TOBACCO SALES AT BELOW COST PRICE

Greymouth Evening Star, 19 October 1948, Page 4

TOBACCO SALES AT BELOW COST PRICE

The tobacco “headache” has been transferred from the public to the retainer, according to retailers interviewed at Greymouth today. Twelve months ago, a retailer with stocks of any kind of tobacco on his shelves could consider himself fortunate, but today many Greymouth firms, in common with others throughout New Zealand are faced with serious losses on their stocks of imported tobacco and cigarettes. Already four brands of imported tobacco are selling at Greymquth at 2s lid a tin, as compared with the original price of 4s 2d. This price reduction has been made generally on the advice of the Tobacco Trade Council, in an effort to clear the embarrassing stocks of brands which have-not proved, popular with New Zealand smokers and which are extremely slow sellers, when there are alternatives.

Heavy Stocks Bought Many Greymouth firms bought heavily when the tobacco shortage was at its worst and when it appeared that queues for popular lines had become an almost permanent feature of the trade. They paid approximately 3s 9d a tin for the tobacco which is now being sold at 2s lid and in some cases the aggregate loss is serious. . ' The same brands of tobacco can now be bought wholesale at 20s a lb. as compared with the original price of 28s 9d, plus sales tax it is hopeless for retailers with big stocks to expect that they can recoup their original outlay which, at the time, appeared to be good business. It has become a case of “cut your losses and remember the lesson.” Market “Swamped” So far as Greymouth is concerned, there has not yet been any spectacular reduction in the price of the imported cigarettes which have also proved poor sellers in compai ison with the New Zealand packed brands. However, in the North Island six imported brands are now being sold at Is 4d for 20, eightpence a packet below their original price and well below cost to the retailer. When New Zealand was experiencing a tobacco famine, licences were granted for the importation of tobacco and cigarettes from various sources, chiefly the United Kingdom and Canada and in a short time the market was literally “swamped” with these imported lines. For a brief period, smokers were prepared to accept anything, but once supplies of New Zealand-made cigarettes and tobacco became more plentiful it became increasingly difficult to sell the imported lines. Smokers’ Tastes

There is no indication, at least so far as Greymouth is concerned, that smokers generally have developed a liking for the imported lines. As an experiment, one Greymouth firm with large stocks last Friday made a special effort to sell one brand of the imported tobacco at the new, belowcost price of 2s lid a tin but it could dispose of only half a dozen tins, whereas at the height of the shortage, 100 lbs of the same tobacco was sold at 4s 2d a tin, in a matter of days. In at least one case, application has been made to the.' Ministry of Supply for some relief, with the suggestion that the unwanted tobacco might be exported to somewhere where a postwar shortage still exists, but to date the only solution which has been suggested to retailers is to sell the tobacco at a loss, which will be much smaller than will be the case if the tobacco is held in stock until it commences to deteriorate.