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The tobacco industry gets smoked out [IT article]

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    #2
    scamalert
    Registered Users Posts: 3,739 ✭✭✭scamalert


    The First article is very dull,as it advertises on them e cigs that are sold in shops at the same or higher price then normal pack costs,and if these were the only types of e cigs,there wouldn't be much fuss as they are crap ones compared to kits that can be bought for 30e and new e devices that are coming out rapidly now with new designs and better builts for most effective vaping.Also mentioniong at the end that they are good for long travels/hauls as substitute is another crappy description towards e-cigs.Only author cant seem to round his mind on to the topic that he said e cigs have only one ingredient that is addictive is nicotine-where rest is completely harmless,where cigarettes have over 300 additives that cause all the ill diseases and cancer.So why in the hell e cigs should be classified as medical treatment for those who need nic,while leaving rest of the world inhaling all the crap from normal cigarettes which by this stage are mostly made of tobacco left overs covered with thousands of chemicals :cool:
    im not into conspiracy stuff but answer here is obvious that if lets say theres almost 1 mil smokers in Ireland,and packet costs 9.40 by now-to manufacture packet on large scale costs only about a euro,then government gets 4-5e and leaving tobacco companies with another 4-5 euros in profit.And this is only Ireland,and if looked up on large scale its billions that could be lost in next couple years in governments incomes across world.So this battle is becoming more towards 2 versus 1.


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    #3
    DubTony
    Registered Users Posts: 3,269 ✭✭✭DubTony


    scamalert wrote: »
    im not into conspiracy stuff but answer here is obvious that if lets say theres almost 1 mil smokers in Ireland,and packet costs 9.40 by now-to manufacture packet on large scale costs only about a euro,then government gets 4-5e and leaving tobacco companies with another 4-5 euros in profit.And this is only Ireland,and if looked up on large scale its billions that could be lost in next couple years in governments incomes across world.So this battle is becoming more towards 2 versus 1.

    FYI, a pack of cigarettes would typically sell for less than €2 if there was no tax of any sort. Retailers have fought hard over the years to maintain an 8% to 10% margin on them, so one would assume they'd earn about 20c from the sale of a €2 pack. The tobacco company margin remains the same and they make billions every year. Government tax is a lot more than €5 and is closer to €8 per pack.


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    #4
    DublinCJM
    Registered Users Posts: 826 ✭✭✭DublinCJM


    DubTony wrote: »
    FYI, a pack of cigarettes would typically sell for less than €2 if there was no tax of any sort. Retailers have fought hard over the years to maintain an 8% to 10% margin on them, so one would assume they'd earn about 20c from the sale of a €2 pack. The tobacco company margin remains the same and they make billions every year. Government tax is a lot more than €5 and is closer to €8 per pack.

    Disagree with that. There's lots of brands out there selling for €8 and €8.20 which means that if the retailers were getting 8 or 10 percent margin and the government were getting close to €8 tax the tobacco companies would be selling at a loss.

    They might be selling at low profit but in no way would they be selling at a loss.

    Gov tax closer to €6 or €6.50 I'd say. But I'm sure it's easy enough find out if anyone wanted to.


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    #5
    grindle
    Registered Users Posts: 6,026 ✭✭✭grindle


    Cigarettes
    (a) except where paragraph (b) applies, 237.69 per thousand together with an amount equal to 8.83 per cent of the price at which the cigarettes are sold by retail, or


    (b) 271.91 per thousand in respect of cigarettes sold by retail where the rate of tax would be less than that rate had the rate been calculated in accordance with paragraph (a)

    =~€5.50 a packet.


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    #6
    DubTony
    Registered Users Posts: 3,269 ✭✭✭DubTony


    DublinCJM wrote: »
    Disagree with that. There's lots of brands out there selling for €8 and €8.20 which means that if the retailers were getting 8 or 10 percent margin and the government were getting close to €8 tax the tobacco companies would be selling at a loss.

    They might be selling at low profit but in no way would they be selling at a loss.

    Gov tax closer to €6 or €6.50 I'd say. But I'm sure it's easy enough find out if anyone wanted to.

    If we call it €9 for a pack and work backwards the following are roughly the figures.
    Take off the VAT first at 23% (€1.69) that brings the ACTUAL retail price back to €7.31
    Retailer margin of 10% (73c) brings it down to €6.58

    The tax figure of €5.50, provided by grindle, reduces the wholesale price (without ANY taxes) to €1.08

    The tobacco company's profit is within the €1.08.

    On an €8 pack, all figures except the €5.50 are reduced leaving an actual wholesale price of about 35c from which the tobacco company takes its profit.

    The €5.50 is excise duty. Add the vat at retail and the government take is about €7 on the cheaper pack.
    Big tobacco can adjust and develop alternatives. Remember that they have all moved into other areas, especially food, but their biggest earners are cigarettes. So in the long term, while tobacco companies will be affected by e-cigs and are protecting their position by involving themselves in the writing of legislation, governments will lose many multiples of the business losses.


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