Dramatic slump in cigarette sales

By Martin Johnston

Photo / Peter Meecham
Photo / Peter Meecham

Demand for tobacco has fallen 15 per cent at supermarkets since the tax rise in April - a far greater reduction than expected.

"It's extraordinary," public health physician Dr Murray Laugesen said yesterday, commenting on supermarket sales figures supplied to him by research company ACNielsen.

Based on earlier tax increases, a tobacco price rise of 10 per cent would have been expected to reduce sales by 5 per cent.

In April, the Government increased the excise tax on factory-made cigarettes by 10 per cent and on loose tobacco by 25 per cent.

The tax on both types will rise by a further 10 per cent next year, and by the same percentage again in 2012.

Dr Laugesen said that since the April tax rises, average weekly sales of factory-made cigarettes at supermarkets had gone down by nearly 14 per cent - notably more than the price increase of 10 per cent.

Sales of loose roll-your-own tobacco dropped by nearly 18 per cent, which was less than the price increase of 21 per cent.

He said it appeared some smokers might have switched to rolling their own cigarettes, which were cheaper - despite the greater tax increase for loose tobacco - because they were usually thinner than factory-made smokes.

The overall drop in supermarket sales - which was not the whole market - could reflect a "pent up effect" in people cutting down or quitting.

"It's 10 years since there was a tax increase above the level of inflation. New Zealanders tend to wait for the price signal before they listen to the logic of health warnings and so forth. The strong health warnings have been there since 2000, and graphic warnings have been there for a long time also."

After the tax rise a decade ago, 80,000 smokers who quit soon relapsed, but Dr Laugesen said conditions were different now, with the graphic warnings on packets, the ban on smoking in bars, subsidised nicotine replacement therapy, and the coming rises in GST and excise.

Quitline says the number of calls it received from people wanting to quit smoking rose to twice the normal rate for the eight weeks after the April tax increase.

"It's settled down to slightly higher than normal," Quit Group chief executive Paula Snowden said yesterday.

"We don't know if it's slightly higher because of the tax increase or advertising."

- NZ Herald

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