Volume Concerns Force Price Increase Rethink

Source from:  Tobacco Reporter 04/19/2010

Philip Morris Japan (PMJ) has decided to cancel its planned increase in cigarette prices for fear of seeing a further fall in sales, according to a Kyodo News story quoting a Finance Ministry official speaking yesterday. The retail price of PMJ's brands was scheduled to increase by ￥20 on June 1 after it received approval in March from the ministry, which oversees the tobacco industry. This would have increased the price of a pack of Marlboro to ￥340. Cigarette prices will rise in any case because the tax on them is due to go up by ￥3.5 per cigarette starting Oct. 1. "I believe this is the first case in Japan that a tobacco company has withdrawn a plan to raise cigarette prices after obtaining permission from the government," the official said. The company changed its policy after market research showed the possibility of a bigger than expected drop in sales if the increases were implemented, according to the official. A month ago, British American Tobacco Japan withdrew its application to raise its prices, citing the need to cope with the changing market environment. Enditem