Thursday 17 May 2012

BAT produces cheaper brand to compete with illegal tobacco in Australia

The story is here. British American Tobacco claims to have lost market share to unregulated tobacco since a 25 per cent tax rise two years ago. It has produced a budget pack of cigarettes in order to win back some of its customers. The pack sells at a small margin over the price of illegal tobacco.

The Health Minister claims not to be convinced that this is a matter of commercial survival, and accuses BAT of targeting children. As Health Minister she is sheltered from the commercial realities of competing in a market like tobacco, and 'targeting children' is an accusation that it is all too easy to make. I tend to feel that she lacks the qualification to comment. Her faith is that taxes help smokers to give up smoking, and by producing a cheaper brand BAT is simply failing to cooperate with her comforting fantasy.

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