The impact of an increase in excise tax on the retail price of tobacco in New Zealand

Tobacco industry pricing strategies during recent tax adjustments in Mexico: evidence from sales data

INTRODUCTION

Previous studies have identified pricing strategies that the tobacco industry employs to try to minimise the impact of tobacco taxation, but these studies are mostly about high-income countries. This research examines industry price responses to a recent cigarette tax increase in Mexico, including in the capsule cigarette segment that has expanded rapidly in Latin America.

METHODS

Data of cigarette prices and sales in Mexico between October 2018 and September 2021 licensed from NielsenIQ were used following a quasi-experimental design to analyse price changes after excise tax increases with fixed effect models by product. To explore heterogeneous responses, estimates were disaggregated by cigarette attributes such as presence of capsules and market segment. Differential shifting was also assessed.

RESULTS

Increasing the tobacco tax from 2011MX$0.35(≈US$0.02) to 2020 MX$0.4944(≈US$0.0283) in January 2020 was associated with an overall 8% cigarette price increase in real terms. However, some cigarette types, including premium to discount segments, exhibited price increases larger than the tax increase, which reduced the relative price of ultra-low-priced cigarettes. Instead of a single hike, prices were gradually raised throughout the first months of 2020 for all cigarette types. A combination of both pricing strategies was employed for capsule cigarettes. The 2021 smaller tax adjustment for annual inflation was fully passed onto consumer, maintaining real prices constant.

CONCLUSIONS

The industry's ability to raise prices more than the tax increase and manage these price increases smoothly suggests that there was room for larger tobacco tax increases in Mexico. Future developments on tobacco taxes could consider a fully specific tax structure or minimum taxes to mitigate the adverse effects of market segmentation and differential shifting.

Going 'Super Value' in New Zealand: cigarette pricing strategies during a period of sustained annual excise tax increases

BACKGROUND

Between 2010 and 2020, the New Zealand (NZ) Government increased tobacco excise tax by inflation plus 10% each year. We reviewed market structure changes and examined whether NZ tobacco companies shifted excise tax increases to maintain the affordability of lower priced cigarette brands.

METHODS

We cluster-analysed market data that tobacco companies supply to the NZ Ministry of Health, created four price partitions and examined the size and share of these over time. For each partition, we analysed cigarette brand numbers and market share, calculated the volume-weighted real stick price for each year and compared this price across different price partitions. We calculated the net real retail price (price before tax) for each price partition and compared these prices before and after plain packaging took effect.

RESULTS

The number and market share of Super Value and Budget brands increased, while those of Everyday and Premium brands decreased. Differences between the price of Premium and Super Value brands increased, as did the net retail price difference for these partitions. Following plain packaging's implementation, Super Value brand numbers more than doubled; contrary to industry predictions, the price difference between these and higher priced brands did not narrow.

CONCLUSIONS

Between 2010 and 2020, NZ tobacco companies introduced more Super Value cigarette brands and shifted excise tax increases to reduce the impact these had on low-priced brands. Setting a minimum retail price for cigarettes could curtail tobacco companies' ability to undermine tobacco taxation policies designed to reduce smoking.

Tobacco industry pricing strategies for single cigarettes and multistick packs after excise tax increases in Colombia

INTRODUCTION

Taxes on tobacco products are an efficient way of reducing consumption. However, they are only effective if passed on to consumers with higher prices. This study aims to examine tobacco industry (TI) pricing strategies in response to tax increases, and whether they differ by price segments or presentation (packs or individual sticks) in Colombia. This is the first such academic study in Latin America and the first anywhere to include the market for single sticks.

METHODS

Using data on cigarette pricing/taxation from a survey of smokers (2016-2017) and official government data on pricing (2007-2019), the TI's pricing strategies were examined, split by brand, price segments, different sized packs and single cigarettes.

RESULTS

The TI employed targeted pricing strategies in Colombia: differentially shifting taxes; and launching new brands/brand variants. The industry overshifted taxes when increases were smaller and predictable, but used undershifting more when there was a larger increase in 2017, after which it mostly overshifted on budget and premium (but undershifted mid-priced) brands. The prices for single sticks increased more than the tax increase in 2017 when their consumption also increased.

CONCLUSION

The pricing strategies identified suggest excise taxes can be increased further, particularly the specific component, to reduce the price gap between brand segments. Brands should be restricted to a single variant along with prohibitions on launching new brands/brand variants. Lastly, since the pricing of single sticks does not match the pattern of packs, more monitoring of their sales and distribution is required, especially since they promote consumption and hinder effective implementation of tobacco tax policies.

How has the tobacco industry passed tax changes through to consumers in 12 sub-Saharan African countries?

INTRODUCTION

Tobacco taxation is only effective in reducing consumption when it is translated into higher prices. This study aims to investigate to what extent the tobacco industry (TI) passes tax increases over to consumers by increasing the retail price of cigarettes in 12 sub-Saharan African (SSA) countries.

METHODS

African Cigarette Prices Project and WHO's Global Tobacco Epidemic Reports data were used to calculate the rate of tax pass-through by decomposing the retail price of cigarettes into tax and net prices between 2016 and 2020. Percentage change in net price was used to identify industry pricing behaviour, in both packs and single-stick sales. TI pricing strategies were examined by country, producer type, producers, and cigarette price segment.

RESULTS

There were mixed TI strategies, with taxes primarily overshifted (Botswana, Madagascar, Tanzania, Zimbabwe), undershifted (Ethiopia, Lesotho, Mozambique, Namibia, South Africa, Zambia) or a mix of both (Malawi, Nigeria). The detail varied between countries, over time, and between the different brands/segments offered. Patterns for single-stick sales were broadly similar to that of packs but with some differences observed in particular countries/years. Pricing strategies for the various transnational tobacco companies and domestic producers were similar but the changes in net price for the latter were larger. The country tax level/type and the size of tax change did not seem to be an obvious influence.

CONCLUSION

This paper provides an overview of TI pricing strategies in response to tax increases in SSA. Governments must monitor how the TI responds to tax changes to ensure that tax increases are effective in impacting price.

Is the neighbourhood context important for a tobacco retailer proximity policy?

A spatial modelling approach was used to explore how a proximity limit (150 m, 300 m, and 450 m) between tobacco retailers may impact different neighbourhoods in New Zealand. Neighbourhoods were categorised into three density groups (0, 1-2, 3+ retailers). As the proximity limit increases, there is a progressive redistribution of neighbourhoods in the three density groups with, the 3+ density group incorporating fewer neighbourhoods and the 0 and 1-2 density groups conversely each consisting of more. The differing measures available at the neighbourhood level enabled our study to discern potential inequities. More directed policies targeting these inequities are needed.

Tobacco industry pricing strategies in response to excise tax policies: a systematic review

OBJECTIVE

To explore what is known about the tobacco industry's (TI) price-based responses to tobacco excise tax policies and whether these vary by country income group using a systematic review.

DATA SOURCES

Studies assessing TI pricing tactics were identified via searches of five online databases using a combination of search keywords.

STUDY SELECTION

Inclusion criteria were applied by two reviewers independently who screened all search results (titles and abstracts) for possible inclusion. They identified 37 publications that reported TI pricing tactics.

DATA EXTRACTION

Study details were tabulated, and information was extracted on the country income group, population characteristics, excise tax structure, and pricing strategies.

DATA SYNTHESIS

Of the 37 publications identified, 22 were conducted in high-income countries, while 15 covered low-income and middle-income countries (LMICs). Major pricing strategies employed were: differentially shifting taxes between products (35 studies); launching new brands/products as pathways for downtrading (six studies), product promotions and different prices for the same products for different customers (six studies); price smoothing (two studies); and changing product attributes such as length/size of cigarettes or production processes (three studies).

CONCLUSIONS

While there is limited evidence to fully ascertain industry responses to tax increases, this review suggests that the TI widely uses a multitude of sophisticated pricing strategies across different settings around the world with the intention of undermining tax policies, thereby increasing tobacco consumption and maximising their profits. There is a need for further research in this area especially in LMICs so that effective policy responses can be developed.

Trends in Smoking Prevalence and Intensity between 2010 and 2018: Implications for Tobacco Control in China

BACKGROUND

China is the world's largest producer and consumer of cigarettes. Since 2010, the Chinese government has implemented many policies to combat the tobacco epidemic, yet little is known about their overall impacts. This study aims to investigate the trends in smoking prevalence and intensity between 2010 and 2018.

METHODS

We use five waves of data from China Family Panel Studies (CFPS), a nationally representative survey, to examine the trends in smoking prevalence and intensity. We use the chi-square test and t-test to examine differences across waves. Binary logistic regressions and linear regressions are applied to examine the association between smoking behaviors and risk factors.

RESULTS

The current smoking prevalence dropped from 30.30% in 2010 (90% CI 29.47-31.31) to 28.69% (90% CI 27.69-29.69) in 2018. As for smoking intensity, the average daily cigarettes consumption decreased steadily from 16.96 cigarettes (90% CI 16.55-17.36) in 2010 to 15.12 cigarettes (90% CI 15.07-15.94) in 2018. Smoking risk factors for men included marriage status, education level, employment status, alcohol consumption, and physical activities. The smoking risk was higher for women with a lower education level, lower household income, unemployment status, and alcohol consumption behavior.

CONCLUSIONS

Our study shows declined trends in both smoking prevalence and intensity between 2010 and 2018, suggesting some positive progress in tobacco control in China. Nonetheless, to achieve the goal of reducing smoking prevalence among people aged 15 and above to less than 20% by 2030, the Chinese government needs to take stronger anti-tobacco measures.

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.

Health and Economic Impact of Health Warnings and Plain Tobacco Packaging in Seven Latin American Countries: Results of a Simulation Model

INTRODUCTION

The burden of disease attributable to tobacco use in Latin America is very high. Our objective was to evaluate the 10-year potential impact of current legislation related to cigarette packaging and warnings and expected effects of moving to a higher level of strategies implementing cigarette plain packaging on health and cost outcomes in Argentina, Bolivia, Brazil, Chile, Colombia, Mexico, and Peru, using a microsimulation model.

AIMS AND METHODS

We used a probabilistic state-transition microsimulation model, considering natural history, costs, and quality of life losses associated with main tobacco-related diseases. We followed up individuals in hypothetical cohorts and calculated health outcomes annually to obtain aggregated long-term population health outcomes and costs. We performed a literature review to estimate effects and analyzed studies and information from ministries, relevant organizations, and national surveys. We calibrated the model comparing the predicted disease-specific mortality rates with local statistics.

RESULTS

Current graphic warnings already in place in each country could avert, during 10 years, 69 369 deaths and 638 295 disease events, adding 1.2 million years of healthy life and saving USD 5.3 billion in the seven countries. If these countries implemented plain packaging strategies, additional 155 857 premature deaths and 4 133 858 events could be averted, adding 4.1 million healthy years of life and saving USD 13.6 billion in direct health care expenses of diseases attributable to smoking.

CONCLUSIONS

Latin American countries should not delay the implementation of this strategy that will alleviate part of the enormous health and financial burden that tobacco poses on their economies and health care systems.

IMPLICATIONS

Tobacco smoking is the single most preventable and premature mortality cause in the world. The Framework Convention on Tobacco Control, supported by the World Health Organization, introduced a package of evidence-based measures for tobacco control. This study adds evidence on the potential health effects and savings of implementing cigarette plain packaging in countries representing almost 80% of the Latin American population; findings are valuable resources for policy makers in the region.

Tobacco industry tactics in response to cigarette excise tax increases in Mauritius

BACKGROUND

In response to high smoking rates, especially among men, Mauritius launched a National Action Plan on Tobacco Control in 2008. It changed its tax system from a mixed system to a uniform specific system. Despite these interventions, cigarette consumption and smoking prevalence in Mauritius decreased only marginally in the subsequent decade.

METHOD

Using publicly available data, we decompose the retail price of cigarettes into tax and net-of-tax components, between 2011 and 2017. We cover premium, popular and economy cigarettes.

RESULTS

Since its introduction in 2008, the nominal excise tax was increased six times. Between 2011 and 2017, the real value of the excise tax increased by 47%. Meanwhile, British American Tobacco (BAT) increased the real net-of-tax price of premium cigarettes by 61.8% and of popular cigarettes by 47.2%, thus overshifting the tax increase. On economy cigarettes, BAT decreased the real net-of-tax price by 14.7%, thus undershifting the excise tax increase.

CONCLUSION

Through its pricing strategy, BAT has greatly undermined Mauritius's tobacco control policy. However, BAT cannot continue undershifting the excise tax on economy brands, since the net-of-tax proportion of the retail price is very low already. BAT would have little choice but to increase the retail price on economy brands in response to future excise tax increases. The government of Mauritius is encouraged to keep the specific excise tax structure but to increase the rate at which it is levied.

Exploiting a low tax system: non-tax-induced cigarette price increases in Taiwan 2011-2016

INTRODUCTION

This study aims to analyse the non-tax-induced price increasing strategies adopted by tobacco industry in Taiwan, a high-income country with comprehensive tobacco control policies but low tobacco taxes and a declining cigarette market.

METHODS

Using governmental tax, price and inflation data, we analysed cigarette sales volume, affordability, affordability elasticity of demand, market share, pricing and net revenue of the top five tobacco companies in Taiwan from 2011 to 2016 when no tax increases occurred.

RESULTS

Total revenue after tax grew significantly for all the major transnational tobacco companies between 2011 and 2016 at the expense of the state-owned Taiwan Tobacco and Liquor Corporation. In terms of market share, Japan Tobacco (JT) was the leading company, despite experiencing a small decline, while British American Tobacco and Imperial Brands remained stable, and Philip Morris International increased from 4.7% to 7.0%. JT adopted the most effective pricing strategy by increasing the real price of its two most popular brands (Mevius and Mi-Ne) and, at the same time, doubling the sales of its cheaper and less popular brand Winston by leaving its nominal retail price unaltered.

CONCLUSIONS

Low and unchanged tobacco taxes enable tobacco companies to use aggressive pricing and segmentation strategies to increase the real price of cigarettes without making them less affordable while simultaneously maintaining customers' loyalty. It is crucial to continue monitoring the industry's pricing strategies and to regularly increase taxes to promote public health and to prevent tobacco industry from profiting at the expense of government revenues.

Smoking prevalence following tobacco tax increases in Australia between 2001 and 2017: an interrupted time-series analysis

BACKGROUND

Building on substantial tobacco control action over the previous decade, Australia increased the taxes on tobacco by 25% without forewarning on April 30, 2010. Australia then became one of a few countries to pre-announce a series of increases in tobacco taxes, with annual 12·5% increases starting from December, 2013. We aimed to examine the effects of both tax increases on smoking prevalence.

METHODS

By use of survey data from Australians aged 14 years and older in five capital cities, we did an interrupted time-series analysis to model the monthly prevalence of smoking (overall, of factory-made cigarettes [FMC], and of roll-your-own tobacco [RYO]), in the total sample and stratified by socioeconomic status subgroups. We measured outcomes in May, 2001-April, 2010; May, 2010-November, 2013; and December, 2013-April, 2017.

FINDINGS

The 25% tax increase was associated with immediate (-0·745 percentage points; 95% CI -1·378 to -0·112) and sustained reductions in prevalence (monthly trend -0·023 percentage points; -0·044 to -0·003), which were driven by reductions in the prevalence of smoking of FMC. The prevalence of smoking of RYO increased between May, 2010, and November, 2013, after the 25% tax increase. At the start of the pre-announced annual 12·5% increases, we observed an immediate reduction in smoking (-0·997 percentage points; -1·632 to -0·362), followed by decreasing overall prevalence (monthly trend -0·044 percentage points; -0·063 to -0·026) due to ongoing decreases in the prevalence of FMC smoking and a cessation of increases in the prevalence of smoking of RYO. Immediate decreases in smoking and changing trends in the prevalence of smoking of RYO were most evident among groups with a lower socioeconomic status.

INTERPRETATION

Large tax increases are effective in reducing smoking prevalence, both as a single increase without forewarning and as a pre-announced series of increases. However, taxes on tobacco are best structured to apply equally to FMC and RYO products. Tobacco control policies should prohibit price marketing that otherwise erodes the full impact of such tax increases.

FUNDING

Cancer Council Victoria.

Retailers' perspectives on selling tobacco in a low-income San Francisco neighbourhood after California's $2 tobacco tax increase

BACKGROUND

California's tobacco tax increased by $2.00 per pack in 2017. Although such increases are among the most effective tobacco control strategies, little is known about their impact from the perspective of corner store owners in low-income neighbourhoods with high concentrations of tobacco outlets.

METHODS

We interviewed 38 corner store owners and managers in San Francisco's Tenderloin, the district with the city's highest tobacco outlet density, 60-90 days following implementation of the tax increase. Questions focused on perceptions of the impact of the higher tobacco tax on their revenues, customers and tobacco company promotions. We used qualitative content analysis to identify, compare and reconcile key themes.

RESULTS

Most retailers reported a decline in cigarette sales, with customers buying fewer cigarettes, switching to cheaper brands or other products like marijuana, or trying to quit smoking. Retailers described challenges associated with running a small business and selling tobacco and concerns about selling a product that is 'bad' for customers' health. Contrary to expectation, tobacco companies appeared to be offering few product promotions in this neighbourhood.

CONCLUSIONS

Small, independent retailers' concerns, about selling tobacco and about the health and well-being of customers, suggest that such retailers may be important allies in tobacco control efforts,particularly those focused on the point-of-sale.

Mind the Gap: Changes in Cigarette Prices After California's Tax Increase

Objective

To investigate whether California's 2017 cigarette tax increase was passed onto smokers equally.

Methods

Auditors recorded 4 cigarette prices in the same random sample of licensed tobacco retailers (N = 1049) before the tax increase (January-March 2017) and after (April-September 2018): Natural American Spirit (ultra-premium), Newport menthol (premium), and Pall Mall (value) all from the same manufacturer, and Marlboro (premium). Ordinary least squares regressions examined how the gap in prices (increase greater or less than $2.00 tax) varied by market segment and neighborhood demographics, controlling for store type and months since implementation. Paired t-tests assessed whether industry/retail revenue (price in excess of state and federal excise taxes) increased.

Results

Over-shifting (increase greater than tax) was evident for all 4 brands and was significantly greater for ultra-premium (Mean = $0.40, SD = 0.75) than premium (Mean = $0.25, SD = 0.78) and greater for premium than value brand (Mean = $0.16, SD = 0.67). However, under-shifting (increase less than tax) was evident for Newport in African-American neighborhoods and Pall Mall in Hispanic neighborhoods. After the tax increase, prices were significantly more likely to be discounted and significantly more stores advertised a discount on cigarettes.

Conclusion

California's tax increase was not passed onto consumers equally. Non-tax mechanisms to increase price could support intended effects of tobacco taxes.

Relationships between smoking duration, smoking intensity, hypothetical tobacco price increases, and smoking habit change intention among current smokers in Shanghai

Objectives

We conducted a cross-sectional study to explore the effect of a hypothetical tobacco retail price increase on smoking habit change intention, and the role of smoking duration and intensity in smoking change intention.

Methods

In 2016 and 2017, we collected questionnaire data from 36,698 residents aged over 18 years in Songjiang district, Shanghai. Chi-square tests and weighted logistic regression were used for data analyses.

Results

The prevalence of current smoking was 19.78% (men: 48.36% and women: 0.22%). A total of 10.83% (men: 10.89% and women: 2.04%) and 9.39% of smokers (men: 9.42% and women: 6.12%) expressed the intention to smoke less or quit, respectively, given tobacco retail price increases. If the current tobacco retail price doubled, 75% of smokers stated that they would smoke less and 60% of smokers would consider quitting. Smokers with longer smoking duration and lower smoking intensity were more sensitive to tobacco price increases and more likely to change their smoking habits.

Conclusions

An increase in tobacco retail prices could induce some smokers to change their smoking behavior, particularly those with longer smoking duration and lower smoking intensity. A tobacco retail price increase is recommended, which should apply to all cigarette brands.

Availability and Use of Cheap Tobacco in the United Kingdom 2002-2014: Findings From the International Tobacco Control Project

Introduction

Raising tobacco prices is the most effective population-level intervention for reducing smoking, but this is undermined by the availability of cheap tobacco. This study monitors trends in cheap tobacco use among adult smokers in the United Kingdom between 2002 and 2014 via changes in product type, purchase source, and prices paid.

Methods

Weighted data from 10 waves of the International Tobacco Control policy evaluation study were used. This is a longitudinal cohort study of adult smokers with replenishment; 6169 participants provided 15812 responses. Analyses contrasted (1) product type: roll-your-own (RYO) tobacco, factory-made packs (FM-P), and factory-made cartons (FM-C); (2) purchase source: UK store-based sources (e.g., supermarkets and convenience stores) with non-UK/nonstore sources representing tax avoidance/evasion (e.g., outside the UK, duty free, and informal sellers); and (3) prices paid (inflation-adjusted to 2014 values). Generalized estimating equations tested linear changes over time.

Results

(1) RYO use increased significantly over time as FM decreased. (2) UK store-based sources constituted approximately 80% of purchases over time, with no significant increases in tax avoidance/evasion. (3) Median RYO prices were less than half that of FM, with FM-C cheaper than FM-P. Non-UK/nonstore sources were cheapest. Price increases of all three product types from UK store-based sources from 2002 to 2014 were statistically significant but not substantial. Wide (and increasing for FM-P) price ranges meant each product type could be purchased in 2014 at prices below their 2002 medians from UK store-based sources.

Conclusions

Options exist driving UK smokers to minimize their tobacco expenditure; smokers do so largely by purchasing cheap tobacco products from UK stores.

Implications

The effectiveness of price increases as a deterrent to smoking is being undermined by the availability of cheap tobacco such as roll-your-own tobacco and cartons of packs of factory-made cigarettes. Wide price ranges allowed smokers in 2014 to easily obtain cigarettes at prices comparable to 12 years prior, without resorting to tax avoidance or evasion. UK store-based sources accounted for 80% or more of all tobacco purchases between 2002 and 2014, suggesting little change in tax avoidance or evasion over time. There was a widening price range between the cheapest and most expensive factory-made cigarettes.

Tobacco pack display at hospitality venues after the introduction of standardised tobacco packaging in New Zealand: a field observation study

OBJECTIVES

In March 2018, New Zealand (NZ) introduced standardised tobacco packaging that also featured new pictorial warnings, with implementation completed by early June 2018. We evaluated how the new packaging affected tobacco pack displays in outdoor areas of hospitality venues.

DESIGN

Before-and-after descriptive field observation study.

SETTING

Central city area of the capital city of NZ (Wellington).

PARTICIPANTS

Observations of people smoking and tobacco packs were made at 56 hospitality venues with outdoor tables (2422 separate venue observations), after the introduction of standardised tobacco packaging. Comparisons were made with a prior study in the same setting, from a time when tobacco packaging still featured brand imagery.

RESULTS

A total of 8191 patrons, 1113 active smokers and 889 packs and pouches (522 of known orientation) were observed over 2422 venue observations. There were 0.80 visible packs per active smoker in 2018, compared with 1.26 in 2014 (risk ratio (RR)=0.64, 95% CI 0.60 to 0.67, p<0.0001). The new packs in 2018 were also less likely to be displayed face-up, compared with packs in 2014, which had brand imagery on the front face (RR=0.77, 95% CI 0.72 to 0.83, p<0.0001). Pack and pouch display (RR=3.09 in 2014 and 3.10 in 2018) and active smoking (RR=3.16 in 2014 compared with 3.32 in 2018) were higher at venues without children present, compared with venues with children present (this finding was consistent over time).

CONCLUSIONS

The reduction in the number of visible packs per active smoker, along with the reduction in face-up positioning of packs, suggests that smokers found the new standardised packs less attractive. Countries introducing standardised packaging should consider evaluating social display of tobacco packaging.

Neighbourhood disparities in the price of the cheapest cigarettes in the USA

BACKGROUND

There is evidence that the cheapest cigarettes cost even less in neighbourhoods with higher proportions of youth, racial/ethnic minorities and low-income residents. This study examined the relationship between the price of the cheapest cigarette pack and neighbourhood demographics in a representative sample of tobacco retailers in the USA.

METHODS

Data collectors recorded the price of the cheapest cigarette pack (regardless of brand) in 2069 retailers in 2015. Multilevel linear modelling examined the relationship between price and store neighbourhood (census tract) characteristics, specifically median household income and percentage of youth, Black, Asian/Pacific Islander and Hispanic residents.

RESULTS

Average price for the cheapest pack was $5.17 (SD=1.73) and it was discounted in 19.7% of stores. The price was $0.04 less for each SD increase in the percentage of youth and $0.22 less in neighbourhoods with the lowest as compared with the highest median household incomes. Excluding excise taxes, the average price was $2.48 (SD=0.85), and associations with neighbourhood demographics were similar.

CONCLUSION

The cheapest cigarettes cost significantly less in neighbourhoods with a greater percentage of youth and lower median household income. Non-tax mechanisms to increase price, such as minimum price laws and restrictions on discounts/coupons, may increase cheap cigarette prices.

Difference between recommended retail price and sales price for tobacco products in independent and convenience (small) retailers before and after the introduction of standardised tobacco packaging in the UK

AIM

Recommended retail price (RRP) is a marketing strategy used by tobacco companies to maintain competitiveness, communicate product positioning and drive sales. We explored small retailer adherence to RRP before and after the introduction of the Standardised Packaging of Tobacco Products Regulations in the UK (fully implemented on 20 May 2017) which mandated standardised packaging of cigarettes and rolling tobacco, set minimum pack/pouch sizes and prohibited price-marking.

METHOD

Monthly electronic point of sale data from 500 small retailers in England, Scotland and Wales were analysed. From May 2016 to October 2017, we monitored 20 of the best-selling fully branded tobacco products (15 factory-made cigarettes, 5 rolling tobacco) and their standardised equivalents. Adherence to RRP was measured as the average difference (%) between monthly RRPs and sales prices by pack type (fully branded vs standardised), price-marking on packaging and price segment.

RESULTS

The average difference between RRP and sales price increased from +0.36% above RRP (SD=0.72) in May 2016, when only fully branded packs were sold, to +1.37% in October 2017 (SD=0.30), when standardised packs were mandatory. Increases above RRP for fully branded packs increased as they were phased out, with deviation greater for non-price-marked packs and premium products.

DISCUSSION

Despite tobacco companies emphasising the importance of RRP, small retailers implemented small increases above RRP as standardised packaging was introduced. Consequently, any intended price changes by tobacco companies in response to the legislation (ie, to increase affordability or brand positioning) may be confounded by retailer behaviour, and such deviation may increase consumer price sensitivity.

Smokers' strategies across social grades to minimise the cost of smoking in a period with annual tax increases: evidence from a national survey in England

OBJECTIVES

To assess associations between smokers' strategies to minimise how much their smoking costs and cost of smoking among smokers across three social grades during a period of annual tax increases in England.

DESIGN

Repeat cross-sectional.

SETTING

England, May 2012-December 2016.

PARTICIPANTS

16 967 adult smokers in 56 monthly surveys with nationally representative samples.

MEASURES AND ANALYSIS

Weighted generalised additive models assessed associations between four cost-minimising strategies (factory-made and roll-your-own (RYO) cigarette consumption levels, illicit and cross-border purchases) and cost of smoking (£/week). We adjusted for inflation rate, age, gender and secular and seasonal trends.

RESULTS

Cost of smoking did not increase above the rate of inflation. Factory-made cigarette consumption decreased, while proportion of RYO and, to a much lesser extent, illicit and cross-border purchases increased. These trends were only evident in lowest social grade. Cost of smoking was 12.99% lower with consumption of 10 fewer factory-made cigarettes (95% CI -13.18 to -12.80) and 5.86% lower with consumption of 10 fewer RYO cigarettes (95% CI -5.66 to -6.06). Consumption levels accounted for 60% of variance in cost. Cross-border and illicit tobacco purchases were associated with 9.64% (95% CI -12.94 to -6.33) and 9.47% (95% CI -12.74 to -6.20) lower costs, respectively, but due to low prevalence, accounted for only 0.2% of variation. Associations were similar across social grades, although weaker for illicit and cross-border purchases and stronger for consumption in higher social grades compared with lower social grades.

CONCLUSION

During a period of annual tax increases, the weekly cost of smoking did not increase above inflation. Cost-minimising strategies increased, especially among more disadvantaged smokers. Reducing cigarette consumption and switching to RYO tobacco explained a large part of cost variation, while use of illicit and cross-border purchasing played only a minor role.

Analysis of tobacco industry pricing strategies in 23 European Union countries using commercial pricing data

Background

The tobacco industry (TI) can act to undermine the impact of tobacco tax increases by adopting various pricing strategies. Little is known about strategies used across the European Union (EU), except for the UK.

Aim

To examine pricing strategies adopted by the TI in the EU, and whether they differ by cigarette price segment, or between manufactured and roll-your-own (RYO) cigarettes.

Methods

This is a longitudinal analysis of commercial pricing data for manufactured and RYO cigarettes from 23 EU countries in 2006–2017. Price and revenue trends were explored. Linear regression estimated the average annual change in revenue, and linear fixed-effects panel regression models were used to explore the association between changes in median revenue (net of tax and adjusted for inflation) and tax increases in different price segments of manufactured cigarettes.

Results

Over the 11-year period price gaps were observed in all countries. The average annual adjusted median net revenue per pack increased in 19 of 23 countries for manufactured and RYO cigarettes. A tax increase was associated with a significant decrease of −€0.09 in adjusted median net revenue per pack (95% CI −0.16 to −0.03) in the cheap cigarette price segment, while no change was detected in the expensive cigarette price segment (−€0.05, 95% CI −0.11 to 0.01).

Conclusion

Across the EU, pricing strategies adopted by the TI maintained or increased price gaps and retained cheaper tobacco products in the market, diminishing the impact of tobacco tax increases. Further strengthening of tobacco taxation policy is needed to maximise public health impact.

Mass media promotion of a smartphone smoking cessation app: modelled health and cost-saving impacts

BACKGROUND

Smartphones are increasingly available and some high quality apps are available for smoking cessation. However, the cost-effectiveness of promoting such apps has never been studied. We therefore aimed to estimate the health gain, inequality impacts and cost-utility from a five-year promotion campaign of a smoking cessation smartphone app compared to business-as-usual (no app use for quitting).

METHODS

A well-established Markov macro-simulation model utilising a multi-state life-table was adapted to the intervention (lifetime horizon, 3% discount rate). The setting was the New Zealand (NZ) population (N = 4.4 million). The intervention effect size was from a multi-country randomised trial: relative risk for quitting at 6 months = 2.23 (95%CI: 1.08 to 4.77), albeit subsequently adjusted to consider long-term relapse. Intervention costs were based on NZ mass media promotion data and the NZ cost of attracting a smoker to smoking cessation services (NZ$64 per person).

RESULTS

The five-year intervention was estimated to generate 6760 QALYs (95%UI: 5420 to 8420) over the remaining lifetime of the population. For Māori (Indigenous population) there was 2.8 times the per capita age-standardised QALY gain relative to non-Māori. The intervention was also estimated to be cost-saving to the health system (saving NZ$115 million [m], 95%UI: 72.5m to 171m; US$81.8m). The cost-saving aspect of the intervention was maintained in scenario and sensitivity analyses where the discount rate was doubled to 6%, the effect size halved, and the intervention run for just 1 year.

CONCLUSIONS

This study provides modelling-level evidence that mass-media promotion of a smartphone app for smoking cessation could generate health gain, reduce ethnic inequalities in health and save health system costs. Nevertheless, there are other tobacco control measures which generate considerably larger health gains and cost-savings such as raising tobacco taxes.

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.

Indexation of Tobacco Excise and Customs Duty and Smoking Prevalence Among Australian Adults, 2001-2010: A Serial Cross-sectional Study

INTRODUCTION

Australia's excise and customs duty on tobacco has been automatically increased biannually since 1984. Increases in duty on par with inflation ensured that tobacco stayed at least as costly as other goods. This would be expected to maintain, rather than drive down, smoking prevalence. We examined the association between smoking prevalence and duty over a 10-year period.

METHODS

Using monthly data from five Australian capital cities, collected from March 2001 to March 2010 among Australians aged at least 18 years, multiple linear regression modeled associations between smoking prevalence and the two components (duty and non-duty) of the recommended retail price of an average packet of cigarettes, adjusting for policy covariates.

RESULTS

Prevalence declined from 23.6% in March 2001 to 17.0% in March 2010 [absolute difference 6.6%; 95% confidence interval (CI) = 6.5 to 6.8]. Duty increased from $0.2026 to $0.2622 per cigarette over the same period. In the adjusted model, a 1-cent increase in the duty component of price was not associated with changes in prevalence (0.019; 95% CI = -0.035 to 0.028). Increased non-duty component of price was associated with a decline in prevalence (-0.027; 95% CI = -0.052 to -0.002). This effect was stronger when changes in income were controlled for.

CONCLUSIONS

In line with expectations, inflation-adjusted duty was not associated with changes in smoking prevalence, but it may have prevented upward pressure on prevalence that increasing affordability could have exerted. Frequent increases in duty greater than the growth in both wages and goods would more effectively reduce smoking than regular indexation.

IMPLICATIONS

Few countries inflation-adjusted excise duty to ensure that tobacco products do not become more affordable; however, Australia experienced a decade of inflation adjustment alone, enabling the impact of this policy to be studied. This study shows that inflation-adjusted duty likely did prevent tobacco becoming more affordable and that indexation was associated with declines in smoking when tobacco companies over-shifted the duty rises (ie, increased price over and above duty rises).The study also suggests that frequent increases in taxation that exceed both wage growth and increases in costliness of other goods are needed to prompt increased rates of quitting.

A decade of cigarette taxation in Bangladesh: lessons learnt for tobacco control

Bangladesh has achieved a high share of tax in the price of cigarettes (greater than the 75% benchmark), but has not achieved the expected health benefits from reduction in cigarette consumption. In this paper we explore why cigarette taxation has not succeeded in reducing cigarette smoking in Bangladesh. Using government records over 2006–2017, we link trends in tax-paid cigarette sales to cigarette excise tax structure and changes in cigarette taxes and prices. We analysed data on smoking prevalence from Bangladesh Global Adult Tobacco Surveys to study consumption of different tobacco products in 2009 and 2017. Drawing on annual reports from tobacco manufacturers and other literature, we examine demand- and supply-side factors in the cigarette market. In addition to a growing affordability of cigarettes, three factors appear to have undermined the effectiveness of tax and price increases in reducing cigarette consumption in Bangladesh. First, the multitiered excise tax structure widened the price differential between brands and incentivized downward substitution by smokers from higher-price to lower-price cigarettes. Second, income growth and shifting preferences of smokers for better quality products encouraged upward substitution from hand-rolled local cigarettes (bidi) to machine-made low-price cigarettes. Third, the tobacco industry’s market expansion and differential pricing strategy changed the relative price to keep low-price cigarettes inexpensive. A high tax share alone may prove inadequate as a barometer of effective tobacco taxation in lower-middle income countries, particularly where the tobacco tax structure is complex, tobacco products prices are relatively low, and the affordability of tobacco products is increasing.

Prevalence and characteristics of tobacco purchases in convenience stores: results of a postpurchase intercept survey in Dunedin, New Zealand

Introduction

Arguments regarding the importance of tobacco to convenience stores could impede the adoption of tobacco retail reduction policies. Although trade associations argue tobacco constitutes two-thirds of convenience store sales and drives footfall, few studies have tested these claims. We therefore examined the prevalence and characteristics of tobacco purchases at convenience stores in Dunedin, New Zealand.

Methods

We conducted a postpurchase survey at 20 convenience stores, each visited for three 60 min intervals over a 4-week period. We used descriptive statistics to determine proportions and 95% CIs of transactions that contained tobacco and those that contained only non-tobacco items. We estimated the mean number of items purchased, the mean number of non-tobacco items purchased and mean expenditure on non-tobacco items.

Results

Fourteen per cent of transactions contained tobacco (n=95/679); of those, 64% comprised tobacco only. Only 5% of all transactions included both tobacco and non-tobacco products. The mean number of non-tobacco items purchased was 1.9 for transactions containing only non-tobacco products and 1.7 for transactions containing both tobacco and non-tobacco products. After excluding the cost of tobacco, people who purchased tobacco and non-tobacco products spent on average $5.11 on non-tobacco items, whereas people who purchased only non-tobacco items spent on average $6.85.

Conclusions

Tobacco products constitute a small proportion of items purchased from Dunedin convenience stores and are typically not purchased with non-tobacco items. Our findings are inconsistent with arguments that most small retailers rely on tobacco sales.

The impact of a federal cigarette minimum pack price policy on cigarette use in the USA

BACKGROUND

Increasing cigarette prices reduce cigarette use. The US Food and Drug Administration has the authority to regulate the sale and promotion-and therefore the price-of tobacco products.

OBJECTIVE

To examine the potential effect of federal minimum price regulation on the sales of cigarettes in the USA.

METHOD

We used yearly state-level data from the Tax Burden on Tobacco and other sources to model per capita cigarette sales as a function of price. We used the fitted model to compare the status quo sales with counterfactual scenarios in which a federal minimum price was set. The minimum price scenarios ranged from $0 to $12.

RESULTS

The estimated price effect in our model was comparable with that found in the literature. Our counterfactual analyses suggested that the impact of a minimum price requirement could range from a minimal effect at the $4 level to a reduction of 5.7 billion packs sold per year and 10 million smokers at the $10 level.

CONCLUSION

A federal minimum price policy has the potential to greatly benefit tobacco control and public health by uniformly increasing the price of cigarettes and by eliminating many price-reducing strategies currently available to both sellers and consumers.

Comparing projected impacts of cigarette floor price and excise tax policies on socioeconomic disparities in smoking

Background

About half of all US states have cigarette minimum price laws (MPLs) that require a per cent mark-up on prices, but research suggests they may not be very effective in raising prices. An alternative type of MPL sets a floor price below which packs cannot be sold, and may be more promising. This new type of MPL policy has only been implemented in 1 city, therefore its benefits relative to excise taxes is difficult to assess.

Methods

We constructed a set of possible state floor price MPL options, and matched them to possible state excise tax hikes designed to produce similar average price increases. Using self-reported price and cigarette consumption data from 23 521 participants in the 2010–2011 Tobacco Use Supplement of the Current Population Survey, we projected changes in pack prices and cigarette consumption following implementation of each paired MPL and tax option, for lower and higher income groups.

Results

We project that state MPLs set at the average reported pack price would raise prices by $0.33 and reduce cigarette consumption by about 4%; a tax with a similar average price effect would reduce consumption by 2.3%. MPLs and taxes that raise average prices by more than $2.00 would reduce consumption by 15.9% and 13.5%, respectively. In all models, we project that MPLs will reduce income-based smoking disparities more than their comparable excise taxes.

Conclusions

Floor price cigarette MPLs set at or above what consumers currently report paying could reduce both tobacco use and socioeconomic disparities in smoking.

Generating revenue by raising tobacco taxes in Latin America and the Caribbean

Objective.

The objective of this study was to determine if raising tobacco taxes in the Latin America and Caribbean (LAC) region will generate extra tax revenue, even at outer edges of the sensitivity analysis, with relatively high price elasticities of demand for cigarettes.

Methods.

A model of the cigarette market in 31 LAC countries was developed using cigarette tax, price, and retail sales data for 2014. It was then assumed that all countries increased the excise tax by 50% per pack. The model incorporated 12 studies from the LAC region that estimate the price elasticity of demand for cigarettes to quantify the expected impact of this tax increase on sales and tax revenues.

Results.

The tax increase would raise cigarette prices by an average of 28% across the region. The volume of cigarette sales would decrease by 7% (confidence interval (CI): 3–11). Cigarette tax revenue would increase by 32% (CI: 27–37), representing an extra US$ 7 050 million (CI: 5 984–8 086) in revenue. Almost all countries showed increases in tax revenue, even at outer edges of the sensitivity analysis.

Conclusions.

These findings confirm that the expected benefits of raising tobacco taxes are robust across the LAC region. Countries in the region should have confidence that raising tobacco tax rates will generate extra tax revenues.

Modelling the implications of reducing smoking prevalence: the benefits of increasing the UK tobacco duty escalator to public health and economic outcomes

INTRODUCTION

Taxing tobacco is one of the most effective ways to reduce smoking prevalence, mitigate its devastating consequential health harms and progress towards a tobacco-free society. This study modelled the health and economic impacts of increasing the existing cigarette tobacco duty escalator (TDE) in the UK from the current 2% above consumer price inflation to 5%.

METHODS

A two-stage modelling process was used. First, a non-linear multivariate regression model was fitted to cross-sectional smoking data, creating longitudinal projections from 2015 to 2035. Second, these projections were used to predict the future incidence, prevalence and cost of 17 smoking-related diseases using a Monte Carlo microsimulation approach. A sustained increase in the duty escalator was evaluated against a baseline of continuing historical smoking trends and the existing duty escalator.

RESULTS

A sustained increase in the TDE is projected to reduce adult smoking prevalence to 6% in 2035, from 10% in a baseline scenario. After increasing the TDE, only 65% of female and 60% of male would-be smokers would actually be smoking in 2035. The intervention is projected to avoid around 75 200 new cases of smoking-related diseases between 2015 and 2035. In 2035 alone, £49 m in National Health Service and social care costs and £192 m in societal premature mortality and morbidity costs are projected to be avoided.

CONCLUSION

Increasing the UK TDE to 5% above inflation could effectively reduce smoking prevalence, prevent diseases and avoid healthcare costs. It would deliver substantial progress towards a tobacco-free society and should be implemented by the UK Government with urgency.

Impact on Smoking Behavior of the New Zealand Annual Increase in Tobacco Tax: Data for the Fifth and Sixth Year of Increases

Introduction

New Zealand has implemented a series of seven annual increases in tobacco tax since 2010. All tax increases, except for the first in the series, were preannounced. It is unusual for governments to introduce small, persistent, and predictable increases in tobacco tax, and little is known about the impact of such a strategy. This paper evaluates the impact of the fifth and sixth annual increases.

Methods

Smokers' behaviors were self-reported during the 3-month period before, and the 3-month period after, the two annual increases. Responses to the two increases were analyzed separately, and generalized estimating equations models were used to control for sociodemographic variables, recent quit attempts, and the research design.

Results

Findings were consistent across years. The proportion of participants who made a smoking-related (54%-56% before and after each tax increase) or product-related change (fifth tax increase: 17%-19%; sixth tax increase: 21%-22%) did not significantly alter from before to after each tax increase. However, it should be noted that the proportion of participants making smoking-related changes was generally high, even prior to each increase. For example, before the 2015 tax increase, 1% reported quitting completely, 21% trying to quit, and 53% cutting down.

Conclusions

In New Zealand, with its series of annual tobacco tax increases since 2010, there were no significant changes in smoking- or product-related behavior associated with the fifth and sixth increases. Nevertheless, overall cessation-related activity was high, with a majority of participants reporting either quitting and/or cutting down recently.

Implications

Little is known about the impact of small, persistent, predictable tobacco tax increases on smoking behavior. This study evaluated the impact of the fifth (in 2014) and sixth (2015) tax increases in an annual series implemented in New Zealand. Although there were no detectable changes in smoking behaviors from before to after each tax increase, self-reported cessation-related activity was high overall (i.e., even prior to each increase). Given that there are multiple possible interpretations for these findings, more in-depth time-series analyses are needed to understand how such a tax strategy influences smoking behavior.

How effective has tobacco tax increase been in the Gambia? A case study of tobacco control

OBJECTIVES

The objective of the present study was to evaluate how effective tobacco tax increase has been in increasing price of tobacco products and reducing tobacco consumption in the Gambia. In addition, it tests the hypothesis that tobacco tax revenue grows while tobacco consumption decreases as a result of tax and price increase.

SETTING

The study is designed at the macroeconomic level to examine the import of tobacco products and revenue collected from tobacco taxation in a low-income setting.

PARTICIPANTS

The participants of this study are the government officials employed in the Ministry of Finance and Economic Affairs (MoFEA), the Gambia and the Gambia Revenue Authority, who are in charge of planning and implementing the tobacco tax policy in the Gambia.

INTERVENTIONS

The study includes 2 consecutive interventions in tobacco tax policy in the Gambia. The first intervention was moving the tax base for the uniform specific excise tax on cigarettes from weight to pack of cigarettes in 2013. The second intervention involved increasing the excise and the environmental tax on tobacco products in 2014.

PRIMARY AND SECONDARY OUTCOME MEASURES

The primary outcome measures were the cost, insurance and freight value and the price of tobacco products. The secondary outcome measures included the import of tobacco products and tobacco tax revenue.

RESULTS

In 2013-2014, the Gambia MoFEA raised the specific excise rate, which increased price, reduced consumption and generated significantly more government revenue from tobacco products. This is a clear evidence of the win-win outcome of raising tobacco tax. In addition, the Gambia has set the example of harmonising tax rates between tobacco products that reduces the substitution between tobacco products.

CONCLUSIONS

The Gambia presents the best practice in tobacco taxation. There is need for documenting more country-specific evidence on the win-win outcome of raising tobacco tax.