New Zealand - BAT reducing prices discouraging people from quitting..

June 11, 2008 - Action on Smoking and Health (Ash) director Ben Youdan: Cigarette companies are using "loopholes" in legislation to cut prices and reverse smokers' quit rates, anti-smoking groups say. The recent lowering of the price of some brands at the bottom end of the tobacco market was an "underhand and cynical attempt to discourage people from quitting smoking".

Just recently the New Zealand government announced it was reviewing the $37 million it spends on stop smoking campaigns because they don’t seem to be working.

While it was illegal for individual retailers to discount cigarettes, supply companies can make country-wide price adjustments.

Tobacco giant British American Tobacco (BAT said its national price cut was in response to similar moves by competitors. BAT's Pall Mall and Freedom cigarette prices have been lowered by about 50c a packet, with Freedom's "limited edition" packet selling for $1.10 less.

A recorded message on the BAT phone number said the price of cigarettes was about 66 per cent tax. Fifty cents out of the remaining 34 percent meant the company was taking about a 15 percent drop in its returns.

BAT head of corporate and regulatory affairs Susan Jones said the price moves were in response to cuts by competitors like Imperial Tobacco's Horizon and John Brandon brands. BAT has 76 per cent of the New Zealand market and owns six of the top 10 brands, including the country's top two brands, Horizon and Benson and Hedges. Pall Mall is the country's fifth-best seller. Jones said Pall Mall and Freedom were "value" brands, but their prices were "still terrifically high and still very highly taxed".

Youdan said companies blaming each other for the price drop was beside the point one of them had started the move and the outcome was that both had lower prices that removed the incentive for smokers to quit. Youdan said New Zealand had good quit rates. "The best thing to decrease smoking is to raise the price," he said. "They are using loopholes in the Smoke-free Environments Act. They (retailers) are forbidden to offer them at a reduced rate other than 'normal trade discounts'." A complaint had been laid with the Ministry of Health, Youdan said.

Every 10 per cent increase in the price of cigarettes reduced youth smoking by seven per cent and overall cigarette consumption by about four percent. -

Reference: Ash attacks firms over cheaper cigarettes by IAN STEWARD, The Press -, 6/10/2009.

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