Observed retail price of Australia’s market-leading cigarette brand before and up to 3 years after the implementation of plain packaging

Abstract

ObjectiveDespite claims by tobacco companies that plain packaging would lead to lower cigarette prices, recommended and observed real cigarette prices in Australia rose in the 9–11 months after plain packaging was introduced. However, little is known about trends in prices longer term. In this report, we assess whether inflation (Consumer Price Index; CPI) and tax adjusted (‘CPI-tax-adjusted’) prices of the market-leading Australian cigarette brand changed in the 3-year period after plain packaging, and whether price changes were associated with retailer characteristics.MethodCigarette prices were ascertained from a panel of tobacco retailers at three time points: (1) in November 2012 (n=857) (before full implementation of plain packaging, compulsory in retail outlets from December 2012), (2) between October 2014 and February 2015 (n=789) and (3) between November 2015 and March 2016 (n=579). Generalised estimating equations were used to estimate percentage change in mean CPI/tax-adjusted cigarette prices over time.ResultsCPI/tax-adjusted adjusted mean stick prices rose by 13.7% (95% CI 13.0 to 16.0) and 15.2% (95% CI 14.3 to 16.0) at 2.1 and 3.1 years after plain packaging was introduced, respectively. Increases in mean CPI/tax-adjusted stick prices varied by outlet type (p<0.001), socioeconomic status (p=0.013) and remoteness of retailer’s area (p=0.028) and whether twin packs were sold (p=0.009).ConclusionsContrary to tobacco company predictions of a fall in prices, the price of the market-leading Australian cigarette brand increased significantly in the 3 years after plain packaging was introduced, and these increases were above the combined effects of inflation and increases in excise/customs duty.

The Economics of Tobacco Regulation: A Comprehensive Review

“…For example, if brand names and advertising create product differentiation, attribute-based regulations might lead to lower prices. However, Egger et al (2019) find that cigarette prices in Australia increased after the implementation of plain packaging. After the 2009 TCA ban on the term "light," U.S. cigarette manufacturers of the affected brands were able to maintain their market shares through package colors and brand names, for example Marlboro Light became Marlboro Gold.…”

Plain tobacco packaging: progress, challenges, learning and opportunities

“…44 The potential shift in tobacco sales from small stores to supermarkets that opponents of plain packaging predicted, as a result of slower service, was not observed. 50 Tobacco companies stalled the introduction of plain packs in countries with long (12 months) sell-through periods, 10 45 51 increased prices [52][53][54][55][56][57][58][59] and continued to promote their products. [60][61][62][63] Health Canada noted that while they could have given tobacco companies longer than 6 months to comply with plain packaging, doing so would be contrary to their goal of protecting citizens.…”

“…Tobacco companies stalled the introduction of plain packs in countries with long (12 months) sell-through periods,10 45 51 increased prices52–59 and continued to promote their products 60–63. Health Canada noted that while they could have given tobacco companies longer than 6 months to comply with plain packaging, doing so would be contrary to their goal of protecting citizens 64.…”

Quit Smoking Weapons of Mass Distraction

“…Philip Morris' budget brand Choice 25s rose $1.80 in this period, with only 41¢ of this being from excise and GST. Later work showed that across three years tobacco retail price increases were above the combined effects of inflation and increases in excise and customs duty (Egger, Burton et al 2019). Moreover, there is a large body of evidence that transnational tobacco companies have had major ongoing involvement in facilitating global tobacco smuggling (Gilmore, Fooks et al 2015, Tobacco Tactics 2020b).…”