Channel NewsAsia

Tobacco industry at crossroads

It's World No-Tobacco Day on Saturday (May 31) - a day intended to encourage people to kick the smoking habit. This year, the Day comes as the $800-billion tobacco industry is at a crossroads.

SINGAPORE: It's World No-Tobacco Day on Saturday - a day intended to encourage people to kick the smoking habit.

This year, the Day comes as the $800-billion tobacco industry is at a crossroads.

Many of the industry's top global markets are posting volume declines.

But don't tell that to tobacco stocks.

On the surface, it looks like a tough time to be in the tobacco industry.

Zora Milenkovic, Euromonitor's head of tobacco research, said: "The tobacco market is in what we would call terminal decline.

"In the top 10 markets globally - the 10 biggest cigarette markets in the world - only 3 or 4 posted growth in the last year.

"And probably 6 to 7 markets in the global top 10 are in Asia Pacific. Many of these have seen declines and we expect to see declines over the next 5 years."

Despite the decline, Asian tobacco stocks remain red hot - some outperforming their markets by large margins.

Indonesia's Gudang Garam is up over 28 percent this year while the JCI is up 15 percent.

Korea Tobacco and Ginseng Corporation has shot up over 11 percent this year while the Kospi sits up under 1 percent.

China is more difficult to guage. It's the world's largest cigarette market but its state-owned China National Tobacco Corp is unlisted.

Euromonitor's Zora Milenkovic said: "Countries like China, where taxation is still low, does contribute to growing sales.

"Indicatively also, over the next 5 years, the 3 countries expected to grow in Asia Pacific are countries that have some of the lowest taxation rates in the region - Thailand, Vietnam and Indonesia.

"They all have taxation rates below 50% so these will see growth."

Global efforts to stamp out smoking are ramping up.

China has issued a smoking ban in some public areas and said it will raise tobacco taxes.

Other countries are also taking a more grassroots approach.

India's Health Minister, Dr Harsh Vardhan, said: "Every individual in his/her field of work should campaign against the use of tobacco and if any person in the country is seen consuming tobacco, people should request him/her to stop it as it is useless."

But experts say higher taxes and polite public requests are unlikely to snuff out the tobacco industry.

Part of the reason is the increasing popularity of electronic cigarettes.

The US has seen triple-digit growth over the past few years in e-cigarettes.

And the trend is catching on in Asia.

In the next couple of decades, the market for e-cigarettes is expected to top $50 billion. 

Tweet Photos, Videos and Update on this Story to  #cna