Objectives Over the past 15 years, tobacco companies operating in Canada abandoned their long-standing unitary price model in favour of price differentiation. Concerns about low cigarette prices were identified by the Quebec government in 2015 when it introduced restrictions on the types of incentives that tobacco manufacturers may offer to retailers. This study sought to explore cigarette prices in Quebec 1 year after these restrictions came into effect.
Methods Details on cigarette trading terms and programmes were obtained from websites maintained by retailer groups. Visits were made to tobacco retailers in four Quebec municipalities in the autumn of 2017. The price displayed for cigarettes was observed and recorded in 273 convenience stores.
Results Two forms of price differentiation were observed. The first was price-segmentation between brands, reflected in a difference of $3 or more in the average displayed price between premium and discount brands of each manufacturer (ie, $10.48 vs $7.43 for a package of 20 cigarettes of the most and least expensive brands sold by Philip Morris International). Price localisation was also observed, reflected in a $2 range of prices between retail outlets for the same package of cigarettes. Even among outlets of a given chain of convenience stores, the price of the least expensive brands varied by more than $1 per package. The size of the variance in prices rivals or exceeds the size of tobacco tax increases in Quebec over the past decade.
Conclusions Recent restrictions on tobacco industry incentive programmes for retailers have not ended price differentiation. Tobacco manufacturers’ and retailers’ pricing policies continue to provide price-sensitive smokers with ways to avoid the impact of tobacco tax increases.
- tobacco industry
- public policy
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