British American Tobacco Plc (BATS)’s Australian unit said it will cut prices if the country passes legislation to ban branding on cigarette packages.
BAT Australia Chief Executive David Crow told reporters today in Sydney that the legislation wouldn’t reduce smoking rates and would result in a flood of cheap and illegal products. The company, Europe’s largest cigarette maker, has a 42 percent share of Australia’s tobacco market and makes Lucky Strike and Pall Mall cigarettes.
“We will be forced to lower price over the short term to compete with the illegal tobacco market,” Crow said. “They will sell for 30 to 40 percent lower than normal cigarettes, which means more people will smoke.”
Health Minister Nicola Roxon unveiled the proposal on April 7 that would force cigarettes to be sold in plain dark olive packages with health warnings. Company names will appear on the boxes in uniform size and style of printing. The legislation, if passed by parliament, will take effect Jan. 1, 2012.
Opposition Liberal-National leader Tony Abbott said the coalition would support the laws if there was evidence it would reduce the number of smokers.
Australia last year increased tobacco taxes 25 percent and began an A$85 million ($90 million) four-year advertizing campaign to combat smoking. Smoking costs Australia A$31.5 billion each year, mainly through health expenses.
The Australian Greens party today said it wants a floor put in tobacco prices.
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