From the Joint Committee on Law Enforcement Inquiry into Illicit Tobacco Hansard
Mr MacDonald: … We are living in a world where cigarette smokers have moved from being very brand loyal to now very price sensitive. Someone could have smoked Winfield or Benson & Hedges all their life, but they are not smoking them now. That brand’s market share is rapidly dropping down to the lower end of the scale. As a retailer, my concern is that, as prices increase, there is nowhere left for them to drop to other than the car park. They are now my bottom line. Over the last three years, they have worked their way down my shelves, and they are on the bottom shelf now.
Then there is this:
Senator LEYONHJELM: I appreciate it is a bit hard to tell which is which—and you say both—but could any of you speculate? Let us suppose the prices had gone up with the excise increases, but we had not had plain packaging. Do you think the consequences would have been the same or different?
Mr Michael : I will speculate. Price has been a significant factor for some time. The price hikes did not help, but to take away branding at the same time as significant price rises is going to destroy brand loyalty.
Mr Rogut : I have to concur on that. When you talk to a few customers and say, ‘Why are you chopping on price?’ the question is that the cachet or image attached to pulling out a gold, silver or red pack is not there any longer. They all look the same, so unless they were absolutely wedded to a particular brand it really is the economy of 100 for $30 rather than 20 for $27.50.
Mr Michael : I might add that we tried to measure this. It was a little bit difficult, but we were getting a lot of reports in about staff confusion and training issues for service staff—particularly for junior staff who have never seen branded packets of cigarettes. I would identify location issues at point of sale as significant within the store, and it is causing delays. Customers will say, ‘Just give me the cheapest one.’ We did try measuring that; it was quite difficult to do.
Mr MacDonald : In my opinion, plain packaging has had zero effect on the consumer but a massive effect on the retailer, and has opened a door for illegal product, because there is less duplication. Staff-wise, stocking shelves, getting the right packet in the right spot and selling the right packet to the customer is extremely difficult. Initially we had people hand back packets and say, ‘No, I don’t like the one with the baby on it,’ and ask for the next one in the line. There were people taking the middle out and throwing the packet away. For a while we tried to make a bit of money out of it by selling stickers that went over the packet. I still have a great pile of them, because that lasted for about a month. Now it is irrelevant to the consumer; it does not change their habit. It just makes our life extremely difficult. Price is the significant factor from a consumer point of view, and plain packaging has assisted the illegal trade enormously.