Cigarette prices drop as tobacco firms fire first salvo in price war

PUBLISHED : Saturday, 08 April, 2006, 12:00am
UPDATED : Saturday, 08 April, 2006, 12:00am

A cigarette price war broke out in the city yesterday as desperate companies try to grab market share, and youngsters, anti-smoking activists claim.

The lower prices come as the government moves to ban smoking in restaurants, bars and karaoke lounges and introduce an on-the-spot fine of $1,500.

Retailers said the biggest discounts were on the brands most popular with youths - Marlboro Lights, Winfield and Next.

The price war was triggered when Philip Morris announced it would slash the price of six brands, reducing a pack of Marlboro Lights to $26 and Next to only $20 - making the city's cigarettes among the cheapest in the developed world.

The company claimed the decision was based on research which showed market share was shrinking, but anti-smoking campaigners claimed it was a blatant attempt to lure teenagers into the deadly addiction.

British America Tobacco spokesman Philip Ho Wing-hong confirmed the company had followed Philip Morris, cutting prices on all brands, including low-price Winfield cigarettes, which now cost $20. Mr Ho denied the cuts would attract youngsters to their products.

Lan Kwai Fong cigarette vendor Ms Fung said the price cut had not had an impact on her sales. However, Ms Fung, who had been selling cigarettes for five years, said that profit margins had decreased, even though the wholesale price remained the same.

'I only sold three cartons of cigarettes today for less than 10 per cent profit for each. I really can't see the point of the price cut.'

A cigarette stall owner in D'Aguilar Street, Ms Ho, said most of her customers were men between the ages of 20 and 30. 'Few young men below 18 try to buy cigarettes here,' she said.

At Ms Ho's stall, the most popular cigarette brand is Marlboro, at $26 per pack, followed by Winfield and Next, both $20 per pack.

Li Cheong-lung, a member of the Committee on Youth Smoking Prevention, said many studies had shown youngsters were sensitive to price when it came to smoking.

'We should be increasing the price of cigarettes, not reducing them,' Mr Li said.

Legislator Kwok Ka-ki said last week that the price cuts appeared to be directed at attracting youths.