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

The impact of cigarette cost on pack sales per capita consumption in the United States

OBJECTIVES

Evidence suggests that cigarette costs significantly impact tobacco use, yet the effect of state-level cost variations on cigarette sales per capita in the US remains uncertain. This study investigates how state-level cigarette costs affect pack sales per capita consumption.

STUDY DESIGN

This was an observational study of cigarette-pack sales per capita consumption in the United States.

METHODS

We used the tobacco tax burden data (1989-2019) and a two-way fixed-effects model to analyse how cigarette costs affect consumption. Our predictor variables were average cost per pack, state tax per pack, and combined federal and state tax as a percentage of the retail price. Additionally, we compared the percentage change in state cigarette taxes per pack for each state in five-year intervals, adjusting for inflation.

RESULTS

Regression analysis revealed that a 10% increase in the average cost per pack was related to a 9.59% decrease in per capita cigarette consumption (β_average cost = -0.959, P < 0.001). Similarly, a rise in state tax per pack and a higher tax as a proportion of the retail price per pack were related to a decline in consumption (β_ state tax = -0.176, P < 0.001), (β_retail price = -0.323, P < 0.001). States that raised cigarette taxes beyond the rate of inflation had a higher reduction in cigarette per capita sales than those maintaining stable tax rates.

CONCLUSIONS

Some states have not raised their cigarette taxes sufficiently to account for inflation. It appears that cigarette costs have significantly reduced cigarette consumption in the US.

Anticipated responses to a hypothetical minimum price for cigarettes and roll-your-own tobacco: an online cross-sectional survey with cigarette smokers and ex-smokers in the UK

OBJECTIVES

As tobacco companies can circumvent tax increases, a minimum retail price per-cigarette/per-gram of roll-your-own tobacco presents an additional mechanism for governments to reduce smoking. We examined (1) anticipated responses to a hypothetical minimum price-per-cigarette/per-gram among smokers in the UK; (2) what demographic and smoker characteristics are associated with anticipated responses; and (3) whether minimum pricing may help ex-smokers stay quit.

DESIGN

Cross-sectional survey (May-July 2019).

SETTING

UK.

PARTICIPANTS

Adult cigarette smokers (n=2412) and ex-smokers (n=700).

MAIN OUTCOME MEASUREMENTS

Anticipated responses to a hypothetical minimum price of £10.00 for 20 cigarettes (£0.50 per-cigarette) and £13.50 for 30 grams of roll-your-own tobacco (£0.45 per-gram); approximately £0.10 per-cigarette/per-gram increases on the cheapest prices in leading UK supermarkets (January 2019). Smokers were presented with ten options (eg, 'Try to quit') and asked which they would do (Yes/No) and then which they would most likely do. Ex-smokers were asked to what extent the minimum prices would help them stay quit (A lot vs Lesser agreement).

RESULTS

Among smokers, 55.6% said they would most likely smoke the same amount, 10.7% they would smoke less, 9.5% they would try to quit and 5.8% they would use e-cigarettes more often. Anticipated reactions were associated with demography and smoker characteristics, for example, C2DE (lower social grade) smokers were less likely than ABC1 (higher social grade) smokers to say they would smoke the same as they do now (ORAdj=0.74, 95% CI 0.62 to 0.88). Among ex-smokers, 38.5% said the minimum prices would help them stay quit 'A lot', more so among C2DE than ABC1 participants (ORAdj=1.80, 95% CI 1.30 to 2.49).

CONCLUSIONS

In response to a hypothetical minimum price for cigarettes and roll-your-own tobacco, approximately a fifth of smokers in the UK indicated they would smoke less or quit and almost two-fifths of ex-smokers indicated the prices would help them stay quit.

Using point-of-sale data to examine tobacco pricing across neighbourhoods in Scotland

OBJECTIVES

To assess the geographical variation in tobacco price (cigarettes and roll-your-own (RYO) tobacco) in convenience stores across Scotland and how this relates to neighbourhood income deprivation, tobacco retail outlet density and urban/rural status.

METHODS

Tobacco price data from 124 566 shopping baskets purchased in 274 convenience stores during 1 week in April 2018 were obtained through an electronic point-of-sale system. These data were combined with neighbourhood-level measures of income deprivation, tobacco retail outlet density and urban/rural status. We examined brand price for 12 of the most popular cigarette brands and 3 RYO brands and variations in purchases by price segment; multivariable regression analysis assessed associations between area variables and tobacco price.

RESULTS

Most stores sold tobacco in all price segments. The lowest priced subvalue brands were the most popular in all neighbourhoods but were most dominant in shops in more deprived neighbourhoods. When total sales were assessed, overall purchase price varied significantly by neighbourhood income deprivation; packets of 20 cigarettes were 50 pence (5.6%) lower and RYO 34 pence (2.7%) lower among shops in the two highest income deprivation quintiles relative to the lowest. Analysis of individual brands showed that for 3 of the 12 cigarette brands considered, average prices were 12-17 pence lower in more deprived neighbourhoods with the most popular RYO brand 15 pence lower. There was limited evidence of a relationship with tobacco retail outlet density.

CONCLUSION

Across Scottish convenience stores, the purchase price of cigarettes and RYO was lower in more income-deprived neighbourhoods. The lower prices primarily reflect greater sales of cheap brands in these areas, rather than retailers reducing the prices of individual brands.

Standardised packaging, minimum excise tax, and RYO focussed tax rise implications for UK tobacco pricing

BACKGROUND

Standardised packaging for factory made (FM) and roll your own (RYO) tobacco was fully implemented in the UK in May 2017. Around the same time, several changes to the tax system were applied (a Minimum Excise Tax (MET) for FM products and tax increases weighted towards RYO products). The tobacco industry claims that standardised packaging will lower prices (a disincentive for quitting) by commoditising the product, yet had itself taken advantage of the previous tax regime to achieve large profits from premium brands while also keeping some products' prices relatively low. Here we evaluate the impact of standardised packaging, the MET and the RYO focussed tax changes on price and industry profitability.

METHODS AND FINDINGS

Nielsen electronic point of sale (EPOS) data (May 2015 to April 2018) were used to calculate real (inflation adjusted) monthly price per stick overall, by cigarette type (FM and RYO) and by seven market segments. Trend estimation, using additive mixed models, assessed weighted average price (weighted by volume of sales) and tobacco industry net revenue changes. The beginning and end of the data series were compared in terms of: (a) average monthly price growth, (b) average monthly net revenue growth, and (c) undershifting and overshifting patterns after tax changes. FM and RYO real prices changed little over the 3-year period-overall prices rose by about 1p per stick. There was no evidence of commoditisation with prices of all FM segments (but not RYO) rising faster after the implementation of standardised packaging than immediately beforehand. The prices of the cheapest FM brands rose with the implementation of the MET. RYO price increases did not close the gap to FM pricing levels despite RYO focussed tax increases. Tax changes following the implementation of standardised packaging and the MET were more widely and quickly passed on to smokers in the form of higher prices than the tax change pre-implementation. The main limitations are first that because we do not know the exact mechanism by which Nielsen scales up sample data to provide UK estimates, we could only use data for a set three year period during which the same adjustments are made. Second, the tax and standardised packaging events were sometimes too close in time to separate their consequences statistically. Third, tobacco prices may also be affected by external factors such as changes in smokers' disposable income or availability of electronic nicotine delivery systems.

CONCLUSIONS

There was no long-term lowering of tobacco prices after the implementation of standardised packaging as predicted by the industry. The introduction of the MET was successful in increasing the price of the cheapest FM cigarettes and narrowing the price gap between FM brands. The RYO tax increases were, however, insufficient to narrow the price gap between RYO and FM. Overall, undershifting became less extensive indicating that tobacco industry manipulation of the tax system which had previously kept cheap products available had declined. This suggests that standardised packaging and a MET will likely contribute to further declines in UK tobacco use.

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

BACKGROUND AND AIMS

Tobacco companies claimed that standardized packaging, phased in/introduced May 2016-May 2017, would reduce prices and increase consumption. We: (1) describe changes in price-per-cigarette and price-per-gram during, and after, the introduction of standardized packaging; (2) describe price changes by cigarette price segment; and (3) analyse price changes by stage of implementation.

DESIGN

An observational study, using electronic point-of-sale data, monitored price trends in three periods: (1) May-September 2016, start of transition period; (2) October 2016-May 2017, when fully branded and standardized products were sold and duty escalators implemented; and (3) June-October 2017, when standardized packaging was mandatory.

SETTING

United Kingdom.

PARTICIPANTS

Small retailers (n = 500) stratified by region and deprivation. Data were monitored for 20 leading fully branded tobacco products [15 factory-made cigarettes (FMC), 5 roll-your-own (RYO)] and their standardized equivalents.

MEASUREMENT

Price-per-cigarette and price-per-gram, based on monthly average Recommended Retail Price (RRP) and actual sale price, adjusted for inflation using the Consumer Pricing Index (CPIH). Net changes (£GBP, %) were analysed by product type (FMC versus RYO) and FMC price segment (value, mid-price, premium).

FINDINGS

Between May 2016 and October 2017, the average inflation-adjusted RRP/price-per-cigarette and price-per-gram increased for FMC (all price segments) and RYO. For example, sales price-per-cigarette increased +4.64%, with the largest increases for value (+6.81%), premium (+5.32%) and mid-price FMCs (+3.30%). Net sales price-per-cigarette and price-per-gram increases were largest in period 2, when fully branded and standardized products were sold and duty escalators were implemented (FMC = +4.70%; RYO = +3.75%). There were small decreases in sales price-per-cigarette and price-per-gram once standardized packaging became mandatory (FMC = -1.14%; RYO = -0.88%).

CONCLUSION

In the United Kingdom, the price of leading roll-your-own and factory-made cigarette brands sold by small retailers increased as standardized packaging was phased in, with increases larger than expected through duty escalation.