Cigarettes are still being marketed in Timaru at cut-price rates and tobacco companies are standing by the decision to do so in the wake of excise tax hikes aimed at curbing smoking rates.
Tobacco taxes were increased last week, with 10 per cent rises planned for next year and the year after, while anti-smoking lobby groups have called for a total ban by 2020.
The cost of cigarettes went up by an average of $1 immediately, while roll-your-own smokers were targeted with a 14 per cent increase to align tax rates.
However, a pack of 20 cigarettes can still be purchased for under $10 in Timaru, nearly $3 cheaper than the most expensive option.
British American Tobacco New Zealand (BATNZ), which produces the Freedom, Pall Mall and Holiday brands, issued a new price list last June recommending a drop in its budget brands.
The move was labelled as “disgraceful” by lobby groups, which claimed the tobacco industry was already under investigation for providing rebates to retailers.
BATNZ spokesman Josh Fett told The Timaru Herald yesterday the company would continue to set wholesale prices and recommend retail prices which reflected a variety of “price points”.
Price notices remained permissible under the Smoke-free Environments Act but were restricted in size and number, he said.
“The Ministry of Health has confirmed that the price reductions by cigarette manufacturers last year were legal, as BATNZ always maintained.
“Although manufacturers recommend prices for each of their products, the retail price is ultimately determined by retailers.”
The BATNZ-recommended prices for New Zealand’s biggest-selling 20s brand, Holiday, was $11.30, while the Freedom brand was being marketed at $10.50 and Dunhill at $13.00.
Asked if the company was picking up any of the increased excise tax, to enable it to keep prices down, Mr Fett said the full value of the Government’s excise increase had been passed on to consumers.
Imperial Tobacco New Zealand would not confirm if it was picking up excise tax on any of its brands, but said its policy was to price brands at a level which allowed it to compete in the market. The recommended retail price for its budget JPS brand was $10 for 20, $12.50 for 25 and $15 for 30 cigarettes.
Action on Smoking and Health (ASH) New Zealand spokesman Michael Colhoun said it was crucial for tobacco companies to maintain a presence in the budget end of the market.
“Young people and the poor are vulnerable to these tobacco industry tactics and they are also the groups most likely to smoke or be potential smokers.
“We’re hopeful that the Maori affairs select committee makes the strongest recommendation possible and sets a timeline that includes taking tobacco companies out of the picture.”
Smokefree South Canterbury chairperson Kate Johnson said she would be calling for tobacco displays to be removed from counters in shops and service stations.
“Let’s take it out of sight to further reduce the number of young people who take up smoking.”
A Maori affairs select committee inquiry into the the impact of tobacco use on Maori is due to wind up on May 14.
A spokesperson said the party was opposed to cut-price cigarettes.
She called the pricing behaviour of tobacco companies “an attack on the poor and low income earners”.
By Al Williams – The Timaru Herald