SMOKERS REJOICE.

Otago Witness, Issue 3885, 28 August 1928, Page 27

SMOKERS REJOICE.

RETAILERS FIGHT. SYDNEY, August 16. Smokers in Sydney are rejoicing. Retailers are fighting one another for trade, and drastic reductions in all the popular brands of tobacco and cigarettes have taken place. It promises to be one of the most intense battles waged anywhere, and because of this may not last very long. But if 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 business. Cigarettes that previously cost 9d a packet are now obtainable at 7Jd, and sixpenny packets are being sold at sd, and even then some of the shops add a box of matches by wa; of a gift. Two ounce packets of tobacco which previously cost Is 9d are obtainable at Is 6d, 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 per cent, if they are not to suffer loss. As a 500 per cent, increase is out of the question, they are bound to lose. It is not quite clear who started the tobacco war. but 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 matches with each purchase. Ordinary retailers protested, but the railway authorities said that they were quite satisfied with the margin of profit which was allowed to them. Then, without making any special announcement, the commissioners increased their gift to two boxes of matches. The result was that smokers’ pockets became filled with matches, and so it came about that the purchaser of a packet of cigarettes was given the alternative of taking a penny change or two 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 evbn the great departmental stores who have never been parties to price-cutting tactics. Price-cutting is. said to be endemic among Sydney retailers, but the present campaign is causing them a great deal of concern. On 50 packets of cigarettes sold at 6d each, the gross profit to the retailer was 4s 9d. At the present rate of 5d the retailer is left with the margin of 7d profit after serving 50 customers. Similarly, the reduced price of tobacco leaves only 7d margin per lb on the 9s 5d list wholesale price,. and on 100 cigarettes usually sold at Is 6d a packet the tobacconist can make only 3d at the cut rates prevailing.