming had become the main cause of deforestation in several countries.

This is largely due to the amount of wood needed for curing tobacco, with WHO estimating that one tree is needed for every 300 cigarettes produced.

WHO also highlighted the pollution generated during the production, transport and distribution of tobacco products.

The report estimates that the industry emits nearly four million tonnes of carbon dioxide equivalent annually — the same as around three million transatlantic flights.

And waste from the process contains over 7,000 toxic chemicals that poison the environment, including human carcinogens, WHO said.

Once in the hands of the consumer, tobacco smoke emissions spewed thousands of tonnes of human carcinogens, toxic substances and greenhouse gases into the environment.

Cigarette butts and other tobacco waste make up the largest number of individual pieces of litter in the world, the agency said.

Two thirds of the 15 billion cigarettes sold each day are thrown on to the street or elsewhere in the environment, it said, adding that butts account for up to 40 percent of all items collected in coastal and urban clean-ups.

WHO urged governments to take strong measures to rein in tobacco use.

“One of the least used, but most effective tobacco control measures… is through increasing tobacco tax and prices,” Chestnov said.

Tobacco is a deadly threat to global development

Dr Margaret Chan, Director-General of WHO

http://who.int/mediacentre/commentaries/2017/tobacco-threat-development/en/

When I reflect on my tenure as Director-General of the World Health Organization, there are many areas where the agency played its unique role as the guardian of health for all people.

But I am especially proud of our work to fight tobacco use, something that I have personally championed since 2007.

Tobacco is a deadly product that kills more than 7 million people every year, and costs the global economy more than US$ 1.4 trillion annually in healthcare expenditure and lost productivity.

Tobacco control will play a major part in meeting the Sustainable Development Goal target of reducing premature deaths from noncommunicable diseases by one-third by 2030.

But tobacco control is about more than preventing deadly cancers, heart diseases and respiratory diseases. In addition to posing a serious threat to health, tobacco use also threatens development in every country on every level and across many sectors — economic growth, health, education, poverty and the environment — with women and children bearing the brunt of the consequences.

The theme for this year’s World No Tobacco Day, on 31 May, is “Tobacco – a threat to development”. This year, WHO will launch a new report that highlights the great harm to the environment inflicted by tobacco growing, manufacturing, trade and consumption. For example, growing and producing tobacco uses 4.3 million hectares of land resulting in deforestation of 2-4%, and the pesticides and fertilizers used in tobacco growing can be toxic and pollute water supplies. Tobacco manufacturing produces over 2 million tonnes of solid waste each year. Up to 10 billion cigarettes are disposed in the environment every day. Cigarette butts account for 30-40% of all litter collected in coastal and urban clean-ups.

Tobacco farming also stops children from attending school and exposes them to hazardous chemicals. Children in tobacco-growing families often miss class because they are needed to work in the tobacco fields. Women are also disproportionately at risk of chemical exposure, as they make up 60-70% of the tobacco farming workforce.

Tobacco use hits the poorest people the hardest and exacerbates poverty. Spending on tobacco products often represents more than 10% of total household income – meaning less money for food, education and health care. Some 80% of the premature deaths attributable to tobacco use occur in low- or middle-income countries. These countries bear almost 40% of the global US$ 1.4 trillion cost of smoking from health expenditures and lost productivity.

Fortunately, we have powerful tools to fight the tobacco epidemic. The WHO Framework Convention on Tobacco Control (WHO FCTC), the first international treaty negotiated under the auspices of WHO, provides governments with clear, legally binding measures that they can introduce to reduce the harm caused by tobacco use. These include banning advertising, promotion and sponsorship of tobacco, effectively warning about the harmful effects of tobacco use, implementing tax or price policies and protecting people from exposure to second-hand tobacco smoke.

In line with WHO’s FCTC, WHO’s MPOWER measures support countries to reduce demand for tobacco, using methods that are practical, low-cost and high-impact. Tobacco taxation is a powerful tool for saving lives. Taxes reduce smoking rates and help government raise revenues to improve health and promote development. Increasing tobacco taxes and prices is one of the most effective, yet least utilized control measures globally. By increasing cigarette taxes worldwide by US$1, an extra US$ 190 billion could be raised for development.

We need to make sure that countries know that this tool exists and how to use it. Ministers of health are convinced by the evidence, and I ask them to be vocal in persuading ministers of finance, trade, foreign affairs and others not to be swayed by the unsubstantiated arguments of the tobacco industry.

Many countries have already shown tremendous progress in reducing tobacco use. Our challenge now is to help more countries follow suit, and to fight the efforts of the tobacco companies to hinder or counter progress that has been made by countries implementing strong measures.

Everyone can help play a role in stamping out tobacco and promoting development at the same time. People can commit to never take up tobacco products or to seek help to quit the habit. Governments can strengthen implementation of the WHO FCTC.

The tobacco industry is a vector of one of the greatest threats our society faces. It takes courage to antagonize powerful economic operators. If we fail to accept this responsibility, we will never make sufficient progress in health and development.

WHO stands ready to help governments introduce innovative approaches to tackle tobacco use. We have taken off our gloves and entered the ring on the side of the countries working to advance tobacco control, and we are going to fight tobacco tooth and nail.

If we rise to the challenge of beating tobacco by adopting measures that reduce demand for this deadly product, we can promote a healthier, more sustainable world.