Newsagents Call For Tobacco Giants To Be Banned From Using Discounts

The Government should ban tobacco companies from discounting larger packs of cigarettes, newsagents say.

Vincent Jennings, CEO of the Convenience Stores and Newsagents Association, says tobacco companies have too much control over price-setting, undermining health policy and lowering the tax take.

“It really is phenomenally frustrating to see that tobacco companies – even though you might think that they are absolutely hamstrung and handcuffed from doing anything within the laws that are there – are managing to post enormous sales, great profits, based upon just very, very clever usage of the psychological effect of price,” said Mr Jennings.

Bigger box brands of more than 20 cigarettes are growing in popularity, Mr Jennings said, as they offer smokers ‘bulk’ discounts of around 6-7pc.

“Of course, the more you have in your pocket the more you consume,” he said. A 35-pack of JPS currently retails at €20, a new low price per cigarette.

He wrote to the Departments of Health, Finance and Enterprise last week asking for a ban on packs of more than 20 cigarettes or price controls based on a pro rata price per cigarette.

The move comes after Imperial Tobacco, which makes the John Player brand, told retailers they would not increase wholesale prices when the VAT rate went back up to 23pc from 21pc this month.

It means retailers selling a single pack will continue to earn a gross margin of €1.36.

“We have an unhealthy relationship and reliance on tobacco as one of the profit centres for our stores,” said Mr Jennings.

“I know of no member of ours who could actually, in the morning, stop selling tobacco and expect the losses that he would forgo transferred into another product.”

The Government has set a target of cutting smoking prevalence to less than 5pc of the population by 2025.

The Department of Health says that tax and excise duty accounts for almost 80pc of the price of a 20 pack.

But Mr Jennings said that policy is being undermined by tobacco companies, which are absorbing VAT and excise increases to ensure smokers don’t pay more.

“Tobacco companies also use price as a promoting tool. They use it in a marketing fashion,” Mr Jennings said. “Frequently they’ll subsume that [tax] increase and not increase the price of a particular brand that they’re interested in.”