Jump to full article: Spotlight on German Retail (Letters from Mike Dawson, Editor of Lebensmittel Zeitung) (de), 2009-10-16
Intro: Primed with films like “The Initiative” and “Thank You for Smoking”, I was expecting my first interview with a representative of “Big Tobacco” in 2004 to be a mixture between the Godfather and Gordon Gekko. . . .
During the interview, Davis was surprisingly forthright about smoking and didn’t try to dodge the contentious issues.
The urbane chief executive began by asking us politely whether we should mind if he smoked. It usually makes me feel ill when people do, but, of course, as a journalist you always have to agree to this type of request because it is of paramount importance that your interview partner feels at ease. So the non-smoker resigns himself to a possible headache and a hefty bill at the dry cleaner’s.
Imperial Tobacco’s top man lit his first cigarette, just as he was saying that the dangers of peer pressure to smoke have been exaggerated. As he did so, all his press team reached for their cigarettes and lit up in unison. When he stubbed his cigarette out, they did so too.
As Mr Davis is quite a strong smoker this procedure occurred fairly frequently during the one-and-a-half hour interview. In fairness to him as CEO, however, I didn’t gain the impression that he was the instigator of this reflex-type behaviour or even expected it. . . .
The lesson is simple. If governments want to increase tax revenues, then raise taxes modestly over a long continuum, rather than do nothing for three years and then raise them substantially. It’s that huge volatility and surge in prices that triggers all the instability in the tobacco trade in any country.
Do you think the same will happen in Germany?
I can see history repeating itself there. The country has undergone a double shock, where a very significant tax increase was accompanied by a liberalisation of its borders. This was too much in one go and caused a huge spike in prices.
So the poor old smoker has no option, if he wants to go on smoking, as most smokers do, he has to down trade and find something else to smoke whether that be OTP (other tobacco products), private label, or buying cigarettes in the Czech Republic or Poland.
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