Cigarette hoarding begins ahead of budget

LAHORE: Sellers and distributors of cigarettes have created an artificial shortage ahead of the federal budget, anticipating an up to Rs20 increase per pack due to increased duties and taxes.
Where it is available, the sellers are overcharging the consumers as well. An official of the tobacco industry disclosed to The News that Rs15-20 increase is expected in the price of premium brands, and Rs10 surge is forecasted in value brands of cigarettes.
The government has categorised the cigarettes in two brands, price range up to Rs50 falls in the value brand category whereas cigarettes that cost above Rs90 per pack fall under premium brands.
Thus, the price of premium brands of cigarettes between the range of Rs95 and Rs115 per pack will increase to Rs110-130 per pack, whereas value brands are expected to reach up to Rs60 per pack.
The tobacco industry official said that anticipating the expected increase in the rates, the distributors and sellers began hoarding the various brands of cigarettes, especially the premium category.
In the markets, Pakistan Tobacco Company (PTC) premium brand cigarettes are being sold between Rs100 and Rs125 per pack, almost Rs5-15 higher than the official rates. In some areas Rs95 a pack is being sold at Rs110 and other brand at Rs125 a pack.
Similarly, the Philip Morris International (PMI) premium categories are also sold almost Rs10-15 per pack higher than the official rates.
PTC Director Corporate and Regulatory Affairs (CORA) Asim Ali said that he was unaware about the shortage of cigarettes in Lahore markets. He said that marketing and distribution staff will instruct to look into the matter.
On a question of shortage and overcharging, he said that it is an annual phenomenon ahead of budget; some complaints of shortage and overcharging are recorded. However, Asim said after May 30, anti-smoking pictorial General Health Warnings (GHW) will be increased, which could be a cause of shortage too.
“Perhaps they (sellers), anticipating buyers’ reluctance in buying packs with the new high GHW pictorial warning, are storing old stocks to sell after the implementation of the GHW from June 1 2015,” Asim added.
However, he admitted that the federal budget might also be the reason behind the shortage of cigarettes in the market.
The scribe received no response from the PMI on the raised questions.
Cigarette distribution network officials said that hoarding occurs annually before the upcoming budget. Anticipating a price hike, sellers and distributers hoard packs to mint money from the consumers.
The manufacturers also show leniency and technically provide some room to the sellers who play a vital role in business growth. The tobacco industry has been affected negatively since the implementation of the World Health Organisation (WHO) convention banning marketing of smoking items.