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India: Cigarette Market
The Indian government is considering a proposal to ban foreign brand licensing, franchising, and technology agreements in the tobacco sector to close loopholes in its existing foreign direct investment (FDI) ban. While direct foreign investment in domestic tobacco manufacturing is already prohibited, multinational companies – such as Philip Morris International via its Marlboro licensing deal with Godfrey Phillips India – have long used brand licensing to maintain a market presence. The proposed policy aims to prevent foreign entities from bypassing investment rules and align with WHO tobacco control commitments, though similar past efforts faced pushback over concerns regarding domestic agricultural livelihoods.
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Global Vape Market
China’s Ministry of Finance and State Taxation Administration are completely eliminating value-added tax (VAT) export rebates on e-cigarettes, vaping hardware, and nicotine products, setting a final enforcement deadline of April 1, 2027. Following initial rebate trims in 2026, the removal of the up to 13% tax offset directly impacts the unit economics of China’s dominant global supply chain, forcing manufacturers to either absorb margin losses or raise wholesale prices. This fiscal shift is expected to curtail low-cost spot-market competition, accelerate supply chain consolidation toward tier-one manufacturers, and prompt international brand owners to renegotiate procurement contracts ahead of the implementation date.
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Philip Morris International: News
Philip Morris International (PMI) is scheduled to report its Q3 2026 financial results on October 20, 2026, with consensus estimates projecting a 4.4% year-on-year revenue increase to $11.32 billion and an adjusted EPS of $2.29. Heading into the earnings release, PMI shares are trading near record highs above $200, driven by robust demand for smoke-free products like IQOS and ZYN, strong pricing power in combustibles, and a broader market rotation into defensive value stocks. The company’s latest issued guidance for full-year 2026 targets 5%-7% organic net revenue growth and 10.7%-12.7% adjusted EPS growth.
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USA: Tobacco Regulation – States
South Dakota and Pennsylvania have introduced strict new state-level measures to regulate alternative nicotine and vaping products in the absence of a unified federal approach. South Dakota’s Senate Bill 221 establishes a closed-loop supply chain by requiring retailers to source exclusively from state-licensed distributors alongside stricter licensing and age-verification rules. Meanwhile, Pennsylvania is set to begin enforcing Act 57 through a state-managed product directory, classifying any e-cigarette lacking FDA authorization or active PMTA status as contraband subject to seizure and steep fines.
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Perlz: Dissolvable Nicotine Pearls
Japan Tobacco (JT) has launched “Perlz,” a new range of 100% tobacco-free and sugar-free dissolvable nicotine pearls, in the United Kingdom. Designed to be placed sublingually (under the tongue) for roughly 12 minutes, the multi-layered micro-spheres offer a low-dose (1 mg and 2 mg), waste-free alternative to traditional pouches. Debuting in Mint and Berry flavors, Perlz compete directly with Philip Morris International’s recently launched ZYN Melts in the emerging category of dissolvable nicotine products.
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Southeast Asia: Tobacco Market
Indonesia – the world’s second-largest cigarette market after China – is considering strict restrictions on flavorings and additives across both traditional tobacco products and emerging nicotine formats. Supported by WHO recommendations, the proposal aims to curb youth appeal by limiting flavored variants and cooling agents, though projections indicate it could trigger a 20% to 30% drop in overall retail sales. Policymakers are weighing these public health goals against broader market considerations, including the reduced availability of lower-risk alternatives for adult smokers, commercial impact, and potential illicit trade.
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India: Smokeless Tobacco Market
The Bombay High Court has dismissed petitions from airport duty-free operators, upholding a ban on the sale of imported, tobacco-free nicotine pouches at Mumbai’s international airport. The court ruled that duty-free zones within sovereign Indian territory remain fully subject to domestic laws, rejecting the argument that these areas enjoy regulatory immunity from local health statutes. Furthermore, the decision affirmed the classification of nicotine pouches as drugs under the Drugs and Cosmetics Act, 1940, establishing that duty-free concessions do not exempt retailers from strict domestic licensing and public health requirements.
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Tobacco Lawsuits: USA
A US federal judge has stayed a lawsuit challenging the FDA’s 2021 PMTA rule, filed by Altria subsidiaries Helix Innovations and NJOY over lengthy application review delays. The stay was granted after the FDA announced plans to evaluate revisions to the framework to address review backlogs, ongoing litigation, and the growth of the illicit market. While existing marketing authorization requirements remain fully in effect during the pause, potential regulatory revisions could ultimately reshape how manufacturers approach product development and submissions for novel nicotine products in the US.
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Bangladesh: Tobacco Market
Bangladesh’s 2026-27 national budget establishes a split regulatory structure for tobacco and nicotine products following 2025’s sharp cigarette excise hikes. The framework maintains a complete ban on e-cigarettes to prevent youth vaping, whereas oral nicotine pouches and heated tobacco products (HTPs) are formally integrated under high supplementary duty tiers. While this creates new taxable revenue streams, tax integration currently outpaces comprehensive category-specific regulations.
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South Africa: Tobacco Market
British American Tobacco (BAT) will end over 50 years of South African manufacturing by closing its Heidelberg factory by the end of the year, transitioning entirely to an import model. The decision stems from low plant utilization (35%) caused by rampant illicit trade, which now accounts for an estimated 75% of the market and costs the state R28 billion annually in lost revenue. As BAT advocates for a mandatory minimum retail price and reduced excise frameworks, it maintains local manufacturing will only resume if illicit trade is substantially reduced.
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