SMOKERS’ REJOICE

Hokitika Guardian, 29 August 1928, Page 4

SMOKERS’ REJOICE

Sydney’s tobacco war

SYDNEY. Aug. 10. Smokers in Sydney lire rejoicing. Retailers are fighting one another for trade, and drastic reductions in all the popular brands of tobacco and cigaiettes have taken plate. Tt promises ( to be one of the most intense trade battles waged anywhere, and because of this may not last very long. But it it lasts for only a month, there are going to be many casualties, for it seems clear that the small shopkeeper will be forced out of businer?. Cigarettes that previously cost 9d a packet are now obtainable at: 7,1:1, and Gd packets are being sold at oil. ami even then some of the shops add a box of matches by way of a, gift. Two ounce packets of tobacco which previously cost Is 9d are obtainable at Is Gd, and the eighteen-penny lines have been reduced to Is 4d and even to Is 3d.

Tobacconists say that their sales must be increased 500 percent if they are riot toi suffer loss. As a 503 per cent increase is out of the question, they are hound to lose. It is not quite clear who started the tobacco war, hut it would seem that some of the blame rests with the Railway Commissioners. At railway

refreshment rooms the policy was inaugurated of giving a box of mate-lie' with each purchase. Ordinary retailers protested, but. the railway autlmrit'esaid that they were quit? satisfied with I the margin of profit which was allow/*-’ to them. Then, without making any special annount-oipent, the Commissioners increased their gift to two lioxes of matches. The result was that smokers’ pockets became filled with matches, and so it came about that the purchaser of a packet of cigarettel- - given the alternative of faking r penny change or Iwo boxes of matches. Gradually, other retailers followed suit and many of them reduced tobacco lines generally. The railway authorities were quick to follow suit. And so the process has developed until it has embraced even the great departmental stores, who have never been parties to price-cutting tactics. Price-cutting is said to he endemic among Sydney retailers, but' the present campaign is causing them a great deal of concern. On 50 packets of

cigarettes sold at Cd each, the gross profit to the retailer was 4s 9d. At the present rate of 5d the retailor is left with the margin of 7d profit, after serving 50 customers. Similarly, the reduced price of tobacco, leaves only 7d margin per lib on "the 9s 5d list wholesale price, and on 100 cigarettes usually sold at Is 6d a packet the tobacconist can make only 5d at the cut rates prevailing.

In these circumstances it is not surprising that fears are being entertained that a number of small retailers, including the owners of returned soldiers’ stands in the streets of the city, will bo forced out of business. Already it is stated that many of the wholesale houses are experiencing difficulty' in collecting their accounts. Some time ago, when the tobacco war was carried out on a smaller scale, the wholesale houses came to the assistance of the individual retailer and fixed the retail price. This was effective for only a brief time, when doubts arose as to its legality. Now everybody is being given a free hand with the consequences hero recorded.