1
|
Gendall P, Gendall K, Branston JR, Edwards R, Wilson N, Hoek J. Going 'Super Value' in New Zealand: cigarette pricing strategies during a period of sustained annual excise tax increases. Tob Control 2024; 33:240-246. [PMID: 36008127 DOI: 10.1136/tc-2021-057232] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 12/18/2021] [Accepted: 08/09/2022] [Indexed: 11/04/2022]
Abstract
BACKGROUND Between 2010 and 2020, the New Zealand (NZ) Government increased tobacco excise tax by inflation plus 10% each year. We reviewed market structure changes and examined whether NZ tobacco companies shifted excise tax increases to maintain the affordability of lower priced cigarette brands. METHODS We cluster-analysed market data that tobacco companies supply to the NZ Ministry of Health, created four price partitions and examined the size and share of these over time. For each partition, we analysed cigarette brand numbers and market share, calculated the volume-weighted real stick price for each year and compared this price across different price partitions. We calculated the net real retail price (price before tax) for each price partition and compared these prices before and after plain packaging took effect. RESULTS The number and market share of Super Value and Budget brands increased, while those of Everyday and Premium brands decreased. Differences between the price of Premium and Super Value brands increased, as did the net retail price difference for these partitions. Following plain packaging's implementation, Super Value brand numbers more than doubled; contrary to industry predictions, the price difference between these and higher priced brands did not narrow. CONCLUSIONS Between 2010 and 2020, NZ tobacco companies introduced more Super Value cigarette brands and shifted excise tax increases to reduce the impact these had on low-priced brands. Setting a minimum retail price for cigarettes could curtail tobacco companies' ability to undermine tobacco taxation policies designed to reduce smoking.
Collapse
Affiliation(s)
- Philip Gendall
- Public Health, University of Otago Wellington, Wellington, New Zealand
| | | | | | - Richard Edwards
- Public Health, University of Otago Wellington, Wellington, New Zealand
| | - Nick Wilson
- Public Health, University of Otago Wellington, Wellington, New Zealand
| | - Janet Hoek
- Public Health, University of Otago Wellington, Wellington, New Zealand
| |
Collapse
|
2
|
Hatchard J, Buykx P, Brennan A, Gillespie D. Options for modifying UK alcohol and tobacco tax: A rapid scoping review of the evidence over the period 1997-2018. NIHR OPEN RESEARCH 2023; 3:26. [PMID: 37881457 PMCID: PMC10593339 DOI: 10.3310/nihropenres.13379.2] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Figures] [Subscribe] [Scholar Register] [Accepted: 09/22/2023] [Indexed: 10/27/2023]
Abstract
Background Increased taxation is recognised worldwide as one of the most effective interventions for decreasing tobacco and harmful alcohol use, with many variations of policy options available. This rapid scoping review was part of a NIHR-funded project ('SYNTAX' 16/105/26) and was undertaken during 2018 to inform interviews to be conducted with UK public health stakeholders with expertise in alcohol and tobacco pricing policy. Methods Objectives: To synthesise evidence and debates on current and potential alcohol and tobacco taxation options for the UK, and report on the underlying objectives, evidence of effects and mediating factors.Eligibility criteria: Peer-reviewed and grey literature; published 1997-2018; English language; UK-focused; include taxation interventions for alcohol, tobacco, or both. Sources of evidence: PubMed, Scopus, Cochrane Library, Google, stakeholder and colleague recommendations.Charting methods: Excel spreadsheet structured using PICO framework, recording source characteristics and content. Results Ninety-one sources qualified for inclusion: 49 alcohol, 36 tobacco, 6 both. Analysis identified four policy themes: changes to excise duty within existing tax structures, structural reforms, industry measures, and hypothecation of tax revenue for public benefits. For alcohol, policy options focused on raising the price of cheap, high-strength alcohol. For tobacco, policy options focused on raising the price of all tobacco products, especially the cheapest products, which are hand-rolling tobacco. For alcohol and tobacco, there were options such as levies that take money from the industries to help reduce the societal costs of their products. Due to the perceived social and economic importance of alcohol in contrast to tobacco, policy options also discussed supporting pubs and small breweries. Conclusions This review has identified a set of tax policy options for tobacco and alcohol, their objectives, evidence of effects and related mediating factors. The differences between alcohol and tobacco tax policy options and debates suggest an opportunity for cross-substance policy learning.
Collapse
Affiliation(s)
- Jenny Hatchard
- Population Health Sciences, Bristol Medical School, University of Bristol, Bristol, UK
- Tobacco Control Research Group, Department for Health, University of Bath, Bath, UK
| | - Penny Buykx
- School of Humanities and Social Science, University of Newcastle, Australia, New South Wales, Australia
- Sheffield Centre for Health and Related Research (SCHARR), Division of Population Health, School of Medicine and Population Health, University of Sheffield, Sheffield, UK
| | - Alan Brennan
- Sheffield Centre for Health and Related Research (SCHARR), Division of Population Health, School of Medicine and Population Health, University of Sheffield, Sheffield, UK
| | - Duncan Gillespie
- Sheffield Centre for Health and Related Research (SCHARR), Division of Population Health, School of Medicine and Population Health, University of Sheffield, Sheffield, UK
| |
Collapse
|
3
|
Hilton S, Smith MJ, Buckton CH, Patterson C. Experts' views on how to design a tobacco control fund in the UK. BMJ Open 2022; 12:e066224. [PMID: 36442897 PMCID: PMC9710323 DOI: 10.1136/bmjopen-2022-066224] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Journal Information] [Submit a Manuscript] [Subscribe] [Scholar Register] [Indexed: 11/29/2022] Open
Abstract
OBJECTIVE To explore expert views on the potential value, and approaches to establishing and administering a tobacco control fund in the UK. DESIGN Semistructured interviews and follow-up discussion groups. SUBJECTS Twenty-four UK and international experts on tobacco control regulation, public health, economics or law from the academic, public, private and third sector. METHODS Participants considered the relative merit of (1) general excise tax on retail tobacco sales; (2) ring-fenced hypothecation of excise taxes on retail tobacco sales; and (3) a direct levy on tobacco manufacturers. Preliminary synthesis of interview findings was deliberated on in two follow-up discussion groups to identify key considerations for policy design. RESULT Most experts agreed that a ring-fenced tobacco control fund would be a valuable method of raising predictable and reliable funds from tobacco producers either using either companies' sales volume or market share as a way to establish the proportion they should pay. Experts predominantly recommended that a fund in the UK should be administered by a government body with devolved nation input and with an independent advisory group. They typically indicated that funding should be allocated yearly with a distribution at local, regional and national levels to support smoking prevention and cessation rather than treatment activities with priority given to measures that tackle smoking-related inequalities. CONCLUSION There was overwhelming agreement by experts on the need to establish a tobacco control fund to help meet the proposed government tobacco-free targets to reduce adult smoking prevalence to 5% by 2030 (England) and 2034 (Scotland).
Collapse
Affiliation(s)
- Shona Hilton
- MRC/CSO Social and Public Health Sciences Unit, University of Glasgow, Glasgow, Glasgow, UK
| | - Marissa J Smith
- MRC/CSO Social and Public Health Sciences Unit, University of Glasgow, Glasgow, Glasgow, UK
| | - Christina H Buckton
- MRC/CSO Social and Public Health Sciences Unit, University of Glasgow, Glasgow, Glasgow, UK
| | - Chris Patterson
- MRC/CSO Social and Public Health Sciences Unit, University of Glasgow, Glasgow, Glasgow, UK
| |
Collapse
|
4
|
Scollo M, Branston JR. Where to next for countries with high tobacco taxes? The potential for greater control of tobacco pricing through licensing regulation. Tob Control 2022; 31:235-240. [PMID: 35241594 DOI: 10.1136/tobaccocontrol-2021-056554] [Citation(s) in RCA: 2] [Impact Index Per Article: 1.0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 06/01/2021] [Accepted: 10/29/2021] [Indexed: 11/04/2022]
Abstract
Optimising the taxation of tobacco products should be among the highest priorities for health and hence economic policy in every country. The WHO Technical Manual on Tobacco Tax Policy and Administration released in April 2021 provides invaluable advice, including 26 best practice recommendations on policy design, administrative efficiency and addressing industry tactics to circumvent tobacco tax increases. Introducing and increasing tobacco taxes is the most important tobacco control measure for any jurisdiction. The effects of simple tax structures, high tax levels, and frequent above-inflation increases in specific excise duties can be enhanced through strict controls on packaging (including pack size), product design, and discounting. However, even with such measures, tobacco companies can continue to undermine the effectiveness of tax policy by offering some products in their ranges at very low prices, as well as gradually and selectively increasing the prices of some but not all products after tax increases. This paper is aimed at policymakers in countries that have already adopted best practice tax policy. It explores the idea of wholesale price capping combined with retail licensing to address the problems of brand proliferation, dispersion of prices, cushioning and strategic under/overshifting of tax increases, thereby radically and sustainably increasing the effectiveness of tobacco tax policy while also raising additional tax revenue for governments by reducing industry profitability.
Collapse
Affiliation(s)
- Michelle Scollo
- Centre for Behavioural Research in Cancer, Cancer Council Victoria, Melbourne, Victoria, Australia
| | | |
Collapse
|
5
|
Hiscock R, Augustin NH, Branston JR, Gilmore AB. Longitudinal evaluation of the impact of standardised packaging and minimum excise tax on tobacco sales and industry revenue in the UK. Tob Control 2021; 30:515-522. [PMID: 32719111 PMCID: PMC8394752 DOI: 10.1136/tobaccocontrol-2019-055387] [Citation(s) in RCA: 11] [Impact Index Per Article: 3.7] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 09/18/2019] [Revised: 04/29/2020] [Accepted: 05/01/2020] [Indexed: 12/03/2022]
Abstract
BACKGROUND Standardised packaging for factory-made cigarettes (FM) and roll-your-own tobacco (RYO), and a minimum excise tax (MET) were fully implemented in the UK in May 2017 following a 12-month transition period. This paper is the first to examine effects on tobacco sales volumes and company revenues. METHODS Analysis of UK commercial supermarket and convenience store electronic point of sale data on tobacco sales. FM and RYO products' data (May 2015-April 2018) yielded 107 572 monthly observations. Expected values from additive mixed modelling were used to calculate trends in: (1) volumes of tobacco sold overall, by cigarette type (FM and RYO) and by seven market segments; and (2) company net revenues. A 10-month period (June 2015-March 2016) before the transition to standardised packs was compared with a 10-month period after the introduction of the MET and full implementation of standardised packs (June 2017-March 2018). RESULTS Postimplementation, the average monthly decline in stick sales was 6.4 million (95% CI 0.1 million to 12.7 million) sticks faster than prelegislation, almost doubling the speed of decline. Sales of cheap FM brands, previously increasing, plateaued after implementation. Company monthly net revenues declined from a stable £231 million (95% CI £228 million to £234 million), prelegislation, to £198 million (95% CI £191 million to £206 million) in April 2018. CONCLUSIONS The concurrent introduction of standardised packaging and MET in the UK was associated with significant decline in sales and in tobacco industry revenues, and the end of the previous growth in cheap cigarette brands that appeal to young and price conscious smokers.
Collapse
Affiliation(s)
- Rosemary Hiscock
- Tobacco Control Research Group, Department for Health, University of Bath, Bath, UK
| | - Nicole H Augustin
- Department of Mathematical Sciences, University of Bath, Bath, Somerset, UK
- School of Mathematics, University of Edinburgh, Edinburgh, UK
| | - J Robert Branston
- Tobacco Control Research Group, Department for Health, University of Bath, Bath, UK
- School of Management, University of Bath, Bath, UK
| | - Anna B Gilmore
- Tobacco Control Research Group, Department for Health, University of Bath, Bath, UK
| |
Collapse
|
6
|
Branston JR. Industry profits continue to drive the tobacco epidemic: A new endgame for tobacco control? Tob Prev Cessat 2021; 7:45. [PMID: 34179591 PMCID: PMC8193577 DOI: 10.18332/tpc/138232] [Citation(s) in RCA: 2] [Impact Index Per Article: 0.7] [Reference Citation Analysis] [Key Words] [Track Full Text] [Download PDF] [Journal Information] [Subscribe] [Scholar Register] [Received: 04/16/2021] [Accepted: 05/26/2021] [Indexed: 11/24/2022]
Affiliation(s)
- J Robert Branston
- School of Management, University of Bath, Bath, United Kingdom.,Tobacco Control Research Group, Department for Health, University of Bath, Bath, United Kingdom
| |
Collapse
|
7
|
Branston JR, Arnott D, Gallagher AWA. What does Brexit mean for UK tobacco control? THE INTERNATIONAL JOURNAL OF DRUG POLICY 2021; 92:103044. [PMID: 33279366 DOI: 10.1016/j.drugpo.2020.103044] [Citation(s) in RCA: 2] [Impact Index Per Article: 0.7] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 09/08/2020] [Revised: 10/29/2020] [Accepted: 11/11/2020] [Indexed: 11/23/2022]
Abstract
In January 2020 the UK left the European Union (EU), although a transition period extends EU rules/regulations until the end of 2020 while a longer-term relationship agreement is negotiated. After almost 50 years of membership the UK economy is tightly integrated into that of the EU single market, and many UK laws and regulations have their origins in the EU, including those concerning tobacco. This paper provides an overview of potential implications of Brexit for UK tobacco control. We examine the key areas of the supply, cost, taxation, and regulation of tobacco products, and the impact of commitments in regards to the border between Ireland and Northern Ireland (NI). We find that Brexit provides an opportunity for improved tobacco control with potential for particular enhancements in the areas of taxation and product regulation. However, commitments in regards to NI mean these benefits either won't extend to NI (which will continue to follow EU rules), or could lead to the whole UK having to follow most EU rules/regulations despite no longer being involved in the decision making process. The details of any future deal will be important, especially since virtually all UK tobacco products come from the EU, and hence would be subject to disruption/considerable new tariffs (i.e. taxation on imports) without a trade deal. We conclude that political will by the UK government to secure conditions which protect the UK's world leading tobacco control measures will be key to whether Brexit helps or hinders tobacco control in the UK. In this regards the signs are mixed.
Collapse
Affiliation(s)
- J Robert Branston
- School of Management, University of Bath, BATH, BA2 6AN; Tobacco Control Research Group, Department for Health, University of Bath, Bath, United Kingdom; SPECTRUM Consortium, United Kingdom.
| | - Deborah Arnott
- SPECTRUM Consortium, United Kingdom; Action on Smoking and Health (ASH), London, United Kingdom
| | - Allen W A Gallagher
- Tobacco Control Research Group, Department for Health, University of Bath, Bath, United Kingdom; SPECTRUM Consortium, United Kingdom
| |
Collapse
|
8
|
Partos TR, Hiscock R, Gilmore AB, Branston JR, Hitchman S, McNeill A. Impact of tobacco tax increases and industry pricing on smoking behaviours and inequalities: a mixed-methods study. PUBLIC HEALTH RESEARCH 2020. [DOI: 10.3310/phr08060] [Citation(s) in RCA: 7] [Impact Index Per Article: 1.8] [Reference Citation Analysis] [Abstract] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/22/2022] Open
Abstract
Background
Increasing tobacco prices through taxation is very effective for reducing smoking prevalence and inequalities. For optimum effect, understanding how the tobacco industry and smokers respond is essential. Tobacco taxation changes occurred in the UK over the study period, including annual increases, a shift in structure from ad valorem to specific taxation and relatively higher increases on roll-your-own tobacco than on factory-made cigarettes.
Objectives
Understanding tobacco industry pricing strategies in response to tax changes and the impact of tax on smokers’ behaviour, including tax evasion and avoidance, as well as the effect on smoking inequalities. Synthesising findings to inform how taxation can be improved as a public health intervention.
Design
Qualitative analysis and evidence synthesis (commercial and Nielsen data) and longitudinal and aggregate cross-sectional analyses (International Tobacco Control Policy Evaluation Project data).
Setting
The UK, from 2002 to 2016.
Data sources and participants
Data were from the tobacco industry commercial literature and retail tobacco sales data (Nielsen, New York, NY, USA). Participants were a longitudinal cohort (with replenishment) of smokers and ex-smokers from 10 surveys of the International Tobacco Control Policy Evaluation Project (around 1500 participants per survey).
Main outcome measures
(1) Tobacco industry pricing strategies, (2) sales volumes and prices by segments over time and (3) smokers’ behaviours, including products purchased, sources, brands, consumption, quit attempts, success and sociodemographic differences.
Review methods
Tobacco industry commercial literature was searched for mentions of tobacco products and price segments, with 517 articles extracted.
Results
The tobacco industry increased prices on top of tax increases (overshifting), particularly on premium products, and, recently, the tobacco industry overshifted more on cheap roll-your-own tobacco than on factory-made cigarettes. Increasingly, price rises were from industry revenue generation rather than tax. The tobacco industry raised prices gradually to soften impact; this was less possible with larger tax increases. Budget measures to reduce cheap product availability failed due to new cheap factory-made products, price marking and small packs. In 2014, smokers could buy factory-made (roll-your-own tobacco) cigarettes at real prices similar to 2002. Exclusive roll-your-own tobacco and mixed factory-made cigarettes and roll-your-own tobacco use increased, whereas exclusive factory-made cigarette use decreased, alongside increased cheap product use, rather than quitting. Quitting behaviours were associated with higher taxes. Smokers consumed fewer factory-made cigarettes and reduced roll-your-own tobacco weight over time. Apparent illicit purchasing did not increase. Disadvantaged and dependent smokers struggled with tobacco affordability and were more likely to smoke cheaper products, but disadvantage did not affect quit success.
Limitations
Different for each data set; triangulation increased confidence.
Conclusions
The tobacco industry overshifted taxes and increased revenues, even when tax increases were high. Therefore, tobacco taxes can be further increased to reduce price differentials and recoup public health costs. Government strategies on illicit tobacco appear effective. Large, sudden tax increases would reduce the industry’s ability to manipulate prices, decrease affordability and increase quitting behaviours. More disadvantaged, and dependent, smokers need more help with quitting.
Future work
Assessing the impact of tax changes made since 2014; changing how tax changes are introduced (e.g. sudden intermittent or smaller continuous); and tax changes on tobacco initiation.
Funding
This project was funded by the National Institute for Health Research (NIHR) Public Health Research programme and will be published in full in Public Health Research; Vol. 8, No. 6. See the NIHR Journals Library website for further project information.
Collapse
Affiliation(s)
- Timea R Partos
- National Addiction Centre, Institute of Psychiatry, Psychology & Neuroscience, King’s College London, London, UK
| | | | | | - J Robert Branston
- Centre for Governance and Regulation, School of Management, University of Bath, Bath, UK
| | - Sara Hitchman
- National Addiction Centre, Institute of Psychiatry, Psychology & Neuroscience, King’s College London, London, UK
| | - Ann McNeill
- National Addiction Centre, Institute of Psychiatry, Psychology & Neuroscience, King’s College London, London, UK
| |
Collapse
|
9
|
Branston JR, Gilmore AB. The failure of the UK to tax adequately tobacco company profits. J Public Health (Oxf) 2020; 42:69-76. [PMID: 30726968 PMCID: PMC7044670 DOI: 10.1093/pubmed/fdz004] [Citation(s) in RCA: 3] [Impact Index Per Article: 0.8] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 06/26/2018] [Revised: 10/29/2018] [Indexed: 11/13/2022] Open
Abstract
BACKGROUND A key driver of the global tobacco epidemic is the massive profit earned from manufacturing tobacco products despite high levels of product taxation. Two of the four major Transnational Tobacco companies are based in the UK, where there is growing evidence of corporate tax avoidance by transnational firms and where there are calls for the industry to pay more towards the harms caused by tobacco products. OBJECTIVES/METHODS UK tobacco company profit and corporation tax data between 2009 and 2016 is obtained from publically available sources. The intention is not to perform a piece of forensic accounting but to establish the broad pattern of profit and taxation in order to inform consideration of tobacco product and firm taxation, and hence public health. RESULTS Very little profit based taxation has been paid in the UK despite high levels of reported profits, both in the domestic market and globally. CONCLUSIONS The UK needs better reporting and corporate taxation standards. Tobacco companies should be made to pay more profit based taxation, such as by extending the surcharge on corporation tax currently paid by UK banks, and by making sure companies pay appropriate taxes when reorganizing corporate structures.
Collapse
Affiliation(s)
- J Robert Branston
- School of Management, University of Bath, Bath, UK
- University of Bath, Institute for Policy Research, Bath, UK
| | - Anna B Gilmore
- University of Bath, Institute for Policy Research, Bath, UK
- University of Bath Tobacco Control Research Group, Department for Health, University of Bath and UK Centre for Tobacco and Alcohol Studies, Bath, UK
| |
Collapse
|
10
|
Hiscock R, Augustin NH, Branston JR, Gilmore AB. Standardised packaging, minimum excise tax, and RYO focussed tax rise implications for UK tobacco pricing. PLoS One 2020; 15:e0228069. [PMID: 32053603 PMCID: PMC7017998 DOI: 10.1371/journal.pone.0228069] [Citation(s) in RCA: 14] [Impact Index Per Article: 3.5] [Reference Citation Analysis] [Abstract] [MESH Headings] [Grants] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 05/14/2019] [Accepted: 01/07/2020] [Indexed: 01/10/2023] Open
Abstract
BACKGROUND Standardised packaging for factory made (FM) and roll your own (RYO) tobacco was fully implemented in the UK in May 2017. Around the same time, several changes to the tax system were applied (a Minimum Excise Tax (MET) for FM products and tax increases weighted towards RYO products). The tobacco industry claims that standardised packaging will lower prices (a disincentive for quitting) by commoditising the product, yet had itself taken advantage of the previous tax regime to achieve large profits from premium brands while also keeping some products' prices relatively low. Here we evaluate the impact of standardised packaging, the MET and the RYO focussed tax changes on price and industry profitability. METHODS AND FINDINGS Nielsen electronic point of sale (EPOS) data (May 2015 to April 2018) were used to calculate real (inflation adjusted) monthly price per stick overall, by cigarette type (FM and RYO) and by seven market segments. Trend estimation, using additive mixed models, assessed weighted average price (weighted by volume of sales) and tobacco industry net revenue changes. The beginning and end of the data series were compared in terms of: (a) average monthly price growth, (b) average monthly net revenue growth, and (c) undershifting and overshifting patterns after tax changes. FM and RYO real prices changed little over the 3-year period-overall prices rose by about 1p per stick. There was no evidence of commoditisation with prices of all FM segments (but not RYO) rising faster after the implementation of standardised packaging than immediately beforehand. The prices of the cheapest FM brands rose with the implementation of the MET. RYO price increases did not close the gap to FM pricing levels despite RYO focussed tax increases. Tax changes following the implementation of standardised packaging and the MET were more widely and quickly passed on to smokers in the form of higher prices than the tax change pre-implementation. The main limitations are first that because we do not know the exact mechanism by which Nielsen scales up sample data to provide UK estimates, we could only use data for a set three year period during which the same adjustments are made. Second, the tax and standardised packaging events were sometimes too close in time to separate their consequences statistically. Third, tobacco prices may also be affected by external factors such as changes in smokers' disposable income or availability of electronic nicotine delivery systems. CONCLUSIONS There was no long-term lowering of tobacco prices after the implementation of standardised packaging as predicted by the industry. The introduction of the MET was successful in increasing the price of the cheapest FM cigarettes and narrowing the price gap between FM brands. The RYO tax increases were, however, insufficient to narrow the price gap between RYO and FM. Overall, undershifting became less extensive indicating that tobacco industry manipulation of the tax system which had previously kept cheap products available had declined. This suggests that standardised packaging and a MET will likely contribute to further declines in UK tobacco use.
Collapse
Affiliation(s)
- Rosemary Hiscock
- Tobacco Control Research Group, Department for Health, University of Bath, Bath, England, United Kingdom
| | - Nicole H. Augustin
- Department of Mathematical Sciences, University of Bath, Bath, England, United Kingdom
| | | | - Anna B. Gilmore
- Tobacco Control Research Group, Department for Health, University of Bath, Bath, England, United Kingdom
| |
Collapse
|
11
|
Partos TR, Gilmore AB, Hitchman SC, Hiscock R, Branston JR, McNeill A. Availability and Use of Cheap Tobacco in the United Kingdom 2002-2014: Findings From the International Tobacco Control Project. Nicotine Tob Res 2019; 20:714-724. [PMID: 28525594 PMCID: PMC5934656 DOI: 10.1093/ntr/ntx108] [Citation(s) in RCA: 33] [Impact Index Per Article: 6.6] [Reference Citation Analysis] [Abstract] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 08/31/2016] [Accepted: 05/17/2017] [Indexed: 01/12/2023]
Abstract
Introduction Raising tobacco prices is the most effective population-level intervention for reducing smoking, but this is undermined by the availability of cheap tobacco. This study monitors trends in cheap tobacco use among adult smokers in the United Kingdom between 2002 and 2014 via changes in product type, purchase source, and prices paid. Methods Weighted data from 10 waves of the International Tobacco Control policy evaluation study were used. This is a longitudinal cohort study of adult smokers with replenishment; 6169 participants provided 15812 responses. Analyses contrasted (1) product type: roll-your-own (RYO) tobacco, factory-made packs (FM-P), and factory-made cartons (FM-C); (2) purchase source: UK store-based sources (e.g., supermarkets and convenience stores) with non-UK/nonstore sources representing tax avoidance/evasion (e.g., outside the UK, duty free, and informal sellers); and (3) prices paid (inflation-adjusted to 2014 values). Generalized estimating equations tested linear changes over time. Results (1) RYO use increased significantly over time as FM decreased. (2) UK store-based sources constituted approximately 80% of purchases over time, with no significant increases in tax avoidance/evasion. (3) Median RYO prices were less than half that of FM, with FM-C cheaper than FM-P. Non-UK/nonstore sources were cheapest. Price increases of all three product types from UK store-based sources from 2002 to 2014 were statistically significant but not substantial. Wide (and increasing for FM-P) price ranges meant each product type could be purchased in 2014 at prices below their 2002 medians from UK store-based sources. Conclusions Options exist driving UK smokers to minimize their tobacco expenditure; smokers do so largely by purchasing cheap tobacco products from UK stores. Implications The effectiveness of price increases as a deterrent to smoking is being undermined by the availability of cheap tobacco such as roll-your-own tobacco and cartons of packs of factory-made cigarettes. Wide price ranges allowed smokers in 2014 to easily obtain cigarettes at prices comparable to 12 years prior, without resorting to tax avoidance or evasion. UK store-based sources accounted for 80% or more of all tobacco purchases between 2002 and 2014, suggesting little change in tax avoidance or evasion over time. There was a widening price range between the cheapest and most expensive factory-made cigarettes.
Collapse
Affiliation(s)
- Timea R Partos
- Addictions Department, King's College London, London, United Kingdom.,UK Centre for Tobacco & Alcohol Studies, Nottingham, United Kingdom
| | - Anna B Gilmore
- UK Centre for Tobacco & Alcohol Studies, Nottingham, United Kingdom.,Department for Health, University of Bath, Bath, United Kingdom
| | - Sara C Hitchman
- Addictions Department, King's College London, London, United Kingdom.,UK Centre for Tobacco & Alcohol Studies, Nottingham, United Kingdom
| | - Rosemary Hiscock
- UK Centre for Tobacco & Alcohol Studies, Nottingham, United Kingdom.,Department for Health, University of Bath, Bath, United Kingdom
| | - J Robert Branston
- Centre for Governance and Regulation, School of Management, University of Bath, Bath, United Kingdom
| | - Ann McNeill
- Addictions Department, King's College London, London, United Kingdom.,UK Centre for Tobacco & Alcohol Studies, Nottingham, United Kingdom
| |
Collapse
|
12
|
Hiscock R, Branston JR, Partos TR, McNeill A, Hitchman SC, Gilmore AB. UK tobacco price increases: driven by industry or public health? Tob Control 2019; 28:e148-e150. [DOI: 10.1136/tobaccocontrol-2019-054969] [Citation(s) in RCA: 11] [Impact Index Per Article: 2.2] [Reference Citation Analysis] [Abstract] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 01/25/2019] [Revised: 05/09/2019] [Accepted: 05/16/2019] [Indexed: 11/03/2022]
Abstract
BackgroundTobacco companies claim that higher taxes will force smokers into buying illicit tobacco, but if they were truly concerned about increasing illicit sales with higher prices they would only increase retail prices in line with changes in taxation. In this paper, we explore UK pricing of both factory-made cigarettes (FM) and roll-your-own tobacco (RYO) to explore the extent to which price increases were due to government tax rises or industry strategies to increase profit per pack.MethodNielsen commercial data on UK tobacco sales data (2010–2015) were combined with official UK data on inflation and tax rates, to identify the source of real price increases.ResultsBetween 2010 and 2012, when there were unexpected large tax increases, industry driven price changes were small (16% of the price rise in FM and 20% in RYO), and changes were similar between market segments. Between 2013 and 2015, when tax increases were smaller and expected, industry behaviour generally accounted for a larger share of price rises (33% FM, 48% RYO), but changes varied considerably by segment.ConclusionThe industry has increased its prices beyond that required by tax changes, even when tax rises were larger and unexpected, although were notably smaller in such conditions. This suggests (1) that the industry is not actually concerned by the threat of illicit, especially since RYO had the highest levels of industry driven price increases despite higher levels of illicit, and (2) there remains scope for further tax increases, which should be relatively large and unexpected.
Collapse
|
13
|
Gao W, Sanna M, Branston JR, Chiou HY, Chen YH, Wu A, Wen CP. Exploiting a low tax system: non-tax-induced cigarette price increases in Taiwan 2011-2016. Tob Control 2019; 28:e126-e132. [PMID: 31164488 PMCID: PMC6996108 DOI: 10.1136/tobaccocontrol-2018-054908] [Citation(s) in RCA: 6] [Impact Index Per Article: 1.2] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 12/21/2018] [Revised: 04/11/2019] [Accepted: 04/26/2019] [Indexed: 11/20/2022]
Abstract
Introduction This study aims to analyse the non-tax-induced price increasing strategies adopted by tobacco industry in Taiwan, a high-income country with comprehensive tobacco control policies but low tobacco taxes and a declining cigarette market. Methods Using governmental tax, price and inflation data, we analysed cigarette sales volume, affordability, affordability elasticity of demand, market share, pricing and net revenue of the top five tobacco companies in Taiwan from 2011 to 2016 when no tax increases occurred. Results Total revenue after tax grew significantly for all the major transnational tobacco companies between 2011 and 2016 at the expense of the state-owned Taiwan Tobacco and Liquor Corporation. In terms of market share, Japan Tobacco (JT) was the leading company, despite experiencing a small decline, while British American Tobacco and Imperial Brands remained stable, and Philip Morris International increased from 4.7% to 7.0%. JT adopted the most effective pricing strategy by increasing the real price of its two most popular brands (Mevius and Mi-Ne) and, at the same time, doubling the sales of its cheaper and less popular brand Winston by leaving its nominal retail price unaltered. Conclusions Low and unchanged tobacco taxes enable tobacco companies to use aggressive pricing and segmentation strategies to increase the real price of cigarettes without making them less affordable while simultaneously maintaining customers’ loyalty. It is crucial to continue monitoring the industry’s pricing strategies and to regularly increase taxes to promote public health and to prevent tobacco industry from profiting at the expense of government revenues.
Collapse
Affiliation(s)
- Wayne Gao
- Master's Program in Global Health and Development, Taipei Medical University, Taipei, Taiwan
| | - Mattia Sanna
- Master's Program in Global Health and Development, Taipei Medical University, Taipei, Taiwan
| | | | - Hung-Yi Chiou
- School of Public Health, Taipei Medical University, Taipei, Taiwan
| | - Yi-Hua Chen
- School of Public Health, Taipei Medical University, Taipei, Taiwan
| | - Allison Wu
- Master's Program in Global Health and Development, Taipei Medical University, Taipei, Taiwan
| | - Chi Pang Wen
- Institute of Population Health Sciences, National Health Research Institutes, Miaoli County, Taiwan.,China Medical University Hospital, Taichung, Taiwan
| |
Collapse
|
14
|
Keklik S, Gultekin-Karakas D. Anti-tobacco control industry strategies in Turkey. BMC Public Health 2018; 18:282. [PMID: 29482539 PMCID: PMC5828147 DOI: 10.1186/s12889-018-5071-z] [Citation(s) in RCA: 5] [Impact Index Per Article: 0.8] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 03/08/2017] [Accepted: 01/11/2018] [Indexed: 11/10/2022] Open
Abstract
BACKGROUND Transnational tobacco companies (TTCs) penetrated the Turkish cigarette market due to trade and investment liberalization in the post-1980 period and eventually secured full control. Despite tobacco control policies put in place in reaction to accelerating consumption, TTCs reinforced their market power through a variety of strategies. This paper explores industry strategies that counteract tobacco control policies in Turkey. METHODS The study employs both qualitative and quantitative analyses to explore industry strategies in Turkey. Besides the content analyses of industry and market reports, descriptive analyses were conducted for the sub-periods of 1999-2015. The analyses focus on the market strategies of product innovation, advertisement-promotion, cost management and pricing. RESULTS Rising sales of low tar, ultra-low tar, slim, super-slim and flavoured cigarettes indicate that product innovation served to sustain consumption. Besides, the tobacco industry, using its strong distribution channels, the Internet, and CSR projects, were found to have promoted smoking indirectly. The industry also rationalized manufacturing facilities and reduced the cost of tobacco, making Turkey a cigarette-manufacturing base. Tobacco manufacturers, moreover, offered cigarettes in different price segments and adjusted net prices both up and down according to price categories and market conditions. In response to the successful effect of shifts in price margins, the market share of mid-priced cigarettes expanded while those within the economy category maintained the highest market share. As a result of pricing strategies, net sales revenues increased. Aside from official cigarette sales, the upward trends in the registered and unregistered sales of cigarette substitutes indicate that the demand-side tobacco control efforts remain inadequate. CONCLUSIONS The Turkish case reveals that the resilience of the tobacco industry vis-à-vis mainstream tobacco control efforts necessitates a new policy perspective. Rising market concentration by TTCs and the global nature of industry strategies require that the highly profitable manufacturing and trade of tobacco products should be discouraged on a basis of international collaboration. To reduce and eventually eradicate tobacco consumption, supply-side tobacco control measures are needed along with demand-side policies.
Collapse
Affiliation(s)
- Seda Keklik
- Department of Economics, Faculty of Economics and Business, Isik University, 34980, Sile, Istanbul, Turkey
| | - Derya Gultekin-Karakas
- Department of Management Engineering, Faculty of Management, Istanbul Technical University, 34367, Macka, Istanbul, Turkey.
| |
Collapse
|
15
|
Hiscock R, Branston JR, McNeill A, Hitchman SC, Partos TR, Gilmore AB. Tobacco industry strategies undermine government tax policy: evidence from commercial data. Tob Control 2017; 27:tobaccocontrol-2017-053891. [PMID: 28993519 PMCID: PMC6109235 DOI: 10.1136/tobaccocontrol-2017-053891] [Citation(s) in RCA: 58] [Impact Index Per Article: 8.3] [Reference Citation Analysis] [Abstract] [Key Words] [Grants] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 06/12/2017] [Revised: 09/12/2017] [Accepted: 09/14/2017] [Indexed: 11/04/2022]
Abstract
OBJECTIVE Taxation equitably reduces smoking, the leading cause of health inequalities. The tobacco industry (TI) can, however, undermine the public health gains realised from tobacco taxation through its pricing strategies. This study aims to examine contemporary TI pricing strategies in the UK and implications for tobacco tax policy. DESIGN Review of commercial literature and longitudinal analysis of tobacco sales and price data. SETTING A high-income country with comprehensive tobacco control policies and high tobacco taxes (UK). PARTICIPANTS 2009 to 2015 Nielsen Scantrak electronic point of sale systems data. MAIN OUTCOME MEASURES Tobacco segmentation; monthly prices, sales volumes of and net revenue from roll-your-own (RYO) and factory-made (FM) cigarettes by segment; use of price-marking and pack sizes. RESULTS The literature review and sales data concurred that both RYO and FM cigarettes were segmented by price. Despite regular tax increases, average real prices for the cheapest FM and RYO segments remained steady from 2013 while volumes grew. Low prices were maintained through reductions in the size of packs and price-marking. Each year, at the point the budget is implemented, the TI drops its revenue by up to 18 pence per pack, absorbing the tax increases (undershifting). Undershifting is most marked for the cheapest segments. CONCLUSIONS The TI currently uses a variety of strategies to keep tobacco cheap. The implementation of standardised packaging will prevent small pack sizes and price-marking but further changes in tax policy are needed to minimise the TI's attempts to prevent sudden price increases.
Collapse
Affiliation(s)
- Rosemary Hiscock
- Department for Health, University of Bath, Bath, UK
- UK Centre for Tobacco & Alcohol Studies, University of Nottingham, Nottingham, UK
| | | | - Ann McNeill
- UK Centre for Tobacco & Alcohol Studies, University of Nottingham, Nottingham, UK
- Institute of Psychiatry, Psychology & Neuroscience, King’s College London, London, UK
| | - Sara C Hitchman
- UK Centre for Tobacco & Alcohol Studies, University of Nottingham, Nottingham, UK
- Institute of Psychiatry, Psychology & Neuroscience, King’s College London, London, UK
| | - Timea R Partos
- UK Centre for Tobacco & Alcohol Studies, University of Nottingham, Nottingham, UK
- Institute of Psychiatry, Psychology & Neuroscience, King’s College London, London, UK
| | - Anna B Gilmore
- Department for Health, University of Bath, Bath, UK
- UK Centre for Tobacco & Alcohol Studies, University of Nottingham, Nottingham, UK
| |
Collapse
|
16
|
Hitchman SC, Calder R, Rooke C, McNeill A. Small Retailers' Tobacco Sales and Profit Margins in Two Disadvantaged Areas of England. AIMS Public Health 2016; 3:110-115. [PMID: 29546150 PMCID: PMC5690267 DOI: 10.3934/publichealth.2016.1.110] [Citation(s) in RCA: 12] [Impact Index Per Article: 1.5] [Reference Citation Analysis] [Abstract] [Key Words] [Grants] [Track Full Text] [Download PDF] [Journal Information] [Subscribe] [Scholar Register] [Received: 10/13/2015] [Accepted: 02/26/2016] [Indexed: 11/18/2022] Open
Abstract
AIM To explore tobacco profit margins and sales among small retailers in England. METHODS Interviews with managers/owners of 62 small retail shops that sold tobacco in disadvantaged areas of Newcastle and London, England. The interviews included questions about tobacco sales and profit margins, and interest in reducing reliance on tobacco sales. RESULTS The majority of retailers (89%) reported low overall profit margins on tobacco sales (< 6%). The most common response was a profit margin of 4-6%,with some reporting lower margins for price-marked packs of cigarettes (1-6%) and higher margins for non-price marked or premium brands (7% to over 10%). A few mentioned higher profit margins for e-cigarettes. Despite this, most thought tobacco sales were important (90%), and attributed this reliance to footfall (81%), i.e., customers purchasing tobacco also purchasing other products. 42% of retailers expressed interest in reducing their reliance on tobacco sales. CONCLUSIONS Small retailers report low tobacco profit margins, but high reliance on tobacco sales because of footfall. Retailer interest in reducing reliance on tobacco sales warrants further research into opportunities for disinvestment. Additionally, retailers' belief that they are reliant on tobacco sales because of footfall should be further investigated.
Collapse
Affiliation(s)
- Sara C. Hitchman
- Department of Addictions, Institute of Psychiatry, Psychology, and Neuroscience, London, England
- UK Centre for Tobacco and Alcohol Studies, United Kingdom
| | - Robert Calder
- Department of Addictions, Institute of Psychiatry, Psychology, and Neuroscience, London, England
| | - Catriona Rooke
- Department of Addictions, Institute of Psychiatry, Psychology, and Neuroscience, London, England
| | - Ann McNeill
- Department of Addictions, Institute of Psychiatry, Psychology, and Neuroscience, London, England
- UK Centre for Tobacco and Alcohol Studies, United Kingdom
| |
Collapse
|
17
|
Big tobacco, E-cigarettes, and a road to the smoking endgame. THE INTERNATIONAL JOURNAL OF DRUG POLICY 2015; 29:14-8. [PMID: 26774225 DOI: 10.1016/j.drugpo.2015.12.023] [Citation(s) in RCA: 12] [Impact Index Per Article: 1.3] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 07/21/2015] [Revised: 12/15/2015] [Accepted: 12/21/2015] [Indexed: 11/23/2022]
Abstract
The provision of the extraordinarily deadly product of cigarettes is dominated by a small number of large and incredibly profitable shareholder owned companies that are focussed on cigarettes. The legal duty of their managers to maximise shareholder wealth means that such companies vigorously fight any new public health measures that have the potential to disrupt their massive profit making, and have the resources to do so. Protecting the public health is therefore made a lot more difficult and expensive. We suggest that one way to counter this would be to actively design future tobacco control policies so that tobacco companies face mechanisms and incentives to develop in such a way that they no longer achieve the greatest shareholder value by focusing on cigarettes. A proper tobacco diversification and exit strategy for the shareholders of the profit-seeking tobacco industry would protect the public health by addressing the current addiction to the continuation of the cigarette market. The increasing popularity of e-cigarettes presents a particular opportunity in this regard, and we therefore suggest a possible policy response in order to start discussion in this area.
Collapse
|
18
|
Golden SD, Smith MH, Feighery EC, Roeseler A, Rogers T, Ribisl KM. Beyond excise taxes: a systematic review of literature on non-tax policy approaches to raising tobacco product prices. Tob Control 2015; 25:377-85. [PMID: 26391905 PMCID: PMC4941206 DOI: 10.1136/tobaccocontrol-2015-052294] [Citation(s) in RCA: 46] [Impact Index Per Article: 5.1] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 02/19/2015] [Accepted: 07/02/2015] [Indexed: 11/04/2022]
Abstract
Objective Raising the price of tobacco products is considered one of the most effective ways to reduce tobacco use. In addition to excise taxes, governments are exploring other policies to raise tobacco prices and minimise price dispersion, both within and across price tiers. We conducted a systematic review to determine how these policies are described, recommended and evaluated in the literature. Data sources We systematically searched six databases and the California Tobacco Control library for English language studies or reports, indexed on or before 18 December 2013, that included a tobacco keyword (eg, cigarette), policy keyword (eg, legislation) and a price keyword (eg, promotion). We identified 3067 abstracts. Study selection Two coders independently reviewed all abstracts and identified 56 studies or reports that explicitly described a public policy likely to impact the retail price of tobacco products through non-tax means. Data extraction Two coders independently identified tobacco products targeted by policies described, recommendations for implementing policies and empirical assessments of policy impacts. Data synthesis The most prevalent non-tax price policies were price promotion restrictions and minimum price laws. Few studies measured the impact of non-tax policies on average prices, price dispersion or disparities in tobacco consumption, but the literature includes suggestions for crafting policies and preparing for legal challenges or tobacco industry opposition. Conclusions Price-focused evaluations of well-implemented non-tax price policies are needed to determine whether they can deliver on their promise to raise prices, reduce price dispersion and serve as an important complement to excise taxes.
Collapse
Affiliation(s)
- Shelley D Golden
- Gillings School of Global Public Health, University of North Carolina, Chapel Hill, North Carolina, USA
| | - Margaret Holt Smith
- Gillings School of Global Public Health, University of North Carolina, Chapel Hill, North Carolina, USA Lineberger Comprehensive Cancer Center, University of North Carolina, Chapel Hill, North Carolina, USA
| | - Ellen C Feighery
- International Research, Campaign for Tobacco Free Kids, Washington DC, USA
| | - April Roeseler
- California Department of Public Health, California Tobacco Control Program, Sacramento, California, USA
| | - Todd Rogers
- Public Health Research Division, RTI International, San Francisco, California, USA
| | - Kurt M Ribisl
- Gillings School of Global Public Health, University of North Carolina, Chapel Hill, North Carolina, USA Lineberger Comprehensive Cancer Center, University of North Carolina, Chapel Hill, North Carolina, USA
| |
Collapse
|
19
|
McDaniel PA, Smith EA, Malone RE. The tobacco endgame: a qualitative review and synthesis. Tob Control 2015; 25:594-604. [PMID: 26320149 PMCID: PMC5036259 DOI: 10.1136/tobaccocontrol-2015-052356] [Citation(s) in RCA: 108] [Impact Index Per Article: 12.0] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Journal Information] [Subscribe] [Scholar Register] [Received: 03/19/2015] [Accepted: 08/04/2015] [Indexed: 11/13/2022]
Abstract
The tobacco endgame concept reorients discussion away from the persistent control of tobacco toward plans for ending the tobacco epidemic, and envisions a tobacco-free future. A variety of policy approaches have been proposed, with many offered prior to the introduction of the unifying term ‘endgame’. We conducted a qualitative synthesis of the literature on tobacco control endgames, and drew on media accounts and discussion of analogous ideas for illustrative purposes. We identified proposals focused on the product, user, market/supply or larger institutional structures. Research on public support for these proposals was limited, but suggestive of some public appetite for endgame ideas. Advocates should be encouraged to explore new policy options and consider the goal of a tobacco-free future.
Collapse
Affiliation(s)
- Patricia A McDaniel
- Department of Social and Behavioral Sciences, School of Nursing, University of California, San Francisco, California, USA
| | - Elizabeth A Smith
- Department of Social and Behavioral Sciences, School of Nursing, University of California, San Francisco, California, USA
| | - Ruth E Malone
- Department of Social and Behavioral Sciences, School of Nursing, University of California, San Francisco, California, USA
| |
Collapse
|
20
|
Gilmore AB, Tavakoly B, Hiscock R, Taylor G. Smoking patterns in Great Britain: the rise of cheap cigarette brands and roll your own (RYO) tobacco. J Public Health (Oxf) 2014; 37:78-88. [PMID: 25118219 PMCID: PMC4340325 DOI: 10.1093/pubmed/fdu048] [Citation(s) in RCA: 49] [Impact Index Per Article: 4.9] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/13/2022] Open
Abstract
BACKGROUND In Britain, the tobacco industry segments cigarettes into four price categories-premium, mid-price, economy and ultra-low-price (ULP). Our previous work shows that tobacco companies have kept ULP prices stable in real terms. Roll your own (RYO) tobacco remains cheaper still. METHODS Analysis of 2001-08 General Household Survey data to examine trends in use of these cheap products and, using logistic regression, the profile of users of these products. RESULTS Among smokers, the proportion using cheap products (economy, ULP and RYO combined) increased significantly in almost all age groups and geographic areas. Increases were most marked in under 24 year olds, 76% of whom smoked cheap cigarettes by 2008. All cheap products were more commonly used in lower socio-economic groups. Men and younger smokers were more likely to smoke RYO while women smoked economy brands. Smokers outside London and the South East of England were more likely to smoke some form of cheap tobacco even once socio-economic differences were accounted for. CONCLUSIONS This paper demonstrates that cheap tobacco use is increasing among young and disadvantaged smokers compromising declines in population smoking prevalence. Thus, tobacco industry pricing appears to play a key role in explaining smoking patterns and inequalities in smoking.
Collapse
Affiliation(s)
- Anna B Gilmore
- Department for Health and UK Centre for Tobacco Control Studies, University of Bath, Bath, UK
| | - Behrooz Tavakoly
- Department for Health and UK Centre for Tobacco Control Studies, University of Bath, Bath, UK
| | - Rosemary Hiscock
- Department for Health and UK Centre for Tobacco Control Studies, University of Bath, Bath, UK
| | - Gordon Taylor
- Department for Health and UK Centre for Tobacco Control Studies, University of Bath, Bath, UK
| |
Collapse
|
21
|
Affiliation(s)
- Anna B Gilmore
- Department for Health, University of Bath, and UK Centre for Tobacco Control Studies, University of Bath, Bath, UK
| | | |
Collapse
|
22
|
Gilmore AB. Understanding the vector in order to plan effective tobacco control policies: an analysis of contemporary tobacco industry materials. Tob Control 2012; 21:119-26. [PMID: 22345234 PMCID: PMC3705181 DOI: 10.1136/tobaccocontrol-2011-050397] [Citation(s) in RCA: 37] [Impact Index Per Article: 3.1] [Reference Citation Analysis] [Abstract] [MESH Headings] [Grants] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/04/2022]
Abstract
This paper builds on tobacco document research by analysing contemporary materials to explore how the global tobacco market has changed, how transnational tobacco companies (TTCs) are responding and the implications for tobacco control. The methods involved analysis of a variety of materials, including tobacco company annual reports, investor relations materials, financial analyst reports, market research reports and data. Once China, where TTCs have little market share, is excluded, global cigarette volumes are already declining. Nevertheless, industry profits continue to increase. This pattern is explained by the pricing power of TTCs-their ability to increase prices faster than volumes fall, a consequence of market failure. Pricing power is now fundamental to the long term future of TTCs. Consequently, and in light of growing regulations, the business model of the TTCs is changing. Product innovation is now a key marketing technique used to drive consumers to buy more expensive (ie, profitable) premium cigarettes. Contrary to established wisdom, high tobacco excise rates, particularly where increases in excise are gradual, can benefit TTCs by enabling price (profit) increases to be disguised. Large intermittent tax increases likely have a greater public health benefit. TTC investments in smokeless tobacco appear designed to eliminate competition between smokeless tobacco and cigarettes, thereby increasing the pricing power of TTCs while enabling them to harness the rhetoric of harm reduction. Monitoring TTCs can inform effective policy development. The value maximising approach of TTCs suggests that a ban on product innovation and more informed tobacco excise policies are needed.
Collapse
Affiliation(s)
- Anna B Gilmore
- Department for Health, University of Bath, Bath BA2 7AY, UK.
| |
Collapse
|