Big Tobacco at Loggerheads: the Italian Match | Lettera43

Tobacco giants challenge e-cigarettes together. But they fight on heated-tobacco devices: Philip Morris is the only producer. BAT, JTI and ITG oppose it. In a battle of lobbyists.

tobacco wars

They rarely intervene publicly, they hardly take a stand, and they often act behind the corridors of power. However, they get results, indeed. They are the tobacco lobbies. Regarded as one of the most silent and powerful corporations, they have been fighting a ruthless war for about three years to safeguard (obviously from their point of view) a market that is worth about €12 billion just in taxes in Italy. Although one might think they are a united block (as the popular term Big Tobacco suggests), relationships among them have never been more conflicting. British American Tobacco, Imperial Tobacco Group, and above all Philip Morris are playing a game with no holds barred. United against the “e-cig only” front and internally divided by individual interests.

Teams playing: from British American Tobacco to Philip Morris

Recently, Philip Morris opened a new plant in Emilia Romagna with great fanfare in the presence of Prime Minister Matteo Renzi: 600 workers and a €500 million investment to produce “new” cigarettes, for which it has already obtained a 50% reduction in excise duties. PMI has also sealed a €500 million deal to buy exclusively Italian tobacco until 2020. Instead, Imperial Tobacco aims at the e-cigarette market. Through its subsidiary Fontem Ventures, it has become the first multinational to launch an e-cig in Italy, by focusing on the well-established channel of tobacco shops, with the approval of the National Tobacconists Federation (FIT). After years of bitter controversy and opposition, recently FIT seems to have accepted the coexistence of tobacco and electronic products, even launching its own brand.


In 2014, British American Tobacco committed for €1 billion investment in e-cigs, but to date it distributes and sells them only in Florence; however, Rome, Milan and Naples should follow within six months. By contrast, the production plant in Lecce, although it has been sold, is constantly on the verge of bankruptcy, so that workers have been protesting for years now, and this is a problem for BAT despite a ‘preferential’ relationship with the Government, being the largest funder of Renzi’s “Open” foundation.


Last but not least, Japan Tobacco. Lately, the Japanese multinational company has been “working” a lot on communication (funding the La Scala theatre in Milan and sponsoring cultural exhibitions, as well as the Rome Film Festival) and in 2016 its e-cigs should reach Italy, but the company is ready to go to war with Philip Morris on the so-called heated-tobacco devices with new products currently being developed.

The new player is Anafe Confindustria, which brings together manufacturers in the electronic smoking sector. They found themselves in the grip of the tax authorities, hit by laws “ad personam” that have helped kill official sales, causing the closure of about three thousand stores and the loss of circa 80 percent of customers, who have moved to foreign websites, with Italian companies standing on their feet only thanks to exports and to the support of first-class lawyers and lobbyists.


In recent days, the Council of Ministers has transposed Directive 2014/40/EU of the European Parliament through a Legislative decree (it’s a draft, on which the Parliamentary Committees will have to express a non binding opinion, Ndr): from the ban on smoking in cars in the presence of pregnant women or children, to the elimination of 10-cigarette packs and aromas which would increase a craving to smoke, up to new shocking images on cigarette packets. As for e-cigarettes, restrictive rules on online sales (cross-border distance sales to Italian consumers are prohibited, while online sales are allowed only to authorized parties), as well as heavy bureaucratic impositions are expected.

The war of lobbies on “heated” tobacco devices

Contrary to cigarette packets, the Government has introduced a maximum limit for refill containers: they should not exceed a volume of 10 ml per bottle. Therefore, while Big Tobacco companies can pack their products in “family size” packages, only having to respect a minimum limit of 20 cigarettes, e-liquid producers will not be able to rationalize their production and distribution through the sale, for example, of quarter-litre bottles, which would have led to them saving money on the packaging and labelling of products.


Speaking of Directives, the hardest battle between lobbies was played on “novel tobacco products.” The only one currently on the Italian market is the iQOS cigarette, manufactured by Philip Morris International, a company that has focused on Italy (and Japan) to give a “reduced-risk” vision of the future, as constantly emphasized in public conferences and meetings with analysts. However, a future put at risk by two factors: the first one is the consumers’ response, which has not been enthusiastic, according to PMI’s executives.


The second one is a technical, but crucial aspect. A study on the emissions of heated-tobacco devices (some people call them heat-and-burn products) prepared by Steve Stotesbury, Head of Regulatory Science at Imperial Tobacco, has recently been revealed. During a speech at the recent Global Tobacco & Nicotine Forum, the researcher said that “chemicals produced or emitted by devices such as the iQOS cigarette are largely similar to those found in cigarette smoke.” Very harsh words indeed, which were echoed by two international experts, doctors Polosa and Farsalinos, who have raised doubts because of a lack of public, peer-reviewed studies on iQOS cigarettes.


The text approved by the Council of Ministers has partly “met” the requests of the US giant by acknowledging the device as a hybrid between e-cigarettes (it does not vaporize) and traditional cigarettes (it has no combustion), and therefore calling it a “next-generation product.” General rules on the ban on sales to minors are in force, but there is much uncertainty about refills and marketable quantities. The Government will necessarily have to fill this void, unless Philip Morris decides to withdraw the product from the Italian market, according to rumours. It would be a half-defeat for a giant that has about 80 lobbyists in our corridors of power, five times the number of lobbyists of the other multinationals combined [in Italy].


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