Industry wrong on pricing

The introduction of standardized cigarette packaging in the UK led to an increase in the sale price of leading brands, according to a story in the Guardian citing new research.
A study by Stirling University found that the price of top-selling cigarettes increased by almost five percent during the 18 months after the legislation was introduced. The price of hand-rolling tobacco rose also, by about eight percent.
Stirling is one of 13 universities that forms the UK Centre for Tobacco and Alcohol Studies, a Centre for Public Health Excellence funded by the UK Clinical Research Collaboration.
Researchers said their findings were at odds with tobacco companies’ predictions that standardized packaging, which became mandatory in May last year, would lead to lower prices and greater affordability.
“Tobacco companies were strongly opposed to plain packaging,” Dr. Nathan Critchlow, of Stirling’s institute for social marketing, was quoted as saying. “They appeared adamant that, if the policy was implemented, brands would only be able to compete on price, which would result in lower prices, greater affordability and, consequently, increased consumption.
“Our study, however, provides early evidence that these concerns of lower prices appear to be unfounded. We found that, as well as the sale prices, recommended retail prices also increased. This suggests that tobacco companies instigated the price rises – and that their predictions of falling prices and rising affordability were intended to deter the government from implementing the policy.”
The Guardian reported that the team analysed electronic point of sale data from 500 small retailers in Scotland, England and Wales during the 12-month transition period and then for six months after the legislation became mandatory.
The average price per cigarette and price per gram – both adjusted for inflation – were examined for 20 of the leading fully-branded tobacco products and their standardized equivalents.
The study was funded by the Cancer Policy Research Centre at Cancer Research UK and was published in the international journal Addiction.