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Contrary to conventional belief, Thailand’s high-income earners were the largest tobacco consumer group, while low-income consumers were the smallest group. Photo credit: Kha Ruxury, Pexels.
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Tobacco remains an important crop for Thailand’s agricultural sector. Photo credit: Pixabay.
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The jury’s still out on a proposed regulation that would outlaw menthol cigarettes, which are the second-most popular category in Thailand. Photo credit: Khoa Võ, Pexels.
Contributions from Thailand’s tobacco industry has long been woven into the fabric of the country’s economic and social tapestry. The industry’s value chain continues to provide invaluable support to various sectors, both directly and indirectly.
Figures from Oxford Business Group’s Economic Impact Report: Tobacco in Thailand show that in 2022, the excise tax on tobacco brought THB59.8 billion (US$1.71 billion) to the government. This figure accounted for approximately 12% of the country’s total excise revenue. The country’s tobacco control and health-promotion initiatives are funded by excise taxes from alcohol and tobacco.
The majority of Thai tobacco consumers in 2021 were aged 25-34 years (32%), followed by those aged 35-44 year (25%). Consumers aged 45-54 years and those aged 18-24 years each counted for 18% of total consumers, while those aged 55-64 years made up 7%.
High-income earners were the largest group of tobacco consumers at 38%, followed by medium-income (32%) and low-income (31%), respectively. If divided by gender, 69% of Thailand’s tobacco consumers are male and 31% are female.
Cultivation
Because of the country’s long history of agriculture and its favorable natural environment, over 30% of all workers in Thailand are employed in this sector, which continues to be a major source of revenue for many rural areas. The industry is a national development priority due to its contribution to socio-economic development, including food security. In farming areas, the hardy tobacco crop is a vital source of income, providing chances for leaf cultivation and curing, especially in the country’s northern and northeastern regions. In 2021, Thailand, which ranks 16th globally and as ASEAN’s second-largest producer of tobacco leaves, exported tobacco and manufactured tobacco alternatives valued at THB7.4 billion (US$211.7 million).
Thailand’s tobacco farm count fell by over two thirds in the ten years leading up to 2020. Despite this, the overall volume of tobacco output increased by about 10% over the same time period. It also implies that tobacco farmers in Thailand are still investing in the industry, which boosts regional economies by creating jobs. For populations in the country’s northern and northeastern provinces— Chiang Mai, Chiang Rai, Phetchabun, Phrae, Roi Et, Sukhothai, and other provinces—the industry is still exceedingly important. As of 2020, the Thai tobacco industry directly or indirectly supported approximately 50,000 households.
In Thailand, there are three categories of tobacco cultivation: cultivation under Tobacco Authority of Thailand (TOAT) quota for sale to the authority’s 9 offices across the country; cultivation under quota for private companies for export purposes; and self-cultivation for sale to local tobacco factories. TOAT lowered its production quotas from 22.6 million kg in 2007-2008 to 13 million kg in 2022-2023.
TOAT is the sole organization allowed to produce tobacco products in Thailand. It is also the primary buyer of Thai tobacco leaves from farmers. Burley is the most cultivated variety in Thailand. In 2019, burley accounted for 55% of cultivation, followed by virginia (28%) and turkish (18%). In 2022-23, 50% of Thai tobacco farmers grew burley, while 26% grew turkish leaf and 24% grew virginia leaf, respectively. Burley leaves are mostly grown in the northeastern provinces such as Sukhothai and Phetchabun. Virginia, which enjoys the highest leaf-buying price among all three varieties, is grown mostly in the country’s northern provinces. Turkish leaf is cultivated in the lower northern provinces such as Roi Et.
Distribution
The main manufacturers involved in cigarette distribution in Thailand include: TOAT, Philip Morris International (PMI), Leadon International, and Japan Tobacco International (JTI). In 2022, TOAT enjoyed 50.2% of the Thai ready-made cigarette market, based on volume sold. PMI represented 36.6% of the market, followed by Leadon (6.7%) and JTI (6.3%).
Some 95% of Thai ready-made cigarette consumers opted for the base-range price segment in 2022. Full-flavor cigarettes were the most popular with consumers, representing 54.1% market share, followed by menthol cigarettes at 37.2%, flavor capsule cigarettes at 3.5%, light cigarettes at 2.8%, and light menthol cigarettes at 2.4%.
Regulation
Thailand regulates all aspects of the tobacco business, from cultivation and manufacturing to promotion and selling. While recognizing these regulations as important for public health, industry stakeholders emphasize that regulated products are promoted and sold to adults who have the right to make informed choices as consumers.
Some key points to highlight are:
- There are several exceptions to the ban on tobacco advertising and promotion, such as the use of non-tobacco branding on tobacco products (known as “reverse brand stretching”) and unpaid media portrayals of tobacco use. There are various restrictions, but generally speaking, sponsorship by the tobacco business is allowed.
- For tobacco product sales, it is against the law to sell tobacco products through vending machines, online, in playgrounds, schools, and health-care facilities. Selling single cigarettes and small packs is also banned, as well as the sale of any tobacco product to anyone under the age of 18.
- Public transportation, designated outdoor areas, including parks, marketplaces, and sports and fitness centers, are all places where smoking is not permitted.
- Thailand was the first nation in Asia to use plain tobacco packaging in 2019. As of December 2019, cigarettes sold in retail establishments must be in plain packaging. Ready-made cigarette packages must have rotating graphic health warnings covering 85% of the front and back. Terms like “light” and “low tar” are forbidden. Information about product content and emissions must also be disclosed to government agencies by manufacturers and importers.
A draft ministerial regulation to outlaw all tobacco additives, including flavorings, was proposed in November 2022. The proposal is being re-evaluated in response to concerns expressed by farmers. At the time, Cholnan Srikaew, then-opposition leader in the House of Representatives and a physician, supported the farmers and their concerns, which included concerns over the possibility of a menthol flavoring ban. He even questioned if it was necessary for Thailand to be the first country to have such a law "purely to be praised by the international community, without considering the negative impact it would have on Thai farmers”. Srikaew is now minister of public health in the current government. It would be interesting to see if he maintains his stance on the proposed law.
Challenges
The Thai tobacco industry continues to face several challenges, chief among them being illicit trade. On the one hand, unregulated items may be more enticing due to their lower prices, simpler trade channels, and a wider range of appealing flavors. On the other hand, because there is no regulation or quality control, these illegal goods put consumers’ health at serious danger.
As of mid-2021, about 30% of the country’s cigarette market was made up of illicit products, according to data obtained from the Thai excise department. The Thai Tobacco Trade Association stated that from July to September 2022, illicit trade through online channels increased by 97%. This highlights the challenge of halting the flow of unauthorized products into the market.
A ban on tobacco additives, should it come into effect, would present a myriad of new challenges not limited to employment in tobacco-related jobs, local and national economies, public sector revenue, and consumer choice, while not necessarily giving the perceived public health benefits.