Sales of tobacco have been declining for years. According to the University of Edinburgh, footfall from tobacco purchases in convenience stores has dropped by a whopping 40% over the past decade.
Tobacco is a product of the past. So why, when government is pressing ahead with phasing out the sale to the next generation, is the All Party Parliamentary Group on Smoking and Health pushing for it to do more?
The answer is simple. This is a unique consumer product. There is nothing else like it on the shelves of British retailers – a highly addictive product that kills two in three long-term loyal customers.
Retailers see first-hand how many smokers try to quit – only to find themselves back at the counter weeks later, buying another pack. If we are serious about ending this cycle, we need to invest in effective quit support to help smokers stop for good.
This week, a report from the cross-party group of MPs called on the government to be ambitious and commit to ending smoking within the next 20 years and set a target of at least two million fewer smokers by the end of this Parliament, accelerating current trends. To achieve this goal, they set out a series of recommendations – the central plank of which is a call to levy tobacco manufacturers to fund a comprehensive programme of support.
The ‘polluter pays’ levy would set a cap on the wholesale price of tobacco and control the retail price, with the government taking the additional revenue. For retailers, this would not change much: profit margins on tobacco are low (8.5%). For customers, the levy would probably increase the cheapest prices.
The biggest losers would be the tobacco companies who currently make profit margins of around 60% – securing them an estimated £900m in profits in the UK each year. A levy that capped their profits at 10% would make the government an estimated £700m a year.
For years, market research commissioned by ASH has shown small retailers support strong tobacco regulations. They do not believe previous restrictions – such as point-of-sale bans – have significantly impacted their business. Tobacco has always been an excessively profitable product for manufacturers, but not retailers.
In fact, ending the sale of tobacco as quickly as possible could be good for business. Analysis by Landman Economics for ASH earlier this year found tobacco creates almost no jobs in the UK. It is grown, processed and packaged in other countries.
When a pack is sold, the retailer retains a small percentage, but the rest leaves the local economy in taxes or manufacturer’s profits. When local smokers quit, they buy other products – generally ones with larger profit margins that generate greater benefits to the local and national economy. The estimated value to the economy would be around £10bn a year if no one bought tobacco any more.
Without doubt, a smoke-free country benefits everyone, except Big Tobacco. Investment now, funded by industry, will accelerate progress and could help to save or lengthen the lives of many of the UK’s six million smokers. Now is the time for bold action to make smoking history.
Hazel Cheeseman is the CEO of Action on Smoking and Health (ASH)
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