Russia Weakens Anti-Smoking Law Before Key Second Reading

(Bloomberg – bloomberg.com – Henry Meyer & Stepan Kravchenko – January 24, 2013)

Russia weakened a proposed law aimed at cracking down on smoking in the world’s second-largest tobacco market before a key vote on the legislation tomorrow.

While the bill keeps a ban on smoking in public places, it drops restrictions on cigarette sales and the right to set minimum cigarette prices, said Dmitry Yanin, head of anti- tobacco lobbying group, the International Conference of Consumer Societies. “This is a major victory for the tobacco lobby,” he told reporters in Moscow today. “The tobacco companies have managed to hang onto their second-biggest market after China.”

An aide to Deputy Prime Minister Olga Golodets, Alexei Levchenko, said the changes to the legislation were necessary to reach agreement with lawmakers, though he insisted that health goals of reducing smoking will still be met.

Philip Morris International Inc. (PM), British American Tobacco Plc (BATS), Japan Tobacco Inc. (2914) and Imperial Tobacco Group Plc (IMT), which control 93 percent of the $19.5-billion Russian market, had opposed the curbs on cigarette consumption, which were supported by Prime Minister Dmitry Medvedev and approved on the first reading on Dec. 14. Lawmakers will vote on the bill in the decisive second of three required readings tomorrow.

Russia’s government had proposed measures that would outlaw all tobacco advertising and sponsorship as well as kiosk sales immediately, with bans on trade in small retail outlets and smoking in public places taking effect Jan. 1, 2015.

Tobacco makers will be able to sponsor philanthropy and sell cigarettes in all retail outlets except for kiosks, Levchenko said. The draft law also drops plans to end duty-free tobacco sales while the ban on public smoking will take effect from mid-2014, six months earlier than planned, Yanin said.

The new version of the legislation is a compromise after a “multi-million-dollar campaign” by the tobacco lobby, lawmaker Dmitry Nosov told Bloomberg News.

BAT, Europe’s largest cigarette maker, rose as much as 2.1 percent, the most since Nov. 19. Philip Morris, the world’s largest publicly traded tobacco company, gained as much as 0.5 percent.

In Russia, 39 percent of the population are regular smokers, according to the World Health Organization. About 400,000 Russians, or 0.3 percent of the population, die each year from smoking-related diseases, Medvedev said in October. That compares with 114,000, or 0.2 percent in the U.K.

Article ©2013 BLOOMBERG L.P. ALL RIGHTS RESERVED. Article also appeared at http://www.bloomberg.com/news/2013-01-24/russia-weakens-anti-smoking-draft-law-before-key-second-reading.html