Tax cease-fire in 1990; cigarette declines level off. (Tobacco Products - United Kingdom.)

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As we enter 1991, the U.K. cigarette market, which had been in decline for a number of years, is showing signs of levelling out. The Chancellor of the Exchequer left the tax on tobacco alone in 1987, and again in 1989. These two pauses gave the manufacturers time in which to take a deep breath.

Nonetheless, the amount of tax on a packet of cigarettes has remained around 74% of the retail prices for the past 10 years. The exchequer draws approximately L 6,500 minion out U.K. smokers in a market worth over L7,500 million for the consumption of about 93 billion cigarettes a year.

The taxes on cigarettes are made up of three elements: a specific duty, an ad valorem, and a value-added (VAT) tax. Ad valorem is on the retail price (including VAT), and VAT is a percentage on top of the gross retail price, therefore the state revenues are always boosted when manufacturers raise prices-no matter how small.

Tax on cigarettes has gone up faster and higher than on any other products since 1979. On liquor, it went up by 80% (early 1990 figures), on petrol (gas) by 190%, and on cigarettes by 225%. In anticipation of the 1991 bud , the trade has started another campaign to keep taxation down under the "Give Us a Break" slogan.

Cigarette prices run up to about ;$l.80 per pack (over $3.40) and the U.K. is one of the highest taxed in the EEC. (Only Ireland and Denmark are more expensive.)

Amongst the manufacturers,

Gallaher has undoubtedly taken the lead with about 40% of the market. The company has heavily supported its top brand BENSON & HEDGES FILTERS, maintaining the brand's 19% market share. Similar support has been given to SILK CUT which is now the leading brand in the lowtar sector and comes in standard, king size, and ultra-king size.

Gallaher's BERKELEY SUPERKINGS have made great strides into the growing "extra long" market. In 1980, more than three quarters of cigarettes sold were king size. In 1990, that sector dropped to two thirds with extra-length (superking or 100mm), accounting for more than a quarter of sales. BERKELEY'S …