Dairy owners say they are risking their lives everyday selling cigarettes only to be treated appallingly by the country's biggest tobacco supplier.

An Auckland dairy owner, who spoke to the Herald anonymously for fear of repercussions felt British American Tobacco withheld promised rebates based on their performance and tied retailers into what they felt were one-sided contracts.

But BATNZ strongly disagreed and said it supported its retailers and their choice within the market.

The dairy owner contacted the Herald after reading BATNZ's comments in the Herald last week where the giant called for the Government to step in to protect dairy owners.

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"We do such a risky job in handling tobacco. We are disadvantaged in many ways through insurance premiums, a fear of just having our shop doors open and someone just walking in getting mugged and so on," the Auckland dairy owner said.

"This company is treating us very badly ...

He said many retailers were fearful of speaking out, but there was a lot of "resentment and a lot of unhappiness".

"What they do is they tie you down with contracts and they dangle the rebate. And this rebate is part of an overall discount on the cigarettes."

The dairy owner was obliged to stock whatever range BATNZ told him to even if he knew they wouldn't sell which they expanded "at their whim", he said.

It was also written into the contract they would supply the new product whether the shop wanted it or not. If they refused either, then he would lose the 2 per cent promised rebate paid every quarter.

But it was not just the rebate at risk, being forced to stock around 30 varieties - when in some cases 10 did not sell - also put pressure on the shop's cash flow, he said.

"It ties up thousands of dollars in products that don't move ... They expanded it to such an extent in my case and others that I can't even fulfill the requirement of the planogram because I don't have that kind of money because I'm a very small operator."

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However, the shop owner - like many of his peers - was in a tough position because he was the first to admit it was the biggest income earner for the shop making up to 50 per cent the weekly income each week.

Tobacco was the biggest earner, followed by drinks, frozen confectionery and then confectionery.

"This may sound trivial to someone and people may say if you feel so strongly about it why don't you just say no, but the truth is you can't run a store without tobacco. That's the bottom line.

A Hamilton dairy owner, who also spoke to the Herald on the condition he would not be named, agreed the treatment felt unfair. He said dairy owners had no choice to stock their brands because they were the market leader with about 65 per cent of the market share.

BATNZ did not respond to direct questions about the rebates because its terms with retailers were confidential, but said it was up to retailers if they wanted to work with the company and stock its products or purchase them through wholesalers or a cash and carry.

A BATNZ spokesperson said along with supporting harsher penalties on violent retail crimes and stopping the excise tax, the tobacco giant valued its relationship with its retailers and had secured competitive insurance coverage for them through a third party, as well as investing millions of dollars in providing tobacco dispensers.

"We have provided education and advice directly to retailers and through retail associations ... We are doing what we can but we are not the government, nor police, nor the justice system."

Last week the Herald revealed Philip Morris (New Zealand) was suing BATNZ for allegedly breaching competition law by locking retailers into contracts designed to stay as market leader.

A Commerce Commission spokesperson said it had not received any complaints about BATNZ's behaviour. However it said dairy owners who had concerns about trade practices could contact the commission online.

Legal stoush flares up in $2.5b tobacco industry