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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