58|Retail News|May 2011|www.retailnews.ie
Tobacco grow from strength to strength. The diverse choice of SKU’s on offer makes Mayfair the obvious choice for adult Irish smokers looking for a quality smoking experience at an affordable price. In the RYO sector, JTI Ireland’s Amber Leaf has driven market growth. While the volume of RYO sales in Ireland has increased by a significant 62% over the last two years, Amber Leaf has grown by 175% over the same two year period (Source: ACNielsen, Extended Scantrack, Sales Kilos, MAT 20/03/11 vs MAT 20/03/09). “As the first RYO brand in the Irish market to be launched in a crush proof box, Amber Leaf has gained the reputation as the most innovative RYO brand in the market,” notes Cheryl Cullen, JTI. “More recently, Amber Leaf replaced the traditional foil block of its 12.5g crush proof box with a new innovative mini pouch, the smallest compacted pouch of tobacco on the market.”
EU Developments
Cutters Choice from PJ Carroll is performing extremely well in Ireland.
One, Major, Rothmans, Sweet Afton, Consulate, Lucky Strike, Dunhill, Samson and Cutters Choice. According to Chloe Campen, Corporate Affairs Manager, PJ Carroll, “Many of the trends we are seeing are driven by adult smokers looking for greater value for money during a time where their disposable income is most likely stable or reducing. The Value
PJ Carroll PJ Carroll tobacco brands include: Pall Mall, Vogue, Carrolls Number
The Pall Mall range of cigarettes from PJ Carroll is doing very well, with growth across all variants.
Ask The Expert: Chloe Campen, Corporate Affairs Manager, PJ Carroll. THE SMUGGLING ISSUE: “The legal cigarette market in Ireland has collapsed in recent years, while the proportion of the adult population that smokes has remained relatively stable. We can see that smokers are simply switching from legitimate retailers to the illegal market. The illicit tobacco trade is endemic. Cut price illegal cigarettes are being sold door to door, in housing estates, in street markets and in workplaces. As the Prime Time exposé and TV3 documentary on the black market economy showed, the illicit tobacco trade in Ireland is highly criminalised and widespread. The profits from cigarette smuggling are being used to fund all sorts of other criminal activities. “Despite some positive steps, including the previous Finance Minister
recognising the problem by holding excise in two successive budgets, an increase in the penalties available to the courts, and a number of high profile seizures, PJ Carroll has yet to see a continued reduction in illicit trade. Fine Gael and Labour both included commitments to tackle illicit trade in their manifestos and those commitments were repeated in the Programme for Government. This is a very positive sign and we look forward to seeing action in this area. “With the rate of smuggling damaging our business, and that of thousands of retailers across the country, as well as nourishing sinister criminality, we hope we have helped support the legitimate market by reducing the RRP of Pall Mall to €7.25.”
IN 2010, there were two European developments that are of concern to Ireland’s tobacco taxation and pricing policies. The first was the entry into force of the European Union (EU) Excise Directive (2010/12/EU) on February 27, 2010. The Excise Directive enforces various changes, including providing EU Member States with the possibility of introducing significantly higher rates of fixed (specific) excise duty on cigarettes. Ireland has, for many years, taken the decision to keep the fixed rate of excise at 55% which was the maximum allowed under the previous tobacco taxation legislation. The new EU Directive allows the Government to increase this fixed rate of tax to a maximum of 76.5% of total tax (excise + VAT) on the market weighted average price. The second, more significant development, was the European Court of Justice (ECJ) decision in case C-221/08 on March 4, 2010, which prohibits the continued use of the minimum retail selling price (MRSP), otherwise known as the price basket mechanism, which has been in effect in Ireland since 1986. The MRSP allowed the tobacco regulator in Ireland to set a minimum price for tobacco products. This created a compressed market where the lowest and highest prices of tobacco brands did not vary greatly. In early 2010 for example, the minimum price was €7.75 and the premium price for a packet of 20 cigarettes was €8.55. While the tobacco excise structure will continue to evolve, it is imperative that any cigarette excise policy implemented by Ireland’s Government is sustainable, with the aim of optimising revenues whilst maintaining a stable and orderly market, according to JTI Ireland.
for Money segment of the market is growing, as is RYO. Our Pall Mall range of cigarettes is doing very well and we are seeing growth across all variants. “While cigarettes dominate the tobacco market in Ireland, the Roll Your Own (RYO) category has witnessed unprecedented growth over the last two years and we at PJ Carroll believe that this growth is set