Friday, July 18, 2008

EU executive wants higher tax on cigarettes

BRUSSELS, - Minimum duty on cigarettes should increase to reflect inflation, putting all European Union states on an equal footing and weaning more people off tobacco, the bloc's executive said on Wednesday.

"This proposal ... suggests a number of important amendments to existing community legislation in order to modernise and simplify existing rules, make them more transparent and better integrate public health concerns," the European Commission said.

Consumption of cigarettes in the 27-nation bloc fell 10 percent between 2002 and 2006 while excise duties rose by an average 33 percent.

"In order to trigger a similar decline in consumption over the coming five years, further increases in excise duties would be desirable," the Commission said.

A 25 percent hike in cigarette prices would be needed to achieve a 10 percent cut in demand, the Commission said.

The proposal is part of the executive's regular four-yearly update on the bloc's tobacco excise duties. Unanimity among the EU's member states is needed to adopt tax proposals.

The EU executive proposes giving member states greater flexibility in levying excise duties as part of efforts to cut cigarette consumption.

It also wants higher duties on roll-your-own tobacco to bring them in line with tax on cigarettes.

"In line with the structure of minimum rates on cigarettes, it is proposed to introduce a compulsory monetary and ad-valorem minimum requirement for fine-cut tobacco," the proposal said.

This would mean an increase in the minimum rates for fine cut to 60 euros per kilo.

Excise duties on cigars and cigarillos is also needed to take into account inflation for the 2003 to 2007 period, the Commission said.

Monday, July 14, 2008

Camel Redesign

A redesign of the Camel Lights packaging (the first since the brand's inception in 1913), coupled with a remix of the cigarette's long-standing recipe, poses a challenge to consumer brand loyalty.

The graphics on the package have been streamlined and stylized with bolder metallic colors and the cigarette has been enhanced with a blue stripe. It's still too early to tell what, if any effect the rebranding, launched in March, will have on sales, says RJ Reynolds Tobacco spokesperson David Howard. Camel Lights sell higher than all other Camel styles but Howard says, "part of the push behind this packaging refresh" was that the Lights' share of the market had become relatively flat. "In our focus group testing with adult smokers, both franchise smokers—current Camel smokers—as well as smokers of competitive brands, the response was very positive. Franchise smokers said that they liked the packaging as much if not more than the current packaging, they also liked the blend as much and found it at parity with Camel."

Rosie, a 22 year old from Allston and a Camel Lights smoker, was confused by the under-the-radar switch. "I thought I had mistakenly been sold a package of Camel Turkish Golds." The new design may have colored her impression of the cigarette's flavor at first. "I checked the package and thought maybe the taste was in my head, like I had just gotten a stale pack."

Elizabeth Miller, assistant professor of marketing at Boston College, says history has proven such switches risky. "There is always a danger when you change your formula when you're trying to attract new people, that you might make loyal users upset," she explains. "The classic example, of course, is Coke, when they changed their formula in the 80s. People were extraordinarily upset and they had to change it back."

Retaining the base of their franchise smokers was a priority for the Winston-Salem, North Carolina tobacco company, as was catching the attention of smokers of competitive brands. Whether either goal is ultimately achievable, particularly with smokers—who are, perhaps more than any other type of consumer, drawn to the predictability of ritual and the familiarity of their brand of choice—is debatable.

Susan Fournier, associate professor of marketing at Boston University, conducted six months of research on consumers' reactions to change. Products like cigarettes or caffeine tend to breed more resistance. "These are literally addicted people, and brand-addicted people," she says.

The experiment found that the stronger the subject's relationship was with the brand—"people who had a metaphoric relationship more akin to a partnership"—the more jarring the reaction when a product was altered. People with weaker relationships to brands, what Fournier calls "flings," were more open to change. "For people who were in flings, they thought of changes as exciting, because it brought new vitality to the brand," Fournier says. "Whereas the other people felt betrayal, like, 'Oh! You're not the brand I married!'"

As with romantic relationships, many react to perceived scorn by acting out. "I will definitely try out new brands," says Rosie. "I'll probably switch at least for a while, in the hopes that other folks do too and the new Camel Lights end up losing them money."

Joshua Sheppard, 21, used to buy Camel Lights by the carton. "But now I am hesitant to even pick up another pack," he says. "Even though it breaks my heart, I've been favoring Parliament Lights lately."

These reactions seem incongruous with the intent of Camel Lights' redesign and the new "higher end" recipe which calls for "premium" tobacco, using more leaves from higher on the tobacco plant's stalk.

"It doesn't taste like higher grade tobacco at all," says Rosie. "I suppose it's more 'flavorful,' but personally I think less is more. It's harsher, and the smell is way more intense."

Howard acknowledges iconic branding creates resistance to change, but insists, "Innovation cannot be restricted to brand new things. You've got to be willing to even take something as iconic as your Camel base and say, 'Hey, can we take something that's already great and utilize innovation to make it even better.'"

alternative cigarettes

An alternative method of puffing away at the pub has drifted into the national consciousness and is causing quite a stir in the industry.
So-called electronic or alternative cigarettes give users the sensation of smoking, even producing a vapour that can be inhaled and exhaled while delivering the nicotine hit, but are legal as no harmful smoke is emitted.
One brand on the market is called the SuperSmoker.
Its Ultimo model, which retails at around £78, allows smokers to dodge the smoking ban, which has now been in place for a year.
Inventors say the system helps people lead a healthier lifestyle and is much cheaper, claiming it can knock 65 per cent off of normal smoking costs.
It is legal to use inside pubs and clubs as it causes no harm to those sharing their air.
Cartridges are placed into a pre-charged atomizer and users suck on it like a normal cigarette.
The firm say it looks, tastes and smokes like a conventional cigarette but has no detrimental health effects on others and say it doesn’t cause cancer.
We asked 58-year-old smoker Graham Bates from Herne Bay to trial the SuperSmoker Ultimo on a trip to his local.
He said: “I felt a little strange using it. It does have a certain sensation of smoking but you have to suck pretty hard to get much out and it leaves a sugary taste on the lips.
“I used it in the pub and the barman did initially ask me to stop but I showed him the product and he was fine with it. He said he had seen them before and had no issues with people using them.”
Mark Bradley, assistant manager of the Prince of Wales pub in Railway Street, Chatham, said: “I’ve actually got one of the electronic cigarettes.
“I went to the London Bar Show last week and they were giving them out. I think they’re brilliant and bought some for my staff.”
Sam Griggs, trainee assistant manager of the Druid’s Arms in Earl Street, Maidstone, said: “I think they’re a good idea.
“I’ve not seen anyone using them in the pub. We’ve only got a little garden and it normally gets packed with smokers so products like this may become quite popular.
“It might cause a bit of conflict, though, as other customers may think they’re real cigarettes.”
Graham Moore, landlord of the Dukes Head in Sellindge, said: “I wouldn’t have any objections to them being used here. If they are legal to use indoors and don’t disturb anyone else then that’s fine.”
Ian Gray, from the Chartered Institute of Environmental Health, has looked into the sensation.
He said: “We have been the advisors to all the regulatory authorities on this matter and are hearing about it more and more.
“Our main concern was that officers wouldn’t be able to tell the difference but it’s clear if you are close to them they’re not normal cigarettes.”
He added: “They are perfectly legal to use because, in our view, this isn’t smoking. If people are using them it’s very unlikely that a local authority would want to make a prosecution as the legislation is to protect people from second-hand smoke but if there is none of that then there’s not really a basis for a prosecution.”
Mr Gray says the craze is catching on: “They seem to be using them a lot in the North. I suppose if you don’t want to go outside, it’s a real alternative.
“They seem to be particularly popular in bingo halls where older people who may not want to get up and go outside and all that goes with that such as collecting your coat.”

Friday, July 4, 2008

Cigarette tax kicking butt

PITTSFIELD — Smokers felt the first burn of the state's new $1 tax increase on cigarettes yesterday.
"It's disgusting, people can't live today with all of these taxes, it's killing business," said a patron of A-Mart on North Street, who identified himself as "Stoney."
The statewide cigarette tax increase of $1 went into effect yesterday, after passage in the Legislature late Monday and Gov. Deval L. Patrick's signature yesterday.
In January, the average nationwide price of a pack of cigarettes was $4.25, as reported by a study tracking state cigarette prices, but in Massachusetts, an average pack cost $5.41.
With the total tax now at $2.51, Massachusetts now
Projections are that the tax hike will raise up to $174 million in revenues to help support the state's health insurance programs. Medical News Today, an online newsletter reported in February that the state's subsidized health insurance coverage could cost the state as much as $1.35 billion over the next several years.
"If they were smart, they would have the same tax that New Hampshire has," said Mark Parrott, manager of A-Mart in Pittsfield, where he was tagging new prices yesterday.
The Campaign for Tobacco Free Kids reports that New Hampshire's cigarette tax is $1.08 per pack.
"They claim that they will raise $175 million with
this tax increase, but they will actually raise less, because they are not going to get the same number of consumers that they had before," said Parrott. "Some are going to quit smoking, and others are going to go to (buy in) other states."
For smokers, the cigarette tax adds to the increasing cost of gas and other commodities. But lawmakers hope the new tax will cause consumers to quit smoking.
But some smokers won't quit.
"Smoking is undoubtedly an addiction, in fact, it is more addictive than many more expensive drugs," said Emily Blanchard, community health worker for the Berkshire Area Health Education Center.
"Everyone has their own individual struggles, for one person it might be more difficult to quit than it would be for another person," she said.
During the month of June, the state was offering free two-week supplies of nicotine patches to individuals who called 1-800-trytostop. The program may continue depending on how successful it was, Blanchard told the Eagle.
Though Gloria Wilson feels the tax is too much, none of her friends seem upset by the increased tax, she said.
For many smokers, cigarettes use has been a part of their lifestyles since they were teenagers, said Wilson, a Pittsfield resident.
"I have smoked since I was 14," she said.
Pittsfield resident Anne Bishop, who was smoking a cigarette at a North Street park on Tuesday, said she's been smoking since she was in high school.
"I could quit if I wanted to, I have in the past, I could quit if they kept increasing the tax," Bishop said, but she indicated no intentions of quitting now.
She said cigarettes are not the products that should receive a tax increase.
"I think instead of increasing (the tax on) cigarettes, they should increase a liquor tax," Bishop said. "Drinking is more of a problem to quit, they should increase an alcohol tax. People drink, and then that makes them smoke more," she said.