Tuesday, 17 May 2011

Why Not Just Be Honest? It Is Prohibition, Pure And Simple

Only in the area of tobacco (for now, anyway) is the idea that businesses selling a legal product are forbidden to engage in normal debate with law-makers perfectly acceptable, and even encouraged.

Nowhere is this more stark than ... you guessed it, Australia.

Their media have today (well, yesterday for us, of course) devoted wall-to-wall coverage to the comments of David Crow, CEO of antipodean BAT.

Here are the quotes which have caused garish headlines - employing deliberately emotive language - such as "We'll flood the market with cheap tobacco, says British American Tobacco chief" ... which he didn't say at all, of course.

Mr Crow said cigarette companies would be forced to drastically cut prices because no-name "chop-chop" tobacco and cigarettes - which cost as little as 30 per cent of a regular packet - would be more attractive.

"Could cigarettes halve over time? I think in the longer term potentially yes," Mr Crow said.

"When you look at the four Ps (product, price, place and promotion), pricing's the big one and that's the only one we have left. We will end up fighting on price."

He said that the cheap prices "basically means more people will smoke, more kids will smoke".

"It's going to backfire and go bad and lead to more people smoking, which is just mad if you're sitting at a government desk," he added.
The site which carries the above montage of today's Aussie headlines calls this 'blackmail'. Because in this hysterically dull-witted world, a company pointing out the economic obvious in response to quite disgusting - and sustained - state bullying is still absurdly described as the big guy beating up on poor, weak, anti-smoking institutions.

(I have to just digress for a moment and point out that, yes, this is CAMRA's future if they choose to carry on being isolationist. Alcohol kills, as we all know, so the time when their voice in support of a chosen vice is condemned as advocating the agonising death of kids, is not too far away.)

Still, back to the matter in hand. There is nothing Mr Crow has said which isn't entirely in keeping with how businesses of every stripe operate, not to mention being basic stuff to anyone who understands supply and demand. A threat is identified and they - being a key stakeholder, to use public sector terminology - advance their case and highlight potential unintended consequences. It's a daily occurrence in any other sphere.

In a one-sided state-funded debate, though, this is termed 'blackmail'.

The only blackmail going on here is the one which says "you will meekly allow your legal business to be killed, without regard to your customers, or we will destroy you by portraying you as legitimate hate targets for a bovine public".

Price really is the only tool tobacco companies would have left if plain packaging were to be implemented. It's not the fault of BAT since legislation has already taken all the other economic factors out of the equation. This isn't blackmail, it's undeniable fact.

Why not just be honest about it and stop lying, Australia. This is prohibition by price we are seeing in action here. Pure and simple. The reaction from the federal government is to threaten openly a policy of sustaining tobacco prices with a tax grab in order to prohibitively price smokers out of their personal choice. Now that is what I would call blackmail.

No matter how reasonable Mr Crow is in this debate, the bully boys keep raining blows in. What a fantastic example of fairness and level-headed debate, eh? If this is an example of how Australians operate, perhaps they're not that far removed from the criminal element we sent down there in the first place.


Christopher Snowdon said...

I watched the interview the other day. He said nothing of the sort. The industry couldn't halve the price of a pack of cigarettes if it wanted to because well over half the price is tax. He was talking about the price of smuggled cigarettes surely?

Curmudgeon said...

Tobacco is a unique kind of business, and nowadays you will need a pretty thick skin to run a tobacco company. But I sometimes wonder whether it might make sense, once opprobrium in a particular market crosses a certain threshold, for the major tobacco companies to divest their local operations to second-line companies who have less vested interest in appearing socially responsible. To use an alcohol parallel, like Diageo selling off brands to Halewood.

Woodsy42 said...

If the genuine firms are pushed into competition with cut price 'no-name' russian or chinese suppliers by an inability to even brand their boxes then they have no choice but adopt the same sales tactics.
So they have to cut their prices, and to do that significantly they will ultimately have to by-pass the duty system and become smugglers themselves.

Streuth... said...

...If this is an example of how Australians operate, perhaps they're not that far removed from the criminal element we sent down there in the first place.

I prefer Peter Ustinov's take on this, that he was less bothered about the convicts that settled there than the fact that a lot of the warders must have settled there too.

Anonymous said...

I have said this before, and I will say again :-
'Australia, the arse of the world farts again'!
- Bet the Aboriginies never suffered from this utter furbraindeath ;)

Anonymous said...

If Australians are not carefull they will soon find themselves living in a fascist-healthist society.
It will ge worse.

Anonymous said...

Something wrong here. As Chris Snowdon points out, much more than half of the selling price is duty and taxes.

Angry Exile said...

I was going to blog on this the other day but I've just been too busy.

This is prohibition by price we are seeing in action here.

The tobacco trade is alive and well in Australia, and it's set to see even better times soon. The illegal tobacco trade, that is. When the price has risen high enough that it's only a rich man's vice - and it's already north of $15 a pack - everyone else will be smoking smuggled imports in copies of the government's plain packs or rollies made from chop-chop kept, also thanks to the plain packaging laws, in aftermarket baccy pouches and tins where it'll look the same as legal tobacco. I'm sure the smugglers and chop-chop trade are salivating in anticipation of the profits soon to head their way. As for the Aussie smoker, well, probably not much different except he'll find his smokes a lot cheaper once Fiona Sharkie (our Deb Arnott) & Co have finished creating more incentives to break the law than to comply with it.