The UK’s biggest tobacco company is temporarily phasing out pricemarked packs on certain lines to help retailers adjust to the end of year VAT change.
Imperial Tobacco is ceasing production this month on pricemarked packs of Richmond King Size, Richmond Superkings, John Player Special Black/White, Golden Virginia Green, plus cigar brands Panama and King Edward Coronets. By the end of November only plain packs of these brands will be available.
However, the company is for the time being continuing to produce pricemarked versions of JPS Blue/Silver and Menthol, Windsor Blue, Gold Leaf and Golden Virginia Yellow, despite the rise in VAT from 15% to 17.5% potentially eroding margins for retailers still holding stock of these lines over the new year period.
However, the prospect of duty rises on tobacco in the government’s pre-Budget report later this month adds a further complication.
Fellow tobacco manufacturer JTI is waiting to see what changes are announced by the Chancellor before making a decision on pricemarked packs.
A spokesman said: “Until the content of the Pre-Budget Report is known we are not in a position to assess the likely impact on our category.”
Independent retailer Robert Mulholland from Pudsey, Leeds, says that the VAT increase means retailers will have to increase the price of affected products by 2.174% to maintain margins, and he will have to work through the night to update pos tickets.
He said: “Independents face the prospect of trying to sell pricemarked products at higher prices to skint customers in the biggest recession that we have ever known.”