Data on the price of tobacco products can be obtained from several sources:
- Recommended retail prices (RRPs) determined by manufacturers or wholesalers.
- Retail prices collected from retailers, either in-store by purchasing packs or viewing price lists, or online listings.
- Prices paid by consumers collected through surveys asking smokers to recall the details of their current or regular pack.
- Sales data provided by all wholesalers and/or retailers on the volumes purchased and prices paid for tobacco products. Sales data is may be collected by market research companies for clients who pay for such information. In some countries, governments require companies to report on such data.
Working out the price of cigarettes and other tobacco products is by no means straight-forward— particularly so in Australia. Tobacco wholesalers have been required to report sales data to governments in the Northern Territory and Western Australian, and retailers are required to report in Tasmania—see Table 11B.2 in InDepth 11B Licensing of tobacco sellers. However, information on prices across the market has not been published by these jurisdictions, and price and sales information is not collected at all by governments across the rest of Australia.
The prices at which cigarettes are offered for sale (retail prices) may differ significantly from recommended retail prices set by manufacturers. Many different brands (and sub-brands) of cigarettes are sold in Australia—53 FM cigarette and 26 RYO tobacco brands as of November 2023 (see Section 10.7)—from many different outlets; there were more than 35,000 outlets in Australia in 2004. 1, 2 Some types of outlets are more likely to sell tobacco at cheaper prices, pricing patterns may differ by area characteristics, and there may be additional selective and temporary discounts. Obtaining a representative sample of sale prices for even a single brand over time would be a costly exercise, and not representative of the total tobacco market. Obtaining a representative sample of prices for a large number of brands is simply not feasible without sales reporting from tobacco companies. Many researchers attempt to address this difficulty by using prices of just the brand of cigarettes most popular in the population they are studying, but this may not give a representative picture of the entire cigarette market due to price minimising behaviours such as shifting to cheaper brands or pack sizes, bulk purchasing, or shopping at lower-cost outlets. 3 Further, identifying the current most popular products within a population is challenging without sales data.
This section uses retail price information from tobacconists—a popular 4 and typically heavily discounted 5 retail channel—to report on the recent retail price of tobacco products. Examination of changes in prices over time will use recommended retail prices. These are primarily sourced from the NSW Retail Tobacco Traders’ Association publication the Australian Retail Tobacconist, which provided current recommended prices for tobacco products available for sale in any state or territory. Copies of the publication preserved dating back to 1940 are available at the National Library of Australia and several other libraries throughout the country. The final edition was published in December 2021. These data sources will be supplemented by data from national surveys of Australian smokers on the most popular products consumed and reported prices paid for these products.
This section will focus on the prices of cigarettes and roll-your-own tobacco in Australia. Further data the factors that influence price, are provided in Section 13.4.
13.3.1 Current tobacco prices
The broad range of pack sizes and market segments—particularly for FMC products—in the Australian tobacco market makes it difficult to obtain or estimate a single average price. This section summarises the recent price of the most popular FMC and RYO products, and the average price of a range of products by pack size and segment. Price data for this section is obtained from checks of the online listings of one of the major national tobacconist chains. The popularity of tobacco products was sourced from the 2020 wave of the International Tobacco Control Study, by examining the most popular pack sizes among the most commonly smoked tobacco brands within each survey year.
13.3.1.1 Most popular tobacco products
Figure 13.3.1 shows the price per pack and per stick of the FMC and RYO products that were most popular in 2020 among Australians who smoke. At March 2024, the price of JPS 20s was approximately $39.50, or $1.98 per stick. A 50-gram pouch of Winfield RYO tobacco was $149.95, or $1.80 per stick, assuming 0.6 grams of tobacco for each cigarette. A pouch of Winfield 50g cost almost three times more than a pack of JPS 20s. However, at 0.6 grams of tobacco per stick, the RYO pouch would yield more than 60 additional cigarettes, each costing 9% less than their FMC equivalent. The price of a pack of JPS 20s was 10% higher in March 2024 than March 2023, while the price of a Winfield 50-gram pouch was 14% higher in March 2024 than March 2023.
13.3.1.2 Average price of factory-made cigarettes
The Australian cigarette market is characterised by a broad range of pack sizes and price segments—see Section 13.4 for more detail about the development and consequences of these market features. The very large variety of product offerings makes establishing a single average price difficult. Average pack price is skewed heavily by the high prices of large packs of 40 and 50 sticks. Average stick price is also affected by pack size, but also considerably by brand categories known as price segments. Table 13.3.1 shows the average price per stick of FMCs by market segment and pack size as of March 2024, including brands from major manufactures and small importers.
Table 13.3.1 shows a clear gradient of pricing between segments, with more than $0.65 difference between the average stick price of supervalue and premium products. There was also a general trend for larger pack sizes to offer better value per stick, with packs larger than 25s generally providing better value per stick compared to smaller packs, except in the case of packs of 50s (see below). This pattern is influenced by the number of product offerings from each price segments within that pack size. For example, the large number of supervalue brands available in packs of 20 meant the average price of 20s was lower than 25s.
Historically, large packs offered a substantial per stick discount (see Section 13.4.2), so that stick price decreased as pack size increased within a given brand. At March 2024, Horizon (manufactured by Imperial Brands) was the only brand to still offer packs of 50 sticks. These very large packs were $2.14 per stick, compared to $2.08 per stick for Horizon 30s. The excessive per stick and per pack price of these products, relative to other similar offerings, is a continuation of a trend observed in the recommended retail prices of other brands that offered packs of 50s, such as Holiday. It appears these very large packs became niche products as prices rose following excise increases in the late 2010s, after which these brands no longer provided the same level of bulk-buy discount to loyal users of these brands who tended to be people who smoke heavily.
13.3.1.3 Average price of roll-your-own tobacco
Traditionally RYO tobacco was sold in Australia in pouches of 30 or 50 grams. In recent years many much smaller pouches have also come onto the market—see Section 13.4.2.4. Table 13.3.2 summarises the average price per gram of RYO products in Australia in March 2024. As there are not established price segments for RYO, the minimum, average, and maximum price for each pouch size is presented.
As well as being cheaper up front, small RYO pouches generally offer better value per gram. Whereas cigarette in packs containing 30 or 40 cigarettes tended to be less expensive per stick than cigarettes in packs containing 20 cigarettes, prices across RYO pack sizes tended to increase with increasing pack size. On average RYO tobacco in pouches of 15g and 25g—now comprising two-thirds of all RYO pouches—was substantially cheaper than that in 40- and 50-gram products (most of which are long-standing brands). There was substantial per gram pricing variation within the most popular pouch sizes: pouches of 25 grams ranged from $2.28 per gram to $3.20 per gram.
13.3.2 Trends in the recommended retail price of tobacco products since 1940
Recommended retail prices for Craven A Cork Tip 20s—a brand of cigarettes popular in the 1940 to 1960s in Australia, and one the only brands available in 1940 still available in 2015—are listed in Table 13.3.3. When examining the cost of tobacco products over time, it is useful to take into account the effects of inflation, so Table 13.3.3 also indicates the price adjusted to for changes in the Consumer Price Index (CPI), using 2012 as the base year. This table also shows the current and 2012 pack price for Winfield 25s, one of Australia’s leading brands between the late 1970s and 2010s.
Figure 13.3.2 plots the price per stick of Craven A 20s and Winfield 25s from 1940 to 2024 in $2012 to account for changes in inflation over time.
Table 13.3.3 shows that the current price of a packet of Craven As increased almost 160-fold between 1940 and 2015. However, as is evident from Table 13.3.3 and Figure 13.3.2, adjusting for inflation, Craven As cost no more in real terms in the early 1990s than they did during and immediately after the Second World War. Prices then increased substantially from the early 1990s.
In the ten years from 1990 to 2000, the real stick prices of Craven A and Winfield approximately doubled, and increased by 30-40% between 2000 and February 2010. Between 2010 and 2020—a period of substantial increases to tobacco excise—the price of Winfield increased by 2.4-fold in real terms, an increase of $25 per pack in current dollars. Current prices increased by a further $12.25 between 2020 and 2024, however, after adjusting for inflation, this represented a 12% increase. Across the 34 years from 1990 to 2024, during which multiple major reforms and increases to excise policy occurred (see Section 13.6.3), the real price of Winfield 25 cigarettes increased more than 7-fold.
13.3.3 Trends in the recommended retail price of the most popular tobacco products
Until the 2010s, the range of products available on Australian cigarette market was relatively stable, other than the expansion of pack sizes into 30s, 40s and 50s in the 1980s (see Section 13.4.2). Brands such as Winfield, Longbeach, Peter Jackson, Horizon, and Benson & Hedges were market leaders over more than three decades. Following the large increase in excise duty at the end of April 2010, and coinciding with the implementation of plain packaging in late 2012, new brands were introduced that were priced well below existing value brands, forming a new ‘supervalue’ market segment. 6-8 Packs in unusual sizes, such as 21s, 22s, 23s, and 26s, were also introduced as excise rates increased over the following years. In addition to offering a broad range of price points, making it hard to compare the prices of products, these packs offered ‘bonus’ cigarettes, such as 26 cigarettes for the price of 25s, or served to preserve the pre-tax price of existing packs, such as a pack of 23 cigarettes for the same price as 25s before an excise increase. 9
Over the same period, the size of roll-your-own pouches progressively decreased. While no RYO pouches were smaller than 30 grams before 2010, about one-third of products on the market were 20g or 25g by 2016. 10 New RYO brands also entered the Australian market in the late 2010 and early 2020s, many of which extended FMC brand families that were part of the supervalue price segment, such as JPS, Bond Street, Parker & Simpson. These market trends are discussed further in Section 13.4, while their impact on the recommended retail prices of tobacco products is described below.
13.3.3.1 Recommended retail prices of popular factory-made cigarettes
Figure 13.3.3 shows the recommended retail price per stick of leading FMC brands from 2002. RRPs for the most common pack size from the top three most popular brand families in these years are shown, with markers indicating which products were the three most commonly nominated brand families in a given year from the Australian arm of the International Tobacco Control Study. This graph therefore shows the pricing of popular products before and after changes in their popularity among smokers. (Note no survey data was available for 2012, 2015, 2017, or 2019.)
Between 2002 and 2010, Winfield 25s, Longbeach 40s and Peter Jackson 30s—all brands from the mainstream (mid-priced) market segment—were the most popular FMC products, other than Horizon (a value brand) temporarily replacing Peter Jackson in 2006. From 2011, Horizon 50s replaced Peter Jackson as the third most popular brand. At about this time, the new supervalue brand JPS was launched, with a per stick RRP that was similar to the per stick RPP of Longbeach 40s and Horizon 50s—so, offering the same per stick value as larger packs, but for a cheaper upfront purchase price. As prices rose with large annual excise increases from 2013 onwards, the per stick RRP of JPS 25s were well below the previous leading brand, Winfield 25s. JPS became of the leading brands from 2014 onwards. Rothmans were one of several supervalue brands introduced in the mid-2010s, becoming a leading brand in 2016. By 2018, the leading brands were all from the value or supervalue segment.
13.3.3.2 Recommended retail prices of popular roll-your-own tobacco
Figure 13.3.4 shows the recommended retail price per gram of the three most popular RYO products in 2010 to 2020 among Australians who smoked. Similar to FMC cigarettes in Figure 13.3.5, the same brands were consistently most popular until about 2014: Winfield, Drum, and Champion. These are all long-standing RYO brands (the Winfield brand family also has FMC products), and these had very similar RRPs in each year.
Winfield 50 grams was among the top three products in all survey years examined, and while the brand Champion also among the top brands in every year from 2010 to 2020, the most popular size has fluctuated between 50 and 30 grams until 2018, when 25 grams became most popular within Champion consumers. JPS 25 grams was among the top three brands in 2016, then Longbeach 55 grams in 2018, and Capstan 25 grams in 2020. The per gram RRPs of these products was approximately $0.20 lower per gram that the traditionally popular RYO products.
13.3.4 Prices paid as reported by consumers
An alternative approach to calculating prices of tobacco products is to ask smokers what they paid for their last, or usual packet of cigarettes or smoking tobacco. Respondents may tend to round their responses, and depending on sample size, surveys will only capture a subset of all products available on the market, at a particular point in time. While not suitable for all research purposes—and, provided measures are taken to exclude figures that most likely result from respondent error—such data can provide very accurate information about price as actually experienced by consumers, especially in large longitudinal studies.
Information about purchased products and prices paid from surveys in the US, UK, and Australia have also been useful in identifying changes in consumer behaviours in response to changes in price and product offerings, such as down-shifting to cheaper brands and alternative tobacco products, price minimising behaviours such as bulk-buying, and seeking out duty-free products or illicit tobacco. 11-15 For example, in Australia, following the abolition of state business franchise fees on tobacco, there was a similar shift to roll-your-own including illicit 'chop-chop' (see InDepth 13A), and to cartons and to discount outlets. Changes to tobacco taxes in Australia in 1999 made it much less attractive for smokers to turn to larger pack sizes and budget brands as a means of cushioning themselves from tax increases, and as intended, following introduction of reforms, many smokers shifted back to smaller pack sizes with a lower up-front purchase price but higher costs per stick. 13
Figure 13.3.5 shows the average reported prices paid for the top ten brands, from data collected in Australian smokers in the International Tobacco Control study, against the average recommended retail price (RRP), and the percentage difference between the reported prices and RRP in each year. The reported prices paid and RRP are both weighted by market share within each year.
In all years, the average price consumers reported paying for factory-made cigarettes was lower than the average recommend retail price. Between 2002 and 2011, the difference in average reported price paid and RRP doubled from –4% to –8%. This gap again widened to almost –12% in 2014, before reducing to about –7% in 2018 and again increasing to more than –12% in 2020.
These fluctuations may be at least partially accounted for by discrepancies in the timing of the survey and availability of RRP data within a given year. Respondents may also be prone to round prices up or down when asked to recall these in interviews, and reported price paid may be misremembered if interviewed around the time of large price increases, such as those that occurred with each of the annual excise increases between 2013 and 2020. This may especially be the case when asked about “usual” pack, rather than “most recent”, as per the ITC study. Despite these variations, it is clear that recommended retail prices consistently overestimate the actual prices paid by consumers for cigarettes. The average difference in weighted average price paid and RRP from 2002 to 2020 was 8%.
13.3.5 The Cigarettes and Tobacco sub-group of the Consumer Price Index
The longest-running indicator available of the actual price of cigarettes for sale in Australian shops is provided by the component of the Tobacco and Alcohol Sub-Index of the Consumer Price Index (CPI) that covers tobacco products, the Cigarettes and Tobacco sub-group. The CPI and its sub-indexes are constructed each quarter by the Australian Bureau of Statistics using in-shop surveys monitoring a range of goods that might be purchased by a typical Australian household. 16 Cigarettes and tobacco sub-index reflects change in the real-world price of tobacco products over time. Figure 13.3.6 plots the average index figure for the Cigarettes and Tobacco Sub-group of the Tobacco and Alcohol Sub-index of the CPI against the overall index for each year since the tobacco index was first published in 1973.
It is evident from Figure 13.3.6 that tobacco prices, as determined in the Australian Bureau of Statistics price survey, have risen significantly over time, with notable rises in the mid-1990s, early 2000s, 2010, and 2013 onward. Tobacco prices rose even between 2001 and 2009, during which time the excise and customs duty on tobacco products was increased only in line with the CPI, indicating increased margins to manufacturers and retailers (and also to state governments in the form of GST revenue). The steep increase in the tobacco index in later years corresponds to the implementation of annual 12.5% excise and customs duty increases on 1 December 2013, then each 1 September from 2014 to 2020, and further 5% increases from 1 September 2023.
The tobacco price index has approximately doubled each decade since the 1970s. Tobacco prices were 2.3 times higher in 1980 compared to 1973, and almost tripled between 1980 to 1990 (2.8 times higher). Tobacco prices were 2.4 times higher in 2000 compared to 1990, 1.6 times highest in 2010 compared to 2000, and 2.8 times higher in 2020 compared to 2010. The tobacco index in 2024 was 1.4 times higher than in 2020.
As shown in Figure 13.3.4 and Section 13.3.4, there has been substantial change in the popularity of tobacco brands in Australia, particularly in the market segment and pack size of the leading brands since approximately 2013. Indexes such as the CPI that are based on price monitoring surveys may significantly overestimate prices experienced by consumers unless sampling is adjusted to take account of changing sales patterns, in particular those reflecting consumer efforts to seek lower prices. No information is available about sampling protocols adopted in ABS price surveys.
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