Optimizing the regulatory environment

Championing better regulation for informed choice

We value and support the freedom for adults* to make informed choices. We play our part by being transparent about our products, and ensuring that consumers (The word, consumers, used in the context of the tobacco business means adult consumers. Minimum legal age for smoking varies in accordance with the legislation in each country.) are aware of the associated risks when deciding whether to use our products or not. That’s why we are transparent about our positions on smoking and health.

We adhere to six core principles that define our attitude to smoking. We also work in a highly regulated operating environment. We monitor trends in order to anticipate future changes in regulation and engage with authorities where we see excessive or unworkable initiatives being proposed.

Read more about our views on specific regulatory topics.

  • * Minimum legal age for smoking varies in accordance with the legislation in each country. In Japan, smoking is not permitted for those under 20 years of age.

Aspirational goal

We will ensure the Company is included in policymaking leading to fair and balanced regulation, and enhance our cooperation with governments to combat illegal trade.

Target

We will always protect our ability to participate in public policy debate with the aim to achieve balanced regulation that meets societal concern and supports business growth.

Progress

In 2021, we engaged openly and transparently in public policy debate and made our views known to regulators, NGOs, and other relevant stakeholders in the countries where we operate. We also published our external engagement principles.

Read more about our latest progress on the JT Group's tobacco business sustainability strategy.

Supporting ‘better Regulation‘

Smoking carries risks to health, and appropriate and proportionate regulation of the tobacco sector is both necessary and right. To meet public policy goals, while respecting the rights of all stakeholders, it is important that regulation is evidence-based, practical, enforceable, and competitively neutral.

To help lawmakers develop better regulation, the OECD has endorsed the internationally recognized ‘Guiding Principles for Regulatory Quality and Performance’, which we support. These can be summarized as:

  • Coherence
  • Openness
  • Proportionality
  • Participation
  • Effectiveness
  • Accountability

A key aspect of better regulation is a transparent legislative process, one that involves all interested and affected parties.

Engagement with external stakeholders is an integral part of our business. We are open to and seek dialogue with governmental authorities and members of think tanks, business associations, and academia around the world to address issues about the manufacture, sale, and use of our products.

We are committed to engaging transparently in the public decision-making processes that affect our business. We actively participate in the debate about the regulation of combustible products and products that have the potential to reduce the risks associated with smoking, taxation, the elimination of all forms of illegal tobacco trade, and sustainability.

Our views on Reduced-Risk Product regulation

We believe that Reduced-Risk Products [Reduced-Risk Products are Products with the potential to reduce the risks associated with smoking] can offer real benefits to consumers and society.

Governments and regulators should avoid restrictive regulation which suppresses innovation and/or prevents adult consumers from being able to make an informed choice of whether or not to try these products.

We believe that adult smokers should have an opportunity to choose Reduced-Risk Products if they wish, and that regulation should both enable that choice and encourage manufacturers to continue to innovate and invest in research and development to support this.

It is our opinion that the category can be regulated with a focus on responsible marketing, youth access prevention, product quality standards, and post-marketing monitoring and evaluation.

Latest regulatory developments

It is in the public interest for regulation to be evidence-based, proportionate, and effective. We support the principles of better regulation, which argue for measures that preserve consumer choice and market freedom. Regulation is fast-moving and we monitor developments closely. The following are just a few examples of some key regulatory developments around the world in recent years.

U.S. – Premarket tobacco product applications (PMTA): the September deadline

Following several changes, endorsed by the Food and Drug Administration (FDA), the submission deadline for the Premarket Tobacco Product Application (PMTA) review of tobacco products (including e-cigarettes) was extended. From September 9, 2020, all products must have submitted their PMTA to remain on the U.S. market.

In August 2019, Logic Technology Development LLC (a subsidiary of the JT Group) submitted PMTAs for a number of products in its e-cigarette and tobacco vapor portfolio. In 2022, Logic received PMTA marketing orders for the Logic Pro, Power and Vapeleaf devices, as well as our tobacco flavored capsules from the FDA. Read more on products & services (RRP).

U.K. – Public Health England reiterates the strong risk-reduction potential in e-cigarettes

In 2020, Public Health England reassured users about the risk reduction potential of e-cigarettes currently marketed in the U.K. saying, “PHE and the Royal College of Physicians estimate the risk reduction to be at least 95%.”

Read more from Public Health England

EU – Directive on single-use plastics

The EU Directive “on the reduction of the impact of certain plastic products on the environment” entered into force on July 5, 2019. Member states have two years to transpose the legislation into their national law.

Tobacco filters are included in the scope of the Directive, and we are proactively working with stakeholders to prepare for these regulatory changes, to ensure compliance with laws and maximize the positive impact that these developments might have on our customers and our business.

EU – Ban on characterizing flavors

A partial exemption to the ban on characterizing flavors, part of the EU’s revised Tobacco Products Directive, came to an end across the Union on May 20, 2020. From this date, it became illegal to distribute cigarettes and fine cut tobacco with sales volumes greater than 3% of their respective categories if they have a clearly noticeable smell or taste other than one of tobacco.  There is some concern, based on published consumer research conducted in Poland and the U.S. by third parties, that smokers who have previously chosen to smoke products with, for example, a characterizing flavor of menthol, may now seek similar products from the illegal trade instead.

Plain Packaging

In June 2020, the WTO Appellate Body ruled in favor of Australia in the plain packaging dispute. The ruling is a major step backwards for the protection of intellectual property rights internationally. Although this outcome only applies to Australia, it sets a worrying precedent that could encourage governments to ban branding on other products. Furthermore, the Appellate Body did not have the opportunity to take into account the most recent data from the Australian Government, which shows that the smoking rate has not markedly declined, indicating that plain packaging has not worked as anticipated.

WHO – Framework Convention on Tobacco Control (FCTC)

We continue to follow the evolution of the WHO FCTC. The Protocol to Eliminate Illicit Trade in Tobacco Products (the Protocol) came into force on September 25, 2018. The ninth session of the FCTC Conference of the Parties (COP9) and the second session of the Meeting of the Parties to the Protocol (MOP2) took place in November 2021.

At these FCTC events in 2021, there were no new recommendations or decisions that directly impacted the JT Group and our products. As the decisions made at these events can have far-reaching implications for our consumers, wider society, and our business, we continue to closely monitor the evolution of the FCTC and the Protocol, and are preparing for COP10 and MOP3 in future. Although we continue to be denied a voice at such events, we will continue to share our views with decision-makers wherever possible.

Worldwide – Illegal Trade

In addition to the rapid spread of COVID-19, which has damaged global economies, the ongoing spread of extreme regulatory measures like plain packaging continues to elevate the risk that smokers will seek out illicit sources of tobacco. This threatens to reduce government revenues from tobacco excise at a time when governments already face a global backdrop of falling tax receipts. It will also divert money to the global network of organized criminal groups who produce and supply tobacco to the illegal market.

Case study


During the early stages of the spread of COVID-19, the South African and Indian governments chose to outlaw the sale of alcohol and tobacco products nationwide.

In South Africa, this disastrous prohibition drove huge growth in illegal tobacco networks. The South African Revenue Service anticipates that this will take years to dismantle, given that the vast majority of smokers continued to buy tobacco illegally during the lockdown period. The combined alcohol and tobacco ban cost 568 million U.S. dollars in lost government revenues.

Engaging with our stakeholders

The JT Group remains committed to working with regulatory authorities, public health bodies, and the scientific community. As part of this engagement, we attend industry events where we are able to make our voice heard.

In 2021, we took part virtually in the Global Tobacco & Nicotine Forum (GTNF). This major international conference brings together public health experts, academia, government, and members of the tobacco/nicotine industries. We participated in a special panel discussion on the key causes that exacerbate the illegal trade of tobacco and nicotine products. The discussion also covered risks emerging from the COVID-19 crisis, as well as strategies for curtailing the rising number of organized crime networks and individuals involved in illegal trade. We also set up a virtual exhibition booth to present the underlying causes of illegal trade in more detail.

Transparency

Transparency, openness, and accountability during official decision-making processes are essential to achieving sound public policies and fair regulation for any industry. Since 14 November 2011, JTI has been a registrant of the EU Transparency Register setting out our fields of interest and costs related to lobbying activities within the EU decision-making process.

Responsible marketing

We only market our products to adult consumers in order to maintain brand loyalty and to encourage consumers of competitor brands to switch to our products. We do not market our products to minors*, nor do we encourage anyone to start, or discourage anyone from quitting.

We support regulation on the responsible marketing of tobacco or alternative nicotine containing products, providing it is evidence-based, practical, effective, and proportionate – and that it allows us to communicate with adults who use such products.

We take responsible marketing very seriously, particularly when it comes to preventing youth using our products. We never market our tobacco products to minors.

This focus is reflected in our Global Marketing Principles, a guiding document developed in 2016.

When it comes to our retail partners, we continue to provide support by training staff and providing campaign materials to reinforce the message that underage sales are not allowed.

We provide targeted responsible retailing programs that effectively tackle youth access to our products, and these are welcomed by retailers. In the U.K. for example, the IDentify program has been developed to locate retailers who may be at risk. We offer these retailers professional training and help them to raise standards, so that they will avoid making underage sales.

  • * Minimum legal age for smoking varies in accordance with the legislation in each country. In Japan, smoking is not permitted for those under 20 years of age.