Germany This country profile is taken from "Tobacco and Health in the European Union- An overview" published by the European Bureau for Action on Smoking Prevention (e-mail BASP). The following version may differ slightly to the printed version. I. General Information Population at 1.1.93 : 80,614,100 Projection for year 2000 : 82,269,000 Population + 15 years (1992) : 66,971,300 Area : 356,900 km 2 Density per KM : 225.9 Gross Domestic Product : 16,777 (EU average : 15,616) per habitant in Purchasing Power Standard (PPS)1 in 1992 1 A unit of measure which makes it possible to eliminate the influence of differing price levels between countries and to make comparisons in real terms. II. Consumption of tobacco 1. Prevalence of smoking Due to the 1990 reunification of Germany, there are no long-term comparable national data for the whole country. With regard to the western part of the country, the prevalence of smoking among adults has remained very stable over the past few years, both for men (36.2% in 1992 compared to 36.3% in 1989) and women (22% in 1992 and 21.4% in 1989). In unified Germany, a survey conducted in 1992, shows a global prevalence of 28.8% (36.8% for men and 21.5% for women). Smoking is defined as daily and weekly smoking. Age-group Men Women East West East West 15-19 25.3 20.1 13.9 14.5 20-24 48.4 40.2 33.9 31.8 25-29 53.6 45.2 37.4 35.4 30-39 50.7 47.4 33.2 36.2 40-49 41.5 41.8 19.8 29.4 50-59 33.8 33.5 12.7 16.6 60-69 26.9 26.6 10.4 11.4 70+ 21.3 18.4 4.5 5.4 Total 39.4 36.3 19.5 22 Source : Statistisches Bundesamt; Mikrozensus May 1992. 2. Consumption of tobacco Domestic tobacco consumption 1990-1993 1990 1991 1992 1993 Cigarettes (m. pieces) 150,400 145,600 133,100 130,230 Fine-cut (tonnes) 12,800 12,300 11,200 12,500 Rolls (tonnes) 900 3,100 9,300 5,570 * Rolls (million pieces) 900 (est.) 3,200 9,300 9,700 Border sales 5,500 8,800 13,000 13,000 (million pieces) ** (million pieces) ** Sources : World Tobacco, May 1994; TJI, 3/92 * In 1993, the sales of tobacco rolls in Germany increased by 4.7% over 1992 and represented 9.7 billion rolls. However, to offset the effect of a steep tax raise at the beginning of 1993, manufacturers lowered the weight of each tobacco roll, which meant that fewer tonnes were sold in 1993. ** Border sales (legal and illegal) are difficult to estimate and it could be the case that they were as high as 15,000 million in 1993 Cigarette consumption has been declining steadily since 1991. This decline is largely due, however, to the increase in the legal and illegal smuggling of cigarettes into Germany (see IV. 1 below), which resulted in lower figures for official cigarette sales. Per capita cigarette consumption 1990-1993 (population +15 years) 1990 1991 1992 1993 2258 2180 1987 1939 Source : Eurostat/World Tobacco/TJI III. Price and taxation 1. Price of the five most sold brands The five most sold brands in 1993 were Marlboro, HB, West, F6 and Peter Stuyvesant. The retail price of these brands in September 1994 was as follows : Brand Price in DM Price in ECU* Marlboro 4.75 2.48 HB 4.55 2.38 West 4.40 2.30 F6 3.95 2.07 Peter Stuyvesant 4.75 2.48 Source : Tobacco International, April 1994 *1 ECU = 1.912DM 2. Evolution of cigarette prices since 1987 The price of a pack of 19 cigarettes of the medium price category (HB brand) increased by 16.8% between 1987 and 1993 from DM3.81 to DM4.45. In the same period, the real price of tobacco (taking account of the effect of inflation) increased by only 4.09%. Between 1985 and 1993, the real price of tobacco increased by 7.09%. 3. Tobacco in the consumer price index Tobacco products are still included in the consumer price index where they are given a "weighting" of 2.10% in 1991. 4. Level and structure of taxation at 1.1. 1994 Taxes on cigarettes (VAT + excise duties) presently represent 71.72% of the retail selling price (RSP). The structure of taxation on 1.1.94 was as follows : Product Specific Ad Valorem VAT as % excise excise excise (ECU) as % of RSP of RSP Cigarettes 43.47 33.88% 13.04% (per 1000 pieces) (per 1000 pieces) RYO 15.82 (per kg) 18.12% 13.04% (per kg) Other smoking 2.88 22% 13.04% tobaccos (per kg) (per kg) Cigars and - 5% 13.04% Cigarillos In Germany, the difference in the level of taxation between cigarettes and roll-your-own (RYO) tobacco led to a transfer of consumption from cigarettes to RYO tobacco. The industry took advantage of this situation by launching tobacco "rolls" (pre-prepared tobacco sticks classed, for taxation purposes, as RYO tobacco) whose consumption rose from less than 1 billion in 1990 to 9.7 billion pieces in 1993. The federal government reacted to this situation by increasing the taxes for this product. By 1995, tobacco rolls will be taxed at the same level as cigarettes and the consumption of this product is expected to decrease sharply as a result. 5. Government tax revenue Year Receipts from tobacco taxes (in million DM) (in million ECU) 1991 19,682 10,293 1992 19,233 10,059 1993 19,428 10,161 Source : Statistishes Bundesamt Industry statistics for all EU countries in 1992 (which are over-evaluated in comparison to the national statistics) indicate that Germany is the EU country which receives the biggest income from tobacco taxation in terms of value. Tobacco taxes represented 5% of the total government tax revenue (3) . 6. Price of cigarettes in relation to one hour of work The average hourly gross salary for an industrial worker in 1992 was 11.74 ECU - enough to buy 2.8 packs of 19 cigarettes of a medium-priced brand (HB brand). 7. Tobacco as a percentage of the household budget Tobacco expenditure as a percentage of annual household expenditure 1986 - 1991 Year Expenditure Final Consumption Tobacco on tobacco of Households as % of (mio ECUS) (mio ECUs) overall expenditure 1986 10,558 541,329 1.95% 1987 10,866 576,659 1.88% 1988 11,116 601,855 1.85% 1989 11,650 635,244 1.83% 1990 12,519 701,731 1.78% 1991 12,805 758,972 1.69% Source : Eurostat IV. Market profile 1. Characteristics of the market The German tobacco market is, by far, the most important in the European Union. The value of domestic sales represented more than 33 billion DM in 1993, generating 19.43 billion DM (10.16 billion ECU) in taxes for the State. Value of domestic sales 1993 million DM million ECU Cigarettes 30,152 15,770 Cigars/Cigarillos 502 262 Fine-cut tobacco 1,363 713 Pipe tobacco 211 110 Tobacco rolls 1,148 600 Total 33,376 17,456 With regard to cigarette consumption, the market is largely dominated by established western brands, with the exception of the cigarette brand F6 which is an original product of the former GDR. F6 is only sold in Eastern Germany, but its sales are so high in this region that it, nevertheless, figures on the list of the top five cigarette brands for the country as a whole. The split in consumer brand preference between "Easterners" and "Westerners" persists, partly due to differences in taste, but also as a result of cheaper prices in the East. East German smokers prefer full-flavored cigarettes and, of the top six brands in the East, only two brands are not of GDR origin. One of these, Golden American, being a special creation for the East German market. Most sold brands in 1993 Brand Market share Company Marlboro 20.55% Philip Morris HB 8.48% BAT West 6.11% Reemstma F6 5.24% Vezifa/Philip Morris Peter Stuyvesant 3.91% Reemstma Camel Filter 3.82% RJ Reynolds Source : Tobacco International, April 1994 Most sold brands in 1993 - East Germany Brand Market share Company F6 31.03% Vezifa/Philip Morris Marlboro 7.91 % Philip Morris Golden American 7.91% Rothmans Cabinet Full Flavor 5.60% Reemstma HB 4.59% BAT Cabinet Mild 2.87% Reemstma Source : Tobacco International, April 1994 The German market profited from the reunification and in 1990 and 1991 it enjoyed a phase of growth which then came to a halt. This was due mainly to the illegal smuggling of cigarettes from Eastern European countries into Germany through its eastern boarders and to the huge increase in cross-border buying on the western border. According to industry estimates (which tend to overestimate the smuggling problem) cross-border sales and smuggling account for 15 billion cigarettes a year. 2. Tobacco retail outlets Tobacco products are sold in a variety of retail outlets in Germany. In 1990 the distribution of sales according to the type of retail outlet was as follows : Tobacconists Grocers/ Vending machines Other Supermarkets retail 10% 33% 35% 22% Source : Pieda, the tobacco industry in the European Community 1990 Germany is one of the few EU countries where vending machines are still authorised and are present on such a wide scale (in 1991 there were 730,000 vending machines in Germany). They represent more than a third of cigarette sales in this country. In recent times, increasing numbers of cigarettes have been sold through service stations, which are able to stay open later than other shops. There has also been a small increase in the proportion of cigarettes sold through vending machines in the former West Germany. This was caused by the increase in pack contents from 19 to 22 that occurred when the price of vending packs was put up from DM4 to DM5. This trend is not expected to continue. At the same time, the rapid increase in the proportion of cigarettes being sold through vending machines in the former East Germany has almost ground to a halt. This market, which had no vending machines at the time of reunification, is now thought to have reached saturation point. 3. Expenditure on tobacco advertising Not available V. The costs of smoking 1. Number of tobacco-related deaths In 1990, tobacco was responsible for 112,400 deaths in Germany (95,900 men and 16,500 women). Tobacco-related deaths 1990 Male Female Total All Cancer 39,000 4,400 43,400 (Lung Cancer) 25,000 3,400 28,400 Vascular 31,000 6,300 37,300 Respiratory 15,800 3,800 19,600 All Other 10,100 2,000 12,100 Source : Peto, Lopez et al, 1994 The 58,200 persons who die in the age group between 35 and 69 years are estimated to have lost 21 years of life because of tobacco use. 2. Evolution of the number of tobacco-related deaths Tobacco was responsible for 45,000 deaths in 1955. 112,400 died in 1990. It is estimated that it will be responsible for 108,000 deaths in 1995. Altogether, between 1950 and 2000, tobacco will have killed 4.8 million people in Germany. VI. Legislation 1. Advertising In Germany, tobacco advertising is primarily regulated through voluntary agreements but some legal restrictions also exist. Legal restrictions (§ 22 of the law of 15 August 1974 for the Revision and Amendment of the Legislation on Trade in Foodstuffs, Tobacco Products, Cosmetics and other commodities - LMBf) - Ban of television and radio advertising. - Ban of advertisements which : (a) create the impression that the consumption or the proper use of tobacco products is harmless to health or is likely to have a favourable effect on the functioning of the body, physical performance, or well being; (b) are likely to induce juveniles or adolescents to smoke; (c) make it appear that the inhaling of tobacco smoke is something to be imitated; (d) suggest that tobacco products are natural or pure. Voluntary restrictions Voluntary restrictions are both qualitative and quantitative and include the following provisions : - limitation of the size of advertising panels; - limitation of the size of printed ads and the frequency of their appearance in magazines and newspapers; - no advertising on billboards or bus stops in close proximity to schools or youth centres; - no advertising using health arguments; - no advertising aimed at young people; - no advertising using elements typical to the environment of young people; - no advertising showing media stars or sporting personalities; - no advertising using models of under 30 years of age; - limitation of the use of the terms "mild" and "light"; - renunciation of advertising in certain media; - no advertising in magazines for young people; - no advertising in sports centres; - no advertising on public transport vehicles; - no advertising by aeroplane; - no advertising by illuminated panels; - no free distribution of free samples; In addition, advertisements must include a health warning and the tar and nicotine content of the cigarettes advertised. These indications must cover 10% of the advertisement. 2. Public places There is, at the present time, no general regulation covering all aspects of the problem of smoking in public places under German law. In March 1993, the German coalition against tobacco launched a proposal for a comprehensive law on smoking in public places. The proposal is still to be examined by the Parliament. The federal government has, however, already indicated that it lacks the constitutional power to enact such a law. 3. Labelling/Tar content The 29 October 1991 Decree of the Federal Health Ministry on the labelling of tobacco products and the maximum tar yield of cigarettes implements EU Directives 89/622 and 90/239. 4. Sales to children No legislation 5. Oral tobacco The marketing of oral tobacco is banned since July 1992 by EC Directive 92/41. Germany has still, however, to adopt national legislation to implement this Directive. VII. The tobacco industry 1. Structure of the tobacco industry The German cigarette market is dominated by five manufacturers, of which one is the German company, Reemtsma. The market share of these companies accounts for 96% of domestic sales. Dealers' own brands (mostly sold in East Germany) make up the remaining 4% of the market. Market share of German cigarette manufacturers 1989-1993 1989 1990 1991 1992 1993 Philip Morris 30.3 32 34.6 35.5 37.16 Reemtsma 18.5 23.5 23.4 24.2 24.3 B.A.T. 21.7 20.1 19.3 19.3 18.85 Brinkman * 9.9 10.1 9.7 9.2 8.6 R.J. Reynolds 8.8 8.2 7.7 6.8 6.42 Sources : Maxwell Consumer Report; TJI 3/92; TI, April 1994. * Affiliated with Rothmans International Market shares of cigarette manufacturers East/West Germany (% of market) 1991 Company West Germany East Germany Philip Morris 32.98 44.87 Reemtsma 23.74 21.47 BAT 20.55 10.92 Rothmans 8.92 14.39 RJ Reynolds 7.67 7.585 All others 1.045 0.002 Dealers own brands 5.09 0.74 Source : Tobacco International, 15 February 1992 Altogether, more than 15 German manufacturers are operating in Germany. Among these, the most important is Reemtsma, which sells tobacco products and beverages. It employed 4,905 persons in 1991, and its profits were DM129 million. The East German tobacco industry was rapidly taken over by the larger multinational companies following reunification and was already almost completely in their hands by mid-1990. In 1993, the total turnover of the cigarette industry was DM27.789 billion. Experts' forecasts for 1994 are not, however, as promising as cross-border sales and smuggling are likely to continue with increased intensity and consumers will have to cope with less disposable incomes due to the overall economic situation. 2. Production Production of cigarettes 1988 to 1993 (million pieces) 1988 1989 1990 1991 1992 1993 191,322 189,551 204,651 221,111 222,399 215,500* Source : Tobacco Journal International * Forecast 3. Imports/Exports Imports/Exports of cigarettes 1989-1993 (million pieces) Year Imports Exports 1989 11,908 48,166 1990 11,211 54,320 1991 9,369 86,928 1992 7,773 77,555 1993 8,500* 85,000* Source : Tobacco Journal International * Forecast 4. Employment In 1990, 21,500 persons were employed in the tobacco manufacturing sector. VIII. Agriculture 1. Production Germany is not a big producer of leaf tobacco and only contributes about 2% of the overall EU production. In 1992, the production reached 9,090 tonnes. 2. Imports/exports In 1992, Germany imported 198,000 tonnes of leaf tobacco and exported 25,000 tonnes. 3. Subsidies In 1992, Germany received 43.8 million ECU in tobacco growing subsidies. 4. Area cultivated In 1992, 3,801 ha were devoted to tobacco growing. VIII. Comments The German market is the most important in the European Union, both in terms of production and of domestic consumption. The market will most likely continue to develop, Germany benefiting from its geographical position and privileged relationship with the countries of central and eastern Europe which are large consumers and producers of cigarettes. The tobacco industry is a major player in the national economy and its interests are defended by several national organisations. It has, as a result, an important influence on government policy in the area of smoking prevention. Faced with this powerful and well organised group, German health organisation recently (1991) decided to unite forces in a national coalition against smoking which is beginning to have an influence at national level thanks, amongst other things, to the organisation of several conferences and press meetings and to the participation of well-known scientists and politicians in their activities. However, the activities and resources of the coalition remain limited in comparison to the size of the country and the scale of the problem. The federal structure means that - as in Belgium and Spain - many local initiatives are taken which do not necessarily have an influence at national level. The Health Ministers of the German Laender, for example, adopted a position in favour of a ban on the advertising of tobacco products. The German Federal Government continues, however, to be opposed to such a measure. It is sometimes difficult, moreover, to know at what level decisions should be taken. Finally, more than in all the other countries of the EU, the present socio-economic climate is not conducive to smoking prevention activities. The social and economic problems generated by the reunification of the country make it difficult, at a political level, to impose the tobacco problem as a priority (3) Confederation of European Community Cigarettes Manufacturers; The European Tobacco Industry - Facts and figures 1992.