Philip Morris International (PMI) has announced an increase in prices for its cigarette-shaped e-cigarette cartridges in response to the Japanese government's plan to increase cigarette taxes. In South Korea, there are also claims that the introduction of an inflation index system will lead to increased cigarette taxes. However, many analysts believe that Japan is unlikely to follow suit.
On the 26th, Philip Morris Japan announced that they have applied for approval from the Ministry of Finance to modify the retail prices of HEETS and HEETS Duo used with IQOS and IQOS Illuma electronic cigarettes.
Effective from October 1st, price adjustments will be made to 49 different products, including 15 Terrier products, 11 Sentia products, 12 Marlboro heat sticks, and 11 popular items. The price range for Terrier products will be from 580 yen (approximately 5,700 Korean won) to 600 yen (approximately 5,900 Korean won), while Centia products will range from 530 yen (approximately 5,200 Korean won) to 550 yen (approximately 5,400 Korean won). Marlboro heat sticks will range from 580 to 600 yen, and popular items will increase by 20 yen (approximately 200 Korean won) from 530 yen to 550 yen.
Japan's Ministry of Finance has announced a raise in cigarette taxes, with plans to gradually increase the tax in three phases by 20 yen each time, ultimately reaching a total of 60 yen (approximately 600 Korean won). This decision was made with consideration for the financial status of both the national and local governments, as costs related to social security are expected to rise with an aging population. The tax hike will take effect in October, coinciding with tax reporting season.
Philip Morris Korea has stated that each country's pricing policy is different and currently there are no plans to change prices in Korea. Industry insiders also believe that the recent increase in cigarette prices in Japan is unlikely to directly affect Korea. There have been suggestions to introduce an inflation index system, but the government has not yet started discussing the matter.
An industry official stated that the Korean Institute of Health and Social Affairs has maintained the system of price linkage, but there has been no discussion of cigarette taxation under the government of Yoon Seok-yeol.
In the May release of the National Health Promotion Fund's tobacco pricing policy and utilization plan, the Korea Institute for Health and Social Affairs stated that "due to the need for a high level of societal consensus for an increase in cigarette prices, actual changes in cigarette prices cannot be reflected. It is necessary to examine the introduction of a price index system that has existing price indices.
According to industry insiders, the introduction of an inflation index system is seen as a positive move for businesses. This viewpoint sees it as a means of improving predictability in business management. One industry leader stated, "If a price index system is introduced, such as a 4% increase in prices this year, then it is very useful in predicting the extent to which tobacco tax will rise next year. From a business management perspective, predictable numbers are more important.
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