Cigarette giant chops up the prices

Alison McMeekin
The Daily Telegraph
May 17, 2012

TOBACCO company British American Tobacco Australia (BATA) says it has been forced to start selling cheap smokes to try to win back market share from illegal products and to compete in the expanding “cheap” cigarette market.

BATA – whose brands include Dunhill, Winfield and Benson & Hedges – last week released “Just Smokes”, which retails for about $11.50 for a pack of 25 cigarettes.

The company said the new brand is priced just above illegal counterfeit and contraband cigarette packs – which sell for about $8 to $10 for a pack of 25.

The average price for a pack of 25 smokes is $16.

Spokesman Scott McIntyre said since the government increased the tobacco excise by 25 per cent in 2010, the “cheap price segment” has grown 63 per cent, as smokers look for lower priced cigarettes.

“The tobacco industry is extremely competitive so if smokers continue to ask retailers for cheaper smokes, that’s where the industry will battle for market share which will potentially see prices drop further,” Mr McIntyre said.

“(Smokers) have been down trading to cheaper products or illegal cigarettes, so we’ve been forced to compete.

“If the government keeps giving us ad hoc excise increases, all they’ll do is make the problem worse.

“They’re trying to reduce smoking rates through excise but instead, it’s making people opt for cheaper or illegal options.”
Federal AMA president Dr Steve Hambleton said “price is a very strong signal” that drives either more smoking or less.

“When we tell the government to increase the taxes on tobacco, every time the price goes up, consumption goes down,” he said.
“That the opposite is occuring is very concerning for the AMA.”