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TOBACCO: OVERVIEW/NEXT-GEN


Tobacco enjoys momentum as next-gen skus prompt debate


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Sweeping gains were made in duty free tobacco last year. Luke Barras-Hill assesses stakeholders’ performances and asks how the wider market is responding to regulatory uncertainty on the new wave of potentially reduced-risk products.


T


he tightly regulated tobacco market displayed its strength in duty free last year,


according to a number of suppliers speaking to TRBusiness. Belgian cigar manufacturer J.


Cortès exhibited healthy growth across its J. Cortès and Neos cigarillos at airports including Paris CDG (Aelia); Singapore Changi (DFS Group), Brussels (IDF) and Santiago Chile (Dufry). “We made a big step forward with


the Dufry cooperation,” comments Thomas Gryson, Export Manager & Travel Retail Coordinator, J. Cortès & Oliva Cigars. “In their airports (Dusseldorf,


Zurich, Basel, Madrid, Barcelona, London, Manchester, Newark, Chicago, Managua) we introduced several skus of our premium Oliva and Nub handmade cigars along with our travel retail exclusive Neos Selection 50.” Likewise, Agio Cigars experienced


‘excellent’ results in 2018 from its latest launch Balmoral Añejo XO handmade cigars. “In the premium shortfiller range


our Balmoral Dominican Selection (BDS) assortment has shown a nice growth in sales,” Gertrude Stormink, Global Travel Retail Manager, Agio Cigars reveals. Hans Rijfkogel, Director, Asia


Marketing Services on behalf of Agio Cigars adds: “In Asia our duty free sales showed an increase of +15%. This was mainly due to an increase in sales of our core products and higher sales of our gift items Balmoral Collection 12 and Balmoral Private Collection 25. “China, Hong Kong and Malaysia


duty free performed very well in 2018. In the Middle East Dubai Duty Free did a great job and has started enthusiastically with the Balmoral Añejo XO cigars.”


Changing regulatory picture Shifting away from cigars, the regulatory landscape for next- generation or


the market. Proponents of vaping say


the activity helps to veer adult smokers away from smoking, with associations including Public Health England insisting vaping is 95% less harmful than tobacco. “Tax is something which will


‘potentially This content is for subscribers only.


reduced-harm’ products is still developing and, as such, the future affect that may have on companies and consumers remains decidedly unclear. No more so is this evident than


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in the varying approaches taken by governments. While countries including Singapore and Thailand have clamped down on e-cigarettes and e-liquids, Japan has moved to ban nicotine-containing e-cigarettes, which has led to a rise in heated tobacco products. Meanwhile, some countries apply fewer legal restraints on e-cigarette use – or none at all. One area of uncertainty surrounds


Nub from J. Cortès acquired Oliva Cigars.


FEBRUARY 2019


taxation. Compared to tobacco, vaping products are often taxed differently by governments and one contention is any associated rise in excise taxes could hit profit margins, in turn offsetting the relatively low costs for companies entering


TRBusiness TRBUSINESS 45


be inevitable on e-cigarettes,” comments Ash Mehmood, Managing Director at UK-based Vape Duty Free. “If tax was to be introduced on vaping-related products, I think businesses will absorb some of the cost and the rest will be passed onto consumers to pick up similar to extortionate tax increases on normal cigarettes. “In our industry we expect further


regulations to come into force in the future, at this moment in time what they look like we can only guess, however, any form of regulation can be seen as a positive as it will make


Above: Gertrude Stormink, Agio Cigars.


The regulatory landscape for next-generation or ‘potentially reduced-harm’ products is still developing and the future affect that may have on companies and consumers remains decidedly unclear.


Above: The global e-cigarette regulatory environment continues to change.


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