Days into his presidency, early in 2009 US President Barack Obama signed into a massive tax hike on tobacco. The result is a historic reduction in people smoking. George Bush twice rejected a tax hike on tobacco. The cost to the health system and lives as a result of the lack of a tax hike years is immeasurable.
It is data like this that will spur governments to adopt the Australian plain packaging laws and other measures on tobacco product sales.
Regardless of your position on tobacco, newsagents who sell tobacco need to think about exiting the category. It’s in decline. This will increase on the back of the amazing US result announced a few days ago and the expected result of plain packaging here. There will come a time when tobacco products are not paying their way – for the space and labour the require.
I quit the category in 1999 when our sales were around $1,500 a week. We didn’t skip a beat.
Beyond the issue of social responsibility is the matter of business performance. With governments around the world closing in on big tobacco there is little upside for retailers, especially when there are many other uses for time, space and capital.
i do about $1000 a week on smokes sometimes less . They do not take up hardly any space so this for me is not an issue they don’t take up hardly anytime at all, my only problem is dammmm it is hard trying to give up when they are behind me all day .
Shauns you can try the patches, tablets, acupuncture, hypotherapy, standing on your head …whatever. I think the only true way is cold turkey. I used do three packs a day of 15mg and a fourth if I went out of the juice. Aside from not being able to afford it I have never felt better. Weeks of sheer hell but if I can get through it believe me anyone can.
I stopped selling them in our shop due to Woolies which discount them too heavily for me to compete with for the investment involved.
Unless you regularly sell a a significant amount to warrant it and are in the right location to not have too much competition I think it is a good line to get out of and replace with something more profitable for the financial input.
Pay $ to die before your time?
Shaun are you making money … once you account for the space, labour and opportunity cost.
On your own smoking, your pitch could be: For the sake of my family and my business we (I and my business) are giving up together. Any encouragement accepted.
yeah it wasn’t a serious response to the post , just a bit of friday afternoon commenting basically just a dig at myself about giving the smokes up .
Back to the post , once they go to plain packaging in the next couple of months i plan on getting out of them that way i can get credits on the remaining stock -hopefully .
Shaun, try Zyban…..worked for me. Nearly 4 years without one now. Just make sure you have a GP who will follow up your progress on these tablets.
SHAUN S be careful we heard that they are not crediting not plain packaging stock not sure the truth in the rummor but we are being careful about stock
averill
i think there is a 3-4 month window from when plain packaging comes in, till the current packs are not alowed to be sold.
if anyone is not turning all their cigarette stock over (at least once, but should be more than 4 times) in that period, then they should definatly get out of tobacco. there is too much money sitting there.
Averill
All smokes purchased by a retailer after 1/10 must be plain paper packaging. Any smokes sold by a retailer after 1/12 MUST be plain paper packaging. Stock swap outs by reps or your wholesaler will be done for excess stock.
Peter,
It has always been my understanding that 1/10/12 was the date that tobacco companies must stop manufacturing or packaging any products in anything but plain packaging. To the best of my knowledge wholesalers may still sell non-plain packaging up until 1/12/12.
Averill,
Tobacco companies will be crediting out stock, with some setting limts on the amount.
The only retailers that will have problems are those who a) carry too much stock b) don’t sell much tobacco products, or c) carry a range of niche/specialist products with a low stock turn.
never quit
Its interesting to note that the Government are expecting to receive the same tax revenue from smokes this financial year as last. So they are either planning a significant price rise or they are not expecting the plain packaging to have much of an impact on sales.
Plain packaging is unlikely to have much, if any, immediate effect on sales. The intended effect of plain packaging is one expected to be seen in the medium to long term.
As with most things, if you tell young people that it is bad for you and they cannot have it then it is the thing they want the most. The rebellion may have changed but the nature of youth has not.
By trying to make cigs ” uncool” by the packaging and making it harder to buy it is only feeding the beast.
I was talking with a government health expert who said that they expected plain packaging to drive a noticeable decline this year of upwards of 7%.
Goverment and expert , where would you find such a person …
Big Brother ,next it wiil be soft drinks about suger and god help us vegemite salt .There is 10000 public servents in the health dept in the a c t time they all went .I have had three blokes from the Qld health call on me to check how my cigs are covered ,i am shaw the have their hols in cuba
I did $6700 on cigarettes last week and that was about average maybe a little below normal. I won’t be quitting the sector anytime soon.
As Mark F has pointed out If the Govt experts expect upwards of 7% decline why have they still got the same amount of revenue going forward from tobacco tax?
They tried taxing cigs out of range but that did not work as this will not, I do not remember the last time I saw a smoker walk down the street waving a pack of cigs around or staring at the pack or letting kids play with the pack.
All it will do is again force out the small retailer like newsagents and push more customers into the big 2 who will import cheap plain pack cigs and find a loop hole as they have done with alcohol, but this may be what the Govt wants.
I have never smoked and think it should be made illegal, but no one has the guts to stand up so as long as they feel it is still legal to smoke then let me sell a legal product to mature adults.
The local tobacconist is already switching ppl across to cheaper unknown brands of tobacco and cigs.
I guess if all the packets look the same then some smokers wont care so much about what brand they smoke.
Q: Do your friends really care whether you smoke Peter Jackson, JPS or an unknown brand. I quess they must.
All those advertising dollars to persuade people to the branding. Q Where will all those dollars get spent now?
Will it be like the American election campaign where a lot of money gets spent just persuading people to vote/smoke?
Phillip Morris have confirmed that they will not be swapping over any stock when plain packaging comes in. They are still issuing branded stock as it was manufactured before October 1. Some states may have some plain stock already. They will be still issuing branded stock until it runs out. ( Source – Phamplet with cigarette order and Phillip Morris customer service line )
Imperial Tobacco and British American have confirmed that they will swap over or credit any branded stock I have. Both companies have started issuing plain stock already. I recieved some BATA stock in September which was plain.
Max this is terrific information for sharing here.
thanks max
Max,
This is not the advice we have received from Philip Morris. It is my understanding that all their reps will begin swapping out the old, branded packaging come November and that the process will take them a large chunk of the month to complete.
Our representative was in-store today with a newly-issued wireless barcode scanner that Philip Morris have deployed to reps to make the process quicker than manual entry.
Jarryd,
My information came from the leaflet that was with my Phillip Morris order.
I then rang the Phillip Morris customer service line, who confirmed that Phillip Morris will not be swapping any stock. I was not the only retailer who rang and complained according to Phillip Morris.
If your rep disagrees with the leaflet and Phillip Morris, please get your rep to supply a name and phone number for me to contact. It would be good if Phillip Morris would come to the party and swap stock like the other companies.
A quote from the leaflet – Please ensure that you manage your inventory so all branded products are sold prior to 1 December 2012. PML Reps will not be visiting your store to assist with this process.
End quote.
There are other bits about how they will assist by monitoring my orders . I can do that myself.
This is a generic leaflet and not one addressed to my store. Also 100 % of my Phillip Morris order was branded packaging.
Jarryd, there is the possibility that they may be treating you differently because of sales etc. They obviously do not want the $40,000 / $50,000 I spend with them each year.
If there are any left and they do not exchange them well that would be the end for me with Phillip Morris ,simple as that .i received stock today still branded but next order will not be accepted if it is not new stock .
Max – the information you are sharing here is of terrific benefit.
Max, Do you have a contract with PML?
Jarryd,
One was signed when I was helping Noah build the ark. All my PML stock comes from PML, so they know I am here !
Shauns, Similiar here. If PML do not guarantee me that the stock I order is plain packaging, I won’t even bother placing an order. If they guarantee plain packaging and the stock turns up branded, I won’t accept the order. This would change if PML sent out something guaranteeing credits or swapping of stock after December 1.
PS my PML rep has not turned up for a year or 2.
I can only assume that PML are swapping out stock for stores with space agreements or that participate in their promotions program. This would include some but not the majority of newsagents.
It is unfortunate that PML won’t be swapping out stock in all stores. Its not like they wear the cost of destroying the stock (they simply take it back to their processing plant to be repackaged).
I was actually told by a Bata rep that all of the companies would end up taking the branded stock back though some may play hard ball up until the cut off. In the mean time until I see firm confirmation from PML, my Bata orders are up and Imperial and PML in particular are down.
Jarryd,
It is disappointing for us as we support all the tobacco companies. If one of the reps wanted us to put a new product or sizing on our shelf, we would.I would always ask the question ” Will you take it back if it does not sell?” The reps always answer yes as they know if they tell a fib, they will not get back into my store. Also these reps have a job and helping them keeps them in a job.
With the stock that gets taken back ( at least with the cigarettes ) it may not be possible to repackage them as the cigarettes might not be compliant. With the plain packaging there are restrictions placed on what the companies can put on the cigarette. They can destroy them (under the eye of the government I suppose) and get the excise back. I attended a 4 day conference that dealt with the tobacco industry .
Paul,
BATA has been the best at advising that they will take back branded stock. My orders with them are through the roof.
Imperial has been good at advising that they will take back stock. Imperial orders are doing really well.
PML orders are down and will get to be non-existent for the next 2 months and maybe longer. As I put in an earlier post, PML don’t want my $40000/$50000 I spend with then per year so I can spend it elsewhere.
We behave similarily, ordering only the bare essential from Philip Morris, and offering “swinging” smokers alternative BAT or Imperial products whenever the opportunity arises.
BATA are definatly repackaging the returned product. The company has invested in machinery that automates the entire process. I believe it removes the tobacco from the cigarette and re-uses it in creating another. I assume they are manually checking for counterfeit product on collection.
BATA has been the best at advising they will take the stock back from us as well. They will be taking any and all stock we have. PML will only take up to 1 weeks worth.
ebo, be careful in offering alternative products. It must be done in such as way that is is not considered upselling.