Page 21 - Retail-World-JanuaryFebruary_NonTob-2021

Authorities, Mr Kumar says, “created a rod for their own backs” by continually increasing the excise rate, making
the illegal trade of tobacco viable
and lucrative.
He adds that the relevant authorities
have not had the foresight nor allocated adequate resources to “manage the entry of tobacco products into Australia”.
“Illicit tobacco trade is rampant, with lack of action to control the illicit trade fuelling the ‘high-risk, high-reward’ attitude,” he said. “Retailers tend to expect this as the new normal because everybody’s doing it.
“Obtaining evidence is also becoming difficult, as retailers don’t want to get involved and usually state that, as nothing will be done, it’s a waste of their time.”
On the bright side, Mr Kumar believes the setting up of the Illicit Tobacco Task Force is a sign that government
is willing to prioritise the fight against the illicit tobacco trade, although
he asserts that results and outcome matter more than intentions.
“More needs to be done to change the culture of acceptance of illegal products,” he said, emphasising that the focus should be on preventing illegal tobacco from entering the country at its borders.
Once tobacco has entered the country illegally, he adds, a myriad of issues come into play: the network is well entrenched and containers can be moved swiftly with little detection.
Smoke-free nicotine products in pharmacies?
Mr Kumar says he supports the Australasian Association of Convenience Stores and the National Retailers Association in their assertion that
the recent proposal to the Australian government by the TGA – to consider the sale of smoke-free nicotine products only in pharmacies – to be detrimental to Australian retailers.
“The bottom line is that government should ensure policies proposed can be monitored and controlled,” he said. “If a policy can’t be controlled, why make it
a law?
“Nicotine-based products are
being sold illegally now. Confining nicotine-based vape products to
the pharmaceutical channel will
only motivate people to find ways to circumvent the policies again, fuelling
high-risk, high-reward behaviour. This may also lead to unsafe products being sold illegally.”
Burn that comes with tobacco
tax hikes
Two tobacco excise increases a year,
in March and September, are based on average wage ordinary time earnings, Mr Kumar says, but he points out that the government had legislated for an additional four planned excise increases of 12.5 per cent each September, with the latest one being in September 2020 for a combined tax hike of 16.2 per cent.
He says the intention behind the excise was initially to discourage people from smoking, by increasing the price of tobacco/cigarettes.
“The increase in illicit trade happens to be a known and expected outcome,” he said.
Mr Kumar anticipates that the overall category will continue to decline slightly, and the shift to lower priced products will be maintained, which would make rationalising some
SKUs practical.
“The incidence of smoking will
decline, but volume decline will be at a slower rate,” he said. “The shift to vape products will occur as smokers seek other lower-cost alternatives.
“Aspects of the change in consumer mentality driven by Covid-19 experience will become the new normal, with people not quickly shedding their concern with safety and security. As such, smaller-format shops such as convenience stores and tobacconists should gain share.”
As to TabSol, Mr Kumar says it will remain focused on providing “consumer solutions” and the best value for money in product prices.
“These solutions are firmly rooted in our ‘value for money’ promise
that extends from a diversified product portfolio spanning various consumer segments,” he said. “It’s also the core tenet that drives quality and compliance, fast service and delivery, consistent pricing and long- term partnerships.
“We’ll continue to look at differentiated offers to continually add value for our retailers via ease of service and new products that are legal.”
TOBACCO
JAN/FEB, 2021 RETAIL WORLD