Up in smokes: Cigarette companies piggyback on tax hike
TheMarker finds that cigarette companies raised prices per pack by up to eight times the tax increase.
When the government raised the "sin tax" on cigarettes on January 1, it turns out that some cigarette manufacturers thought that the perfect opportunity to jack up their take as well. The increase in tax per pack is 21 agorot. TheMarker found however that the cigarette companies raised prices per pack by up to eight times as much.
Philip Morris and Dubek were first to make a move, say retail chains. Import company Globrands, which distributes Camel, Winston, More, Magna, Pall Mall, Kent, Vogue and other brands, told retailers it would be sending out new price lists in a couple of days.
Just like Tnuva, Osem and other suppliers, the cigarette companies give retailers price lists the prices the retailers pay for cigarettes, and also give the retailers recommended prices to consumers.
The biggest of the local pack is Philip Morris Israel. Its price lists (to retailers) that TheMarker obtained show it raised the prices of many brands by 79 agorot per pack. That is almost four times the increase in tax.
Philip Morris recommends that the retailers increase the prices they sell to consumers by one shekel five times the increase in tax. These include popular Philip Morris brands Marlboro, L&M and Next.
While about it, Philip Morris raised the price of Parliament cigarettes by NIS 1.59 per pack, almost eight times the increase in tax.
The price Philip Morris recommends that retailers sell Parliament cigarettes to consumers increased by NIS 2 per pack, from NIS 23 to NIS 25.
Eve cigarettes increased by six times the tax increase, rising NIS 1.19 per pack to retailers, and NIS 1.50 per pack to consumers.
Dubek also hiked prices of its main brands Time, Sheraton, Europa and Broadway, by 79 agorot per pack to retailers. The price of Noblesse cigarettes to retailers rose by 63 agorot, Golf increased by 40 agorot and Golf Super Slim increased by 93 agorot per pack. (These prices all relate to the price of packs of cigarettes sold in cartons.) Dubek, however, recommended to retailers that they increase the price of cigarettes by one shekel per pack.
Dubek did not raise the price of Choice cigarettes, which it launched in Israel a year ago.
Philip Morris and Dubek both commented that they had to raise the price by more than the tax because their cost of production had risen a great deal since the last time prices were increased.