Business, Economics and Jobs

Australia condemns British American Tobacco's cheap cigarettes


A handout image provided by the Australian Government shows a proposed "plain-packaged" cigarette packet.



Australia's Health Minister has slammed a decision by British American Tobacco Australia (BATA) to start selling cut-price cigarettes Down Under.

BATA — whose brands include Dunhill, Winfield and Benson & Hedges — last week released "Just Smokes," which retails for about 11.50 Australian dollars ($11.42) for a pack of 25 cigarettes.

The average price for a pack of 25 cigarettes in Australia is 16 Australian dollars, owing to the high excise tax.

BATA says it is being forced to market the cut-price cigarettes to compete with black market tobacco, with spokesman Scott McIntyre said retailed for between 8 and 10 Australian dollars, according to Australia's ABC News.

Health Minister Tanya Plibersek said she was most worried about the effects on young people.

"We know that smokers are very price sensitive and we know that the most price-sensitive smokers are teenagers," she said.

"Young people who are just starting to smoke are more likely to smoke if cigarettes are cheaper."

She says she was suspicious of the company's motives.

"What they're interested in doing is attracting new smokers and keeping existing smokers, and they'll do whatever it takes to do that," she said.

"Every time the Government has introduced something like plain packaging, like graphic health warnings, like increasing excise, they've [tobacco companies] said these measures won't work to reduce smoking rates.

"[But] they have worked to reduce smoking rates."

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The Murdoch press quoted the BATA spokesman McIntyre as saying that a 25 percent increase in Australia's tobacco excise in 2010 meant the "cheap price segment" had grown 63 percent.

"The tobacco industry is extremely competitive so if smokers continue to ask retailers for cheaper smokes, that's where the industry will battle for market share which will potentially see prices drop further," McIntyre reportedly said.

"[Smokers] have been down trading to cheaper products or illegal cigarettes, so we've been forced to compete.

"If the government keeps giving us ad hoc excise increases, all they'll do is make the problem worse.

"They're trying to reduce smoking rates through excise but instead, it's making people opt for cheaper or illegal options."

BATA, meantime, is among a number of companies challenging the Australian government's move to introduce plain packaging for cigarettes in December.

The companies are arguing the new law — with specifies that all cigarette packets are to be the same shape with the same drab color and print — will extinguish their trademark.

The case is before the High Court.