by Pippa Starr
4 January 2024
From Cooper Pedy to capital cities across Australia, experts and media are finally working out that price hikes on tobacco and restrictions on vaping products have gone way too far!
I have been a close observer to this mess, where it was obvious that tobacco excise had past the point of diminishing returns on the laffa curve many years ago. Now the results are finally being talked about.
The conequence of taxes gone too far of course has been well over 200 firebombings across Australia as organised crime thrives on the back of this highly profitable situation.
As the black market criminals fight over turf for supremacy in this market, billions go into feeding international organised crime syndicates, sex traficking and the worst crime imaginable.
In other words, Australia's arrogance on world leading tobacco taxes and vape bans are helping fund billions of dollars into international crime! It's a blight on our nations character that as soon as big corporate businesses are effected, it's only then that people seem to start caring! Meanwhile former smoking vapers have been forced back to smoking in the hundreds of thousands which is a dreadful health outcome.
Even a writer for the Coober Pedy Regional Times has noticed that this has all gone way too far!
On Thursday he wrote:
"As a non-smoker, and despite extensively analyzing market data, I must admit, I haven't paid enough attention to what's happening with tobacco sales. The size and the importance of the category for the overall performance of Australian supermarkets were clear to me.
I've been also paying attention to the ever increasing tobacco taxes, resulting in ever decreasing tobacco sales for Australian supermarkets. But, as a non-smoker myself, I subconsciously "subscribed" into the government's narrative of increasing tobacco taxes as a way to nudge more people to give up smoking. And it sat well with me. Until I started seeing other perspective.
First, retailers started reporting sales and inflation with and without tobacco, pointing out how much growth was lost due to the decline in tobacco sales. It's been happening for quite some time now.
Then came the news on tobacconist stores being set on fire. It started happening everywhere across Australia, with Victoria seemingly over-indexing in the number of accidents.
Finally, prominent industry leaders started raising huge concerns and openly talking about a disastrous state of tobacco sales in Australia, urging the government to act quick and not allow the situation to get worse.
Fast forward to the start of 2025, and it looks like we're about to hit the rock bottom, when the government will be forced to act. Unfortunately though, most likely not because they will finally listen to the retailers and manufacturers, but because they've recorded a significant decline in tax excise revenue from tobacco: -$2.8bn (-24.2%) vs YA. Illegal tobacco trade is to blame.
In the article, published by the Herald Sun, Fred Harrison, CEO of Ritchies IGA, says that his supermarket chain has lost $150m in legal cigarette sales to the illicit market in the last three years. And if you, like me, don't necessarily see an issue with people buying less cigarettes, consider the bigger picture:
1. According to Fred Harrison, "every customer that was coming in to buy a packet of cigarettes, spent an average of $24.92 in other groceries, representing an additional $30m in lost revenue over the same period."
2. Because of these lost sales, Ritchies IGA was forced to reduce its wages bill by $15m over the same period, resulting in hundreds of staff loosing their jobs.
3. Independent retailers over-index in sales of tobacco products.
So, while majors better placed to absorb those losses without significant implications for their workforce, Independents don't have this privilege.
But, for the context, according to Q1'25 reports from majors, only in Q1 of this financial year: 🟢Woolworths lost -1.3% of growth (-$170m), and attributed +0.5% of inflation growth to Tobacco.
🔴Coles lost -1.4% of growth (-$130m), and attributed the same +0.5% of inflation growth to Tobacco. Everything is interrelated. Stay informed.":
From Nine News: