Právo: Cigarette Prices to Grow Faster in 2008

Source from:  By ČTK / Prague, Dec 21 (CTK) 12/29/2007

Prices of cigarettes will grow more than expected as data from the bulletin of prices show that the price of a pack of cigarettes will rise by Kc8 instead of the announced Kc7, daily Pravo wrote Friday. Excise duty on cigarettes will grow from the current Kc1.64 to Kc1.92 a cigarette. In the previous years, producers reacted to the price growth by cutting margins. Philip Morris, the dominant player on the market, has changed its strategy and will raise the margin now. Rivals have been waiting for such move and prepare to do the same, Pravo writes. Retailers will be selling their stock of cigarettes with old stamps until April or May, Imperial Tobacco executive Kamil Provaznik said. "Then smokers will really have to pay Kc8 more for nearly all cigarette brands," he said. Profits of the Czech tobacco industry were falling notably in the last three years, Provaznik added. One of the main reasons is that over 80 percent of the cigarette prices are taxes. The profits are also pulled down by the fact that smokers are switching to lower-quality brands, Pravo adds. Experts expected that many people would stop smoking due to the sharp growth in cigarette prices, but this did not happen. While in 2005 23.5 billion cigarettes were sold in the Czech Republic, last year it was 23.45 billion and this year, consumption fell by just 1.5 percent, Pravo notes. Enditem