Fears of cigarette price war

Since plain pack tobacco legislation was enacted by the government, there appeared another issue defining the measure would strengthen price competition and eventuate in cheaper cigarettes.

On August 15 the High Court rejected challenge of the tobacco industry to the unprecedented legislation. The plain packaging will ban brand logos and trademarks on cigarette packets from December 1.


Arranged cigarettes

It is expected that the banning of logos will eventuate in cheaper prices, as cheap cigarette brands pressure sales of more famous brands, an anti-tobacco leader have foretold.

Australia’s healthcare executives said the legislation called for a total ban on tobacco product.

Mark Fitzgibbon, chief executive of the health insurer NIB, said that charging everyone the same price regardless their age and underlying health status is fair, but it does not mean that they can not punish people for behaviours which obviously lead to health risks.

Anne Jones, who is a chief of the campaign group Action on Smoking and Health, said while the elimination of glitzy packaging would lessen smoking appeal to youth, the lack of logos would make smoking people to look at the cigarette price.

There will be only the brand name in small print at dull brown packets and otherwise covered with graphic health warnings.

Ms Jones said supermarket shelves are already replenished with low-priced cigarettes from Germany and China which were reducing the price of name brands.

A recent research, in which 3000 people gave taken part and which was conducted by London Economics, revealed that warning images helped smokers to make difference between brands. If smokers could not make difference between products, they chose cheaper cigarette brands.

The tobacco industry in Australia as well foretold price reduction, but said it would be as a consequence of a hike in cheaper black market cigarettes, a negative effect denied by the government.

Nicola Roxon, the Attorney-General, said that the government decided to not increase excise ”at the moment”.

Ms Roxon added that they hope that cigarette plain packaging will help in reducing smoking rates to 10 % in Australia. The recent rate is nearly 15 %.

Tanya Plibersek, the Health Minister of Australia, said that if the tobacco companies reduce price cigarettes, by that they appeal young people to take up cigarettes.

”Young people frequently fall under the influence of low prices. So tobacco companies are admitting that their business model is about appealing new, young smokers,” Ms Plibersek said.

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