Australia:Tobacco Giant Slashes Cigarette Prices Down Under to Counter Counterfeits

Source from:  WNYW Fox 5 NY 05/18/2012

SYDNEY -- Tobacco company British American Tobacco Australia (BATA) says it has been forced to start selling discounted cigarettes 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 -- has released "Just Smokes," which retail for about AU$11.50 (US$11.40) for a pack of 25 cigarettes, The (Sydney) Daily Telegraph reported Thursday. The company said the new brand is priced just above illegal counterfeit and contraband cigarette packs -- which sell for about AU$8 to AU$10 for a pack of 25. The average price for a pack of 25 cigarettes is AU$16. BATA spokesman Scott McIntyre said since the Australian government increased the tobacco excise by 25 percent in 2010, the "cheap price segment" has grown 63 percent, 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," McIntyre said. "[Smokers] have been down trading to cheaper products or illegal cigarettes, so we've been forced to compete. "They're trying to reduce smoking rates through excise but instead, it's making people opt for cheaper or illegal options." Australian Medical Association (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 occurring is very concerning for the AMA." Last year, the Australian government passed laws to make the country the first to restrict logos, branding, colors and promotional text on tobacco packets. Beginning December 2012, product names will appear in standard colors and positions in a plain font and size on packets colored a dark olive-brown. Health warnings with graphic images of the harmful effects of smoking will have to make up 75 percent of the front of the packaging and 90 percent of the back.Enditem