The tobacco market has seen great changes during the past few years due to regulations. In 2013, there was a large tax increase on cigarettes, causing the prices of cigarettes to skyrocket. The government hoped that the increase in price of cigarettes will cause a decrease in smoking. However, four years later, it has caused the value of tobacco market to increase.
Meanwhile, the tax on rolling tobacco was not raised as high as that of cigarettes, causing a strong shift towards the fine cut tobacco market. Tobacco importers and manufacturers noted this trend and encouraged it by launching mainstream cigarette brands into the fine cut tobacco market, including Marlboro and Pall Mall. However, the popular fine cut tobacco brands remain the pure fine cut tobacco brands, such as Bali Shag and Drum. According to publications by the Ministry of Health, the government has lost over five hundred million Shekel due to the shift towards fine cut tobacco.
Regulations in the Israeli tobacco market have been stagnant in recent years, while they have become stricter throughout the world, causing smoking to remain prevalent in the market. One out of every five Israeli's smoke cigarettes, and the tobacco market continues growing in volume terms. In 2017, Channel 2 News published a segment showing the aides of Health Minister Ya'acov Litzman accepting money from fake cigarette distributers. Locals were very upset by this news segment and due to it, the Ministry of Health is likely to put stricter regulations in place in the market. Some expected regulations include banning advertisements of tobacco products, completely banning smoking in public places, and increasing taxes on fine-cut tobacco.
One such leniency was seen in the launch of iQOS by Philip Morris. Until the FDA's decision on whether to consider the product a tobacco product or not, the Health Ministry allowed the product to be sold without any restrictions. Therefore, the iQOS was launched with strong promotional activity and was able to be sold to anyone. Locals expressed strong backlash against this to the Ministry of Health, and they decided to consider it a tobacco product.
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