Cigarettes and alcohol

Cigarettes and alcohol

Published: November 24 2006 13:00 | Last updated: November 24 2006 22:52

Emerging markets, the last bastion of growth for purveyors of cigarettes and alcohol, are cracking down on bad habits. Thailand plans to ban alcohol ads from next month, while Indonesia is mulling higher taxes on cigarettes.

This is a blow for profitability as well as vice. Cigarette manufacturers have assiduously sought to sell more in less health-conscious nations. Philip Morris last year paid $5.2bn for a cigarette manufacturer in Indonesia, a populous country where about 70 per cent of young men smoke. Similarly, brewers endeavour to cash in on countries where binge-drinking is on the rise: young Thais knock back an estimated 8.5 litres of alcohol each year. Others benefit too: tobacco is a big contributor to government revenues in Indonesia, while alcohol advertising helps fill the pockets of the media industry.

ADVERTISEMENT

Yet those who make money from the bad habits of others need not fret too much. Emerging markets typically exhibit fast economic growth and slow legislative processes. Industry lobbyists have clout, and could yet stymie the new proposals. Sin industries are generous sponsors and both Thailand and Indonesia, often in the news for the wrong reasons, need all the help they can get to woo tourist dollars. Thailand’s plans threaten to scotch next year’s Johnnie Walker Classic golf tournament in Phuket and the Bangkok Rock Festival. The government may well surmise there are less painful ways to beat the scourge of alcoholism.