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| ASH News |
Hazel Cheeseman, the head of Britain's most dishonest pressure group ASH, has taken to the pages of The Grocer to tell small retailers what is good for them. You might think that owners of convenience stores know their business and customers better than someone who has only ever worked in public affairs, but the say-anything, do-anything prohibitionists at ASH have long maintained that selling cigarettes is holding corner shops back. Cheeseman writes...
Big Tobacco is out in force telling retailers what to think about impending changes to the law.
And the pot is out in force calling the kettle black.
As you may have heard, the government is phasing out the sale of tobacco to the next generation, which means by 2027 no one born before 2009 can be legally sold tobacco.We’ve all seen the articles and the adverts from tobacco manufacturers painting a picture of doom over these proposed changes. And behind the scenes, no doubt, there are countless emails, letters, and visits from company reps pushing the same message: that stronger tobacco regulation spells disaster for business.But the real burden on retailers isn’t regulation – it’s reliance on tobacco itself. Cigarettes might bring in footfall, but they deliver some of the lowest margins in retail, often just 6%. Smokers are quick, transactional customers; they buy their pack and leave.
About 80% of the price of a pack of cigarettes is tax. The retailer obviously doesn't get a share of that. But if a pack of cigarettes is £15, a 6% share is 90p. Not bad for a quick transaction. Since the actual product only costs about £3, the pre-tax profit margin is 30%. If ASH wants retailers to have a bigger post-tax profit margin, it should call for tobacco duty to be cut.
By contrast, the same customers who quit smoking or switch to legal vapes tend to buy more, such as food to go, coffee, groceries and snacks. Every time that happens, both retailer and customer are better off.
Ex-smokers obviously spend their money on other things. The problem for small retailers is that people can buy 'food to go', coffee, groceries and snacks in lots of places whereas smokers go specifically to local corner shops to buy their snouts. Most corner shops don't sell hot food and coffee at all.
In any case, retailers are not so much worried about people quitting smoking as they are about smokers evading tobacco duty (and, in the future, bypassing the ridiculous generational ban) by buying cigarettes on the illicit market.
When display bans and plain packaging were first introduced, the same scare stories were rolled out. Yet the evidence tells a different story. ASH’s retailer survey, conducted by an independent market research firm with 900 small retailers, found 74% said the display ban had no negative impact or even helped their business, and 75% said the same about plain packs. Retailers adapted and carried on trading successfully.
Neither of these stupid policies had an
impact on the smoking rate, although the display ban did make it easier
for retailers to sell illicit cigarettes. That was good news for some shops but presumably not for the legitimate businessmen who read The Grocer and who are losing a lot of money to a black market that ASH barely acknowledges the existence of.
The illicit trade mythAt ASH we are not remotely complacent about the illegal tobacco market.
Yes you are. You have to be to do your corrupt job.
It brings crime into our communities, undermines legitimate trade and keeps people smoking. Illicit trade is a real issue – but it’s not caused by sensible regulation. In fact, illicit tobacco consumption has dropped by almost 90% since 2000-01, even as tax and regulation have tightened.
If you believe that, you will be believe literally anything. Legal cigarette sales nearly halved between 2021 and 2024. The black market is quite obviously big and getting bigger.
The best way to end the illicit trade in tobacco, possibly the only way, is to end the demand for tobacco.
Indeed it is the only way. But the Tobacco and Vapes Bill doesn't tackle demand. It is all about controlling supply, and we know what happens when supply is artificially restricted while demand remains high. The UK is already a cautionary tale, but Australia, with its even higher tobacco taxes and total ban on vapes, is the ultimate shipwreck that the rest of the world can use as a lighthouse.
On the same day that Cheeseman's article was published, The Australian published this...
Tobacco taxes backfire as black market cripples retail giantsAustralia’s two biggest supermarket chains have recorded a collapse in tobacco sales, blaming Labor’s aggressive tax hikes and the booming black market for hollowing out legitimate trade.Coles and Woolworths both reported more than 50 per cent declines in tobacco revenue over the past year – the sharpest fall on record – with the retailers saying cigarettes were priced so high that smokers have turned to untaxed, criminally supplied alternatives.
Amazingly, these retailers have not been selling enough coffee and 'food to go' to make up the shortfall.
Woolworths revealed a 51.1 per cent plunge in sales for the first quarter, while Coles reported a 57 per cent decline, saying tobacco products now made up less than 2 per cent of total sales.“New tobacco legislation and growth in the illicit market led to a 57 per cent decline in tobacco sales compared to the prior corresponding period with tobacco sales this quarter now less than 2 per cent of total sales,” Coles noted in its first-quarter trading update.
Nothing to see here, eh Hazel?
Woolworths chief executive Amanda Bardwell said the decline in tobacco sales was “accelerating” when asked about the plunging figures during her full-year results announcement. “We’re still navigating some near-term challenges, particularly the material reduction in tobacco sales,” she said.
“It’s been well-discussed by others, but the decline in tobacco sales is accelerating and the current regulatory settings, and continued illegal sales, is evident in our performance.”
The collapse follows The Australian’s investigation into the black market, which revealed convenience stores recorded a $2bn collapse in legal tobacco sales.
It is frankly shameful that politicians and the British media have avoided mentioning the real world fiasco that has been unfolding in Australia while the Tobacco and Vapes Bill has been rolling through Parliament. The government pays more attention to the fabulist propaganda of ASH than to what is actually happening in another country.
