Plain packaging triggered tobacco price hike, study found
Plain packaging triggered a hike in the price of tobacco products in the UK. Specifically, the price of leading tobacco products rose, say researchers from the University of Stirling in Scotland.
The researchers wrote about their study and findings in the international journal Addiction (citation below). Their findings conflicted with tobacco company predictions. Tobacco companies had predicted that plain packaging would have triggered a decline in prices, and subsequently, more affordability.
Since May 2016, new legislation required tobacco companies to sell their products in plain packaging in the UK. The British Government gave them a 12-month transition period.
The researchers found that the prices of leading cigarette brands rose by an average of 38p ($0.48) per pack of twenty. That equates to an increase of nearly five percent. These increases occurred eighteen months after the new legislation came into effect.
The retail price of hand-rolling tobacco also rose. The price of a 30g pack increased by approximately 8%, or 91p ($1.15).
Plain packaging – tobacco companies’ position
Team leader, Dr. Nathan Critchlow, of Stirling’s Institute for Social Marketing, said:
“Tobacco companies were strongly opposed to plain packaging. 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 researchers gathered and analyzed electronic point of sale data. The data came from a representative sample of 500 small retailers in England, Scotland, and Wales and covered the 12-month transition period. They also analyzed data six months after the transition period had ended.
They focused on the average price-per-cigarette and price-per-gram of the country’s twenty leading fully-branded tobacco products and their standardized equivalents. The researchers adjusted the average prices for inflation. In other words, the price increases were in real terms.
Dr. Critchlow said:
“We found that prices increased across the tobacco market, including rises for value cigarettes and hand rolling tobacco, which price-sensitive consumers may have down-traded to. We also found a continued use of higher prices to distinguish the quality of premium cigarette brands.”
“The increases were greater than expected, if just moving in line with tobacco duty.”
Plain packaging – tobacco companies were wrong
Regarding what tobacco companies had said, Kruti Shrotri, from Cancer Researcher UK, said:
“Tobacco companies claimed that putting cigarettes in plain packaging would result in lower prices, make tobacco more affordable, and increase smoking rates. This research gives us an early indication that this isn’t true.”
“Plain packaging for cigarettes is an effective public health measure to reduce the attractiveness of tobacco to young people. The tobacco industry was clearly saying anything they could to try and undermine this health measure and protect their profits.”
“Pricing of tobacco products during, and after, the introduction of standardized packaging: an observational study of retail price data from independent and convenience (small) retailers in the United Kingdom,” Nathan Critchlow, Anne Marie MacKintosh, Martine Stead, Douglas Eadie, Kathryn Angus, and Crawford Moodie. Addiction. First Published: 16 December 2018. DOI: https://doi.org/10.1111/add.14488.