Cigarette Prices - One
Year Afler The Raise
On e year ago durin g August and Sep-
tember, and later, ciga rette operators wer e
co nfronted with a gene ral pro bl em of
adj ustin g pri ces, and also machines me-
chanically, to conform to a n in crease of
eight cents per ca rton on cigarettes by
th e manufa cture rs_
There were ma tters of price poli cy for
operators to decide, as well as to adjust
many machines mech a nically. Th e re were
many situati ons in whi ch operators, by
absorbin g pa rt of th e in creased cost, could
still sell at 20 ce nts per pa ck whil e stores
were advan cin g to 21 or 22 ce nts retail.
Oth er operators were also in crea in g the
price by as much as two or three cents
a nd thus in crease th eir margin , ra th er
th an abso rb part of th e in creased price
a nd till sell at 20 cents.
Many operator reported th at the move
to boost ma rgins gave them a com fortable
return for th e first tim e in th eir operatin g
ex perience, because ciga rettes had always
been regarded as a low margin produ ct.
Th e question of pu blic rela ti on wa
also involved, and ma ny operators sa id they
wo uld sti ck to 20 cents ra ther th a n risk
incurrin g consumer ill-will by increasin g
th e margin too much, as th ey put it. This
point was widely di scussed in operating
circles and in trade mee ting .
State taxes on cigarettes entered into
the situ ation also, and in a number of states
ma de it necessa ry for opera tor to set their
machin es at 25 cents a nd th en penny the
packs to return change. Ma nufacturers
of machin es went in to action a t on ce to
help opera tors adjust th eir machin es to
the new pri ce itu a tion . Th ere were moves
to' put 25-ce nt mechani sms on th e market
a nd to offe r mechani sms th at would give
penni es in ch an ge.
( See ONE YEAR, Page 36 )
Cigllrette Bevenlles DrOll In
Jllly F(!r 2nd Time In Yellr
W ASHI GTON- Th e offi cial revenu e re-
port of sales tax stam ps on cigarettes for
th e month of July a rou sed som e fears a gain
th a t total cigarette sales in 1949 m ay show
na tion al consumpti on as levelin g ofT. Cigar-
ette stamp sales for July were down a
littl e more than 6 per cent from th e July
1948 mark.
Cigarette revenu es also declin ed last
Apri l, compared with April 1948, hence
two month s in th e year have now dropped
below last year's score. Th e drop in July
a lso redu ced the total gain for th e first
seven months of the yea r to less than on e
per cent.
T he cigarette trade explains that sales
of revenue stam ps for any one month does
not always show th e actu al sales to con-
um ers, th a t wholesalers and retail ers m ay
bu y heavy in on e month a nd redu ce pur-
chases th e foll owin g month. Manufacturers
also Ru ctu ate in the ir purchases of stamps.
But the fact th at two month s in th e first
seven h ave shown declin es will cau se more
anxiolls watchin g of future sales trends.
Th e Agri culture Dept. issued its re port
on the tobacco trade situation a t about
th e same time of the rcvenu e report for
Jul y. The AD report gives data f or th e
fi cal year endin g l ast Jun e 30 a nd thi s
12-month period shows ciga rette output as
about 3 per cent a bove th e previou s fi scal
yea r. Experts h ave predi cted that cigarette
sales for 1949 will r un about 3 pe r ce nt
a bove 1948.
Th e AD r eport sta ted: "Cigarette pro-
du ction, which has i ncreased steadil y for
several years, is begi nnin g to level off."
Now th at 40 states al so tax cigarettes,
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Set for 20c: Operation
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OCTOBER, 1949
th e sta te tax r eports will be watched more
closely for inform ation on what sta tes or
regions are showing the in crea e, or de-
crease in sales. Some of th e states issue
monthly reports and others do not even
ma ke an annual breakdown of r evenu es
from cigarettes. Th e Florida report for July
indi cated a declin e in cigarette sale as
compared with July 1948, but this may be
due to an off-season in tourist trade.
Ohio cigarette revenu es declined in July,
althou gh the previou s month h ad shown
gains ove r June 1948.
ebra ka re ported
a declin e fo r July, below th e previou s
month and also th e same month in 1948.
Ma sachusetts had r epor ted a declin e in
May and this state will be watch ed more
closely after hikin g it cigarette tax on e
cent recently.
Currently, the cigarette trade is inte rested
in tobacco markets a nd th e inRu ence to-
bacco costs may have on cigarette pri ces.
Th e Georgia-Florida Ru e-cured tobacco belt
marketed its n ew crop some weeks ago, a nd
\vas closely watched a th e first indi cation
of pri ce trends. Official re port says that
price level on thi s crop drop ped about 10
per cent as compared with last year, but
sin ce pri ces are still very hi gh as com-
pared with prewar p ri ce, th e pri ce of ciga-
rette will not be affected.
Earli er reports promised a bum per cro p
of burley, wi th lower p ri ces, but more
recent reports have sugge ted th a t th e cro p
may fall below 1948, also that a lot of
the new crop may be poor i n quality. Th e
burley c rop m a rk e t s tarts e arl y i n
December.
Operators of cigarette vendors have been
affected in th e past umm er month s more
by employm ent Auctuation s than hy any na-
tion al trends in cigarette consumption. Som e
cities have had serious unemployment prob-
lems, and in these cigare tte vendor have
~ hown a downward trend in sales.
Since th e federal governm ent is now care-
full y checkin g on sta tes and cities th a t may
h ave in creases in unemploym ent, it may be
possible to compare th ese with re ports on
cigarette sales-in those states that issue
monthly re ports on cig. revenu es.
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