British American Tobacco Defends Lower Priced Cigarette Brands

November 28th, 2014 00:00

Senator Nick Xenophon is standing in favor of the minimum floor price on smoking products, as British American Tobacco (BAT) protects its choice to decrease the price of its cigarettes. It affirms the previous federal government's boost to the tobacco excise is just increasing the demand for lower priced products.

British American Tobacco

BAT is saying to be providing the least costly cigarettes on the Australian market at about $13 per package, which is almost half the price of high quality brands. They also state this price reduction is the response to the Government's initiatives to push the cost upward so as to put smokers off the costly and unhealthy habit.

BAT representative Scott McIntyre has explained that the company had to take action in order to protect its market. What has been occurring over the last five years in Australia is we have observed a 66 % boost in the low-price segment. These days, the low cost segment is cigarettes which are marketed for below $15, and that is in primary impact of the excise system and plain packaging. However excise has pushed the major line of cigarettes to much than $25, but what cigarette users have accomplished is they have gone, I'm not going spending that sum of money for it, I do not want to quit, I'm going to search for lower priced brands. About a year ago, the previous authorities have reported strategies to boost the excise rate on smoking products. That led to a 12.5 % boost every year until 2016. The step is likely to increase billions of dollars, but it also raised the price of tobacco products.

Scott McIntyre states with millions of cigarette users in Australia, BAT still has to compete in a challenging market. We are a legal business and we offer a legal product and our rivals are playing very ardently at this segment of the market. Smokers are going to tobacco stores and ask for the lower priced cigarettes. 44 % of all tobacco products sold in Australia at present are under $15.

BAT states that the Government ought to admit that the tax regime hasn't worked well. Company's representative Scott McIntyre states for as long as cigarette users are asking for lower priced brands, the company won't stop offering them.

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