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Tobacco Journal article about hookah

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  #1  
Old January 13th, 2009, 06:40 PM
rosc2112
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Default Tobacco Journal article about hookah

Just came across this, it's a few months old but it hints at some good developments (standardizing things would be helpful for us as consumers.)

http://www.tobaccojournal.com/All_ey...h.49190.0.html

All eyes are on hookah

02 Sep 2008. It may be a fad for young adults in Europe and North America, but there is no denying that smoking shisha or water pipe has grown in popularity, elevating its status from niche product for the Middle East and India to a global phenomenon.


It seems that as human beings, we know we have “made it” when people ask for our autograph and perfect strangers call out our names when we are out in public; alas, if you are a tobacco product, you know that you are successful when everyone attempts to regulate you and change the tax structure. Yes, it seems when government officials learn about the popularity of a product, suddenly it becomes important to check the tax policy and these days its seems that several governments are contemplating the way they tax other tobacco products, or OTP as they are commonly called, and where shisha molasses are often categorised along with all of the various smokeless products available on the market.

In the US, several states are reconsidering their ad valorem tax on OTP and moving toward a weight-based tax instead. Since 2005 eight states have gone to a weight-based tax, bringing the overall total to 13, with Utah having just switched in July.

“There’s no conspiracy going on here; it has to do more with looking at companies who offer various segments of a product and wondering why a premium product is taxed more heavily than a cheaper brand,” notes Steve Stanek, managing editor of Budget and Tax News.

In the ad valorem world – where excise taxes are based on product price –, he explains that as cheaper brands gain greater market share, they drive down the prices people are willing to pay for the product. Because ad valorem tax is built into the final sales price, the final cost differential becomes even greater in states which have sales tax. It ends up distorting consumer behaviour and if you are a consumer of either OTP or cigarettes, you should want a per-unit price.

“It is simply a matter of fairness; when it comes to wine you pay the same tax no matter whether it is a USD 100 bottle or a USD 5 one, so why should it be any different for tobacco products?” argues Stanek.

“As you can imagine, depending on the cigarette manufacturer and how many premium brands they produce, some companies welcome the change to weight-based and others do not,” he adds. He says that ad valorem tends to distort the market because it increases the cost differentials between premium products and lower-quality brands.

“I think the fact that states are considering these kinds of changes for the OTP segment is a sign that these products have really gained in market share as consumers look for alternatives to cigarettes for whatever reason,” suggests Stanek.

“There used to be a time when smokeless products did not have a lot of brands, so it really was not much of a concern in terms of taxation and revenues and I imagine it was the same for people who offered hookah molasses. Now it is really trendy and you are beginning to see more brands and price bands.”

Meanwhile in the state of Ohio, a debate has been waging to raise its OTP tax, which it has not done since the tax was created in 1993. Health advocates in Ohio want to raise the OTP tax in Ohio, which has one of the lowest OTP tax rates in the country. They argue that the OTP tax of 17 per cent of the wholesale price is less than half of that for cigarettes, which is USD 1.25 per pack.

The health lobby insists that having cheap OTP products leads to more tobacco use and though considered less deadly than cigarettes, they are worried that a market full of cheap OTP markets will be a gateway to a lifelong tobacco addiction.

Across the Atlantic in the UK, consumers believe they are getting an unfair deal as the UK is one of the few, if not the only, countries in Europe which slaps a full tobacco tax, or GBP 60 per kg, on a 250 gram pack of shisha molasses, even though only 0.05 per cent of its contents are actually tobacco. This translates to GBP 15 per pack and thus most molasses bound for the UK are imported to continental Europe before being distributed to the UK. In addition, a new law in the UK will require providing all of the ingredients as well as a lab report on the contents.



Setting shisha standards



According to Ismail Hebesha from Egypt-based Nakhla Tobacco’s export department, the UK is not the only government which does not completely understand the shisha product.

“We want our products to be represented 100-per cent legally in the country – there is no argument about that; but our products are not like other tobacco products with a high tobacco content, it is more like 20 to 30 per cent and the rest are additives, yet they tax us unfairly as if we were a full tobacco product like cigars.”

For that reason, Hebesha says that Nakhla has spent a great deal of time lobbying for the inclusion of shisha or water pipe tobacco to be included in the World Tariff Organisation’s official handbook and he is happy to report that it has recently been accepted. In addition to the taxation struggles, Hebesha says that producers of molasses are popping up like daisies all over the world and their product needs to have international standards recognised.

“Over the last ten years we have worked very hard to get the word out about the pleasures of shisha and now we have the problem that because of the growing popularity, some companies have begun manufacturing products which do not follow the standards that companies like Nakhla, and some of the other traditional brands, have worked so hard to establish, so our agenda now is to work on getting the shisha tobacco product standards in the World Tariff Organisation and to have a specific tariff code ensuring that every company adheres to these legal standards and consumers have access to quality products and not inferior imitations.”

When Nakhla is not busy promoting and protecting the essence of the industry, it focuses on the more mundane aspects of the business, such as searching for new markets, and Hebesha says that they are “very interested in the Far East”. He also says that they are currently working on packaging innovations and making the packing easier for end users to handle. Some innovation is happening in the way water pipes look but otherwise he says that as long as consumers enjoy the experience with the traditional apparatus – and they apparently do and in growing numbers –, there is little reason to tinker with the construction of the pipes.

“Smoking shisha is not just a process, but an entire culture which you share with friends and business associates. We have conducted marketing research with a German company and what we found is that people are excited about the traditional shisha cafés and prefer them over the modern ones,” explains Hebesha.

This point alone must be frustrating to hookah lovers the world over, as from Vancouver, Canada, to Mumbai, where water pipe smoking all began, governments are striking down the argument that it is a cultural aspect and are including it along with the rest of tobacco products as a banned habit in public places. Happily, as recently as 24 July 2008, Mumbai’s High Court reached a decision which would allow the city’s hookah parlours to continue their business for the time being.

And while on the subject of India, Sopariwala is enjoying much success with its herbal molasses under the Soex brand name, which, according to Asif Fazlani, managing director, contains no tobacco but in no way compromises the smoking experience. As with their traditional molasses, Sopariwala offers consumers over 40 flavours. Fazlani says the manufacturing of the herbal product is more technical and refined than the traditional product. The only downside to this popular product is, of course, the tax issue. Over the last year, the Mumbai-based company has experienced the greatest interest in its products from the Far East and Europe.

Further to the south in the United Arab Emirates, Al Ajamy is preparing its entry to the European market, having already made a mark in the US, South Africa, Russia and traditional Middle Eastern markets.

“Smoking shisha is spreading so quickly that we are surprised to find ourselves exporting our product to places we would not have thought about, such as the Ivory Coast, Angola and the Congo,” says Ali Al Ajami Saleh, procurement and export manager at the three-year-old company.

In the first two quarters of 2008, they had a 36 per cent share of the UAE market behind leader Al Fakher, which also happens to be the world’s number two behind world leader, Nakhla. He explains that the company’s current focus is its European launch, which is planned for September 2008 in Germany. Saleh says that Germany will be the first country for two reasons: demand is very high in the country, and thanks to a diligent agent based in Hanover, it was concluded that some of the molasses ingredients would have to be modified in order to meet the regulations for import. They have also received initial orders from a Swiss company, and thus are excited about the potential in Europe. According to Saleh, business is going so well that in the last 18 months the company has grown tenfold with 48 employees operating nine production lines.

Rosemarie Overstreet
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  #2  
Old January 13th, 2009, 08:00 PM
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Default Re: Tobacco Journal article about hookah

I love the part where they state Nakhla is number one and Al Fakher number two.
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  #3  
Old January 13th, 2009, 10:36 PM
rosc2112
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Default Re: Tobacco Journal article about hookah

Quote:
Originally Posted by speel View Post
I love the part where they state Nakhla is number one and Al Fakher number two.
Maybe in that market that is what their sales ranking is/was? I believe the context placed it in the Mumbai market. But that point was not the focus of the article.

It does bring up a question I raised elsewhere, and I should just start a new thread (regarding why shisha tobacco is so expensive, when it's only 30% tobacco.)
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  #4  
Old January 14th, 2009, 04:23 AM
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Default Re: Tobacco Journal article about hookah

This topic should be a "deep thought" topic because I have to begin to bitch! First off... when you say to someone that you smoke hookah (assuming ur talking to a non smoker) they put their nose up in the air. The government taxes the shit out of tobacco. Why?? Because they are using a bullshit excuse: "It may cause blah blah blah" We, as hookah smokers, cigar smokers, cigarette smokers, etc understand the risks involved in smoking. Why do we have to pay the price (esp as business owners) because the gov't says... Now here is my way of justifing bullshit taxes like this..... I believe that everything in moderation is just fine.... BUT if you smoke a pack of ciggs a day for 20-30 years ur prob going to have cancer yet wait.... What happens if you eat a bag of cheetos a day for 20-30 years... chances are your going to have some type of medical ailement... (heart attact, colesteral etc) Why dosent the government tax junk food like they do smoking? Is junk food bad? yes. Is smoking bad? yes. But why do we continue to do it then. WE LIKE IT! I dont think that tobacco products should be singled out and taxed to hell because it may give u cancer and u die... what do u think the shit in that bag of chips is eventually going to do? I know I dont put a good example across... im just bitching about the Ohio OTP thing... and I'm gladd its a growing trend lol... for obvious reasons.
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  #5  
Old January 14th, 2009, 11:00 AM
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Default Re: Tobacco Journal article about hookah

Quote:
Originally Posted by wonderland View Post
I know I dont put a good example across... im just bitching about the Ohio OTP thing... and I'm gladd its a growing trend lol... for obvious reasons.
Right with you on the Ohio OTP issue. I didn't even know there was legislation being talked about on the subject... I live in cincinnati so if that goes through i get to pay more taxes w00! and for what. I am as informed as it is possible to be with the limited studies on hookah health issues. I tell anyone who smokes my hookah, that yes, it is probably better than cigarettes, but noone knows 100%, and it is still a tobacco product. I do everything i can to stay aware and keep people aware of the risks, and the government thinks i need help.

So I should pay more for it.
That'll learn me real good.
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  #6  
Old January 14th, 2009, 11:26 AM
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Default Re: Tobacco Journal article about hookah

[FONT=Verdana]Trust me the tax that you all in the states will have to pay is nothing compared to what we pay in Canada. A shop that legally sells Nahkla in Ontario must sell it for $65 - $80 per 250g box. Now you can find some stores that sell it for around $15 - $30 but unless you are a usual customer they won’t even talk to you.[/FONT]
[FONT=Verdana] [/FONT]
[FONT=Verdana]The laws have been changed recently and all shisha products have been recognized and moved to a separate category on their own like they should be. New law is for every $10 worth of shisha the tax is $35. Still very high but at least it brings the legal price down a bit. Governments all use the excuse of the problems that are caused by smoking and say that we smokers will have to pay for our "addiction" to help fund the stress we put on the healthcare system in Canada. This is nonsense these taxes are in place because it is just another way for them to screw us, as if they don’t get enough out of me already taking 30% of my pay check every week.[/FONT]
[FONT=Verdana] [/FONT]
[FONT=Verdana]We can sit here and complain about this but honestly unless people realise that you need to do something for things to change then governments will always take advantage of the fact that a majority of the population would like their good shepherd to lead the flock where to go and not have to ask any questions.[/FONT]
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Old January 14th, 2009, 11:53 AM
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Default Re: Tobacco Journal article about hookah

Quote:
Originally Posted by vcitriniti View Post
[FONT=Verdana]Trust me the tax that you all in the states will have to pay is nothing compared to what we pay in Canada. A shop that legally sells Nahkla in Ontario must sell it for $65 - $80 per 250g box. Now you can find some stores that sell it for around $15 - $30 but unless you are a usual customer they won’t even talk to you.[/FONT]

[FONT=Verdana]The laws have been changed recently and all shisha products have been recognized and moved to a separate category on their own like they should be. New law is for every $10 worth of shisha the tax is $35. Still very high but at least it brings the legal price down a bit. Governments all use the excuse of the problems that are caused by smoking and say that we smokers will have to pay for our "addiction" to help fund the stress we put on the healthcare system in Canada. This is nonsense these taxes are in place because it is just another way for them to screw us, as if they don’t get enough out of me already taking 30% of my pay check every week.[/FONT]

[FONT=Verdana]We can sit here and complain about this but honestly unless people realise that you need to do something for things to change then governments will always take advantage of the fact that a majority of the population would like their good shepherd to lead the flock where to go and not have to ask any questions.[/FONT]
For every 10$ there's a 35$ tax? This is when i start growing my own tobacco.
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  #8  
Old January 14th, 2009, 12:01 PM
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Default Re: Tobacco Journal article about hookah

[FONT=Verdana]That is new import tax in Canada. Shisha was marked as a pipe tobacco before but enough cases starting coming in and I guess we got what we asked for. Shisha is now marked as a "manufactured tobacco containing nontobacco products." The other problem is that tobacco and alcohol tax is already so high in Canada that this tax on shisha really is not that bad or out of the norm here. I hear it is worse in Europe so I am not going to complain too much. Only thing is that the tax is pretty high right now the only place it can go is up, they never lower the taxes on tobacco and alcohol.[/FONT]
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Old January 14th, 2009, 01:12 PM
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Default Re: Tobacco Journal article about hookah

If that tax comes to Louisiana, I'll have to give up hookah.
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  #10  
Old January 14th, 2009, 08:36 PM
rosc2112
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Default Re: Tobacco Journal article about hookah

There's always the duty-free route, or maybe we can ask the new york native americans to start producing shisha tobacco =)
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Old January 15th, 2009, 09:00 AM
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Default Re: Tobacco Journal article about hookah

Quote:
Originally Posted by vcitriniti View Post
[FONT=Verdana]Trust me the tax that you all in the states will have to pay is nothing compared to what we pay in Canada. A shop that legally sells Nahkla in Ontario must sell it for $65 - $80 per 250g box. Now you can find some stores that sell it for around $15 - $30 but unless you are a usual customer they won’t even talk to you.[/FONT]

[FONT=Verdana]The laws have been changed recently and all shisha products have been recognized and moved to a separate category on their own like they should be. New law is for every $10 worth of shisha the tax is $35. Still very high but at least it brings the legal price down a bit. Governments all use the excuse of the problems that are caused by smoking and say that we smokers will have to pay for our "addiction" to help fund the stress we put on the healthcare system in Canada. This is nonsense these taxes are in place because it is just another way for them to screw us, as if they don’t get enough out of me already taking 30% of my pay check every week.[/FONT]

[FONT=Verdana]We can sit here and complain about this but honestly unless people realise that you need to do something for things to change then governments will always take advantage of the fact that a majority of the population would like their good shepherd to lead the flock where to go and not have to ask any questions.[/FONT]
and i thought tobacco in Denmark was expensive in Denmark 250g of Nakhla is about 45$
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Old January 15th, 2009, 11:53 AM
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Default Re: Tobacco Journal article about hookah

Perhaps it is time for the Canadian tobacco producers to step up.
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  #13  
Old January 15th, 2009, 05:05 PM
rosc2112
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Default Re: Tobacco Journal article about hookah

I understand the reasoning behind "sin" taxes, but canada's is just ridiculously over the top.. I'd have to subvert it by buying through duty-free shops, or worse case find a friend outside and have em send me packages.. *shrug* Such taxes are self-defeating in the end.
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