Lucky Strike The most Competitive Brand at Malaysian Market

March 29th, 2013 00:00

The traditional belief is that there will never be a scenario where prices will drop when demand is achieved properly. The resulting generation of considerably more work opportunities converts into greater demand. The only rational outcome is larger prices or inflation.

The case of alcohol and tobacco - mainly tobacco or cigarettes - is strange. There are unofficial reviews that sales of locally produced cigarettes have decreased by around 15 %. From this standpoint, the Department of Finance should be considered in charge for the inflation uptick. By increasing prices of local smoking products by a calculated 700 % for the lower-priced cigarette brands that make up about 60 % of full consumption, smokers were required to pay more. For instance, the existing “high” category of tobacco products that was selling at P40 per 20-stick package is currently available at P60. It is a fact that the great price could have discouraged smoking. It is well known to the Department of Finance that an increase in prices has the trend to decline demand.

Lucky Strike

The tax on cigarettes imported by British American Tobacco (BAT), remarkably the popular Lucky Strike, was decreased to the category of high from premium one in the existing law. In the previous law that banned declining classification, Lucky Strike was below the “premium” category which was paying P28.30 per package. The tax on Lucky Strike and identical imported brands is currently P25. The tax on local cigarettes is increased vertically whilst imported cigarettes are taxed lower. It is evident that smoke lovers keep on to buying local but more costly cigarettes and pay a lot of money. Lucky Strike currently retails at P29.

There could certainly be a switch to the lower priced imported cigarette brands as Lucky Strike. Despite the fact that the retail price of Lucky Strike is incredibly lower at P29 per package in comparison with nearby brands from the “high” category - locally produced and imported - the brand will have to remain competitive with the smuggled sort.

Consequently, the Department of Finance could not be able to gather the progressive profits it considered it could by increasing the prices of local cigarettes, but curiously it backed-the demand of BAT for a level playing field. Which means a decrease in excise tax for Philippine-produced cigarettes and a decline for imported brands such as Lucky Strike.

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