Friday 20 October 2017

'Big Tobacco' earns €104m in profits from sales here

Profits for 'Big Tobacco' have been revealed
Profits for 'Big Tobacco' have been revealed
Sarah McCabe

Sarah McCabe

JUST how much tobacco companies earn in Ireland has long been shrouded in mystery, hidden in annual accounts that refuse to go into specifics.

But now the value of the Irish market to Big Tobacco has been revealed for the first time – and it is a hefty number.

A new independent study says the country's three largest tobacco suppliers made €227m in 2011 sales alone, and profits of €104m.

What's more, they enjoyed profit margins of up to 55pc after excise duties – around three times more as those achieved by food and drink manufacturers.

Dr Robert Branston of the University of Bath, who led the study, said Ireland is one of the easiest markets in Europe for cigarette companies to turn a profit.

While 79pc of the cost of a pack of cigarettes goes to the Government in taxes, virtually all of the rest is profit for manufacturers – because cigarettes cost so little to make.

According to the research, dominant player Japan Tobacco International, which makes Benson & Hedges and Silk Cut, sold €112m worth of tobacco to Irish consumers in 2011.

Imperial, which makes the John Player brand, made €80m and BAT, formerly PJ Carroll and Co, made about €35m. It is difficult for new competitors to enter the Irish market because of strict controls on tobacco advertising.

And Dr Branston pointed out that while the State earned €1.42bn in taxes on tobacco during the year, this amount still fell far short of the €2bn cost of caring for smoking-related diseases.

MARGINS

"Tobacco multinationals can continue to charge premium prices and make excessive profits because their products are very cheap to make, are highly addictive and competition in such a highly regulated market is so limited," said Dr Branston.

"This extreme profitability creates the incentive and ability for tobacco companies to fight tobacco control measures to the detriment of public health."

The Irish Cancer Society and the Irish Heart Foundation, which commissioned the study, said the Department of Health is permitting these huge profit margins through ineffective tax policies.

They called on the Government to cap tobacco companies' profits at "normal" levels by limiting the wholesale price they can charge for cigarettes.

Any reductions to cigarette prices for end users as a result of this cap, they said, should be compensated by higher taxes.

Irish Independent

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