Blocking Ads, Increasing Regulations... Tobacco Industry Faces 'Triple Hardship'

Advertising Ban Outside from July
Flavored Tobacco Ban Bill Proposed
High Taxes Imposed on Smokeless Tobacco
Industry Reluctant to Immediate Regulation...

[Asia Economy Reporter Lee Seung-jin] "While alcohol sales are allowed through vending machines and online, tobacco advertising exposure is completely banned, which is a frustrating situation."

Although the smoking rate decreases every year, government regulations are becoming increasingly strict, deepening the tobacco industry's concerns.

On the 7th, dissatisfaction in the tobacco industry grew due to the expansion of government anti-smoking policies. While external exposure of tobacco advertisements at retail stores is strictly prohibited, a bill to completely ban flavored tobacco has been submitted to the National Assembly, and high taxes are imposed on electronic cigarettes and even heated tobacco products, causing the tobacco industry to suffer triple hardships.

Complete Ban on Tobacco Advertising

Starting next month, the National Health Promotion Act, which prohibits external exposure of tobacco advertisements, will be enforced from July. If tobacco advertisements inside convenience stores or retail shops are visible from outside, they will be subject to enforcement. Since most marketing channels are already blocked, the tobacco industry is facing double difficulties.

Although the aim is to reduce smoking rates, the smoking rate has already been declining annually. According to the Ministry of Health and Welfare, the overall smoking rate for those aged 19 and older was 27.5% in 2010 but dropped to 22.6% in 2015. It further decreased to 21.5% in 2019, and the industry believes that last year’s smoking rate declined even more due to mask-wearing and longer indoor stays caused by COVID-19. A tobacco industry official pointed out, "Tobacco is a typical ‘purpose purchase’ product," adding, "No one impulsively buys tobacco just because it looks tasty while walking down the street."

The enforcement criteria are also ambiguous. Whether an advertisement is considered exposed depends on who sees it, where, and how, but the Ministry of Health and Welfare has only issued rough enforcement guidelines without clear standards. Violators may face imprisonment of up to one year or fines up to 10 million KRW.

The advertising regulations have also affected the convenience store industry. Covering windows with opaque sheets to block tobacco ads also blocks the external exposure of other products, raising concerns about reduced customer inflow. Since the interior is not visible from outside, the risk of crime exposure increases, leading to growing dissatisfaction among convenience store operators.

Liquid-type Electronic Cigarette Tax Increased 6.6 Times

Although the government has strengthened regulations to reduce smoking rates, there are claims that focusing solely on tax revenue is actually blocking consumers’ better choices. The Korea Electronic Cigarette Association Federation announced that it is preparing a constitutional lawsuit because taxes on reduced-harm products are excessively higher than those on regular cigarettes.

The Federation recently argued that the government ignores harm reduction and applies excessive tax rates to heated tobacco and liquid-type electronic cigarettes. While these products are recognized overseas as less harmful than regular cigarettes, they are taxed more heavily domestically.

According to the Federation, heated tobacco, classified as smokeless tobacco, is taxed 6.6 times higher than regular cigarettes. Unlike regular cigarettes, which are taxed per 20 sticks, heated tobacco is taxed per gram. A tax of 1,274 KRW per gram is imposed, and when converted to the final consumption unit, the tax on 20 heated tobacco pouches (15g), equivalent to one pack (20 sticks) of cigarettes, reaches 19,000 KRW.

"Complete Ban on Flavored Tobacco"

A regulatory proposal on capsule cigarettes and flavored cigarettes with sweet filters has also emerged. On the 31st of last month, Kim Ye-ji, a member of the People Power Party, submitted the ‘Partial Amendment to the Tobacco Business Act’ to the National Assembly’s Planning and Finance Committee. This amendment bill bans the manufacture and import of flavored tobacco. Most popular tobacco products recently are flavored, and heated electronic cigarettes also contain various flavors through capsules, so if passed, the impact on the tobacco industry will be significant.

The tobacco industry agrees with the bill’s intent to reduce smoking among youth and women by regulating flavored tobacco but points out a lack of concrete evidence. Although the amendment presents evidence through public opinion surveys that flavored tobacco increases smoking rates among youth and women, there are no specific statistics on sales volume or smoking rates related to flavored tobacco.

A tobacco industry official said, "The industry agrees with the government’s policy direction to reduce smoking rates, but there is no research or statistical data on the effectiveness of the regulations," adding, "While overseas countries adjust price policies and advertising regulations together every year, domestically, only advertising regulations are strengthened, leaving sensitive price policies untouched due to public opinion concerns."

This content was produced with the assistance of AI translation services.