Cigarette: Instead of 5% Overall Increase Over 10.7%

8 years ago - November 13, 2013
Consequence of the budget, smokers, specifically those who smoke Dunhill and Benson & Hedges brands, discovered Saturday morning that their pack of cigarettes increased from Rs 140 to Rs 155. This is an overall increase of 10.7%.

Paradoxically, Xavier-Luc Duval announced a 5% increase. And the tax applied to only part of a pack of cigarettes. The rise of the package that should have been the order of Rs 5 because on each thousand cigarettes, the tax is increased from Rs 3540 to Rs 3717.

The company British American Tobacco (BAT), acknowledges that "some brands have actually experienced a greater increase for various reasons." "For three consecutive years, the tax has increased by over 71% and the price differential between brands 'premium' (Dunhill, B & H) and 'sub-premium' (Matinée, Embassy) has narrowed. To keep in line with our portfolio strategy, we only increased our premium brands by Rs 15. "

While other brands have experienced an increase of only Rs 10 and those in the 'low segment' have not experienced any real increase. The package remains in effect Viceroy Rs 100 while Seaman shows a rise of Rs 2 to also sell at Rs 100.

Another explanation put forward by the BAT is that produce cigarettes more expensive. In this portfolio strategy, "we must add the cost of production, for example the increase of raw materials. There are also operational costs, such as higher margins to retailers and increase the cost of the tax stamp which has been enhanced to combat counterfeiting, which is additional to the overall increase. " Thus the smoker is left with a maximum increase of 10.7% over its package of 20 cigarettes instead of 5%.

 

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