In the UK, for an average packet of 20 cigarettes, you would pay around £5.66 per pack. The tax element of this is £4.33, which is a 77% tax burden
If you had any doubt at all, in the value of a brand, you only need to look at two rival brands and the costs they can get away with charging side by side.
Marlborough Lights sell for around £6 per pack, which gives them a gap after tax of £1.67 or 27.8% and this is the one true ‘Lovemark’ brand within the sector – ie people seem to love it beyond all reason as they will pay a massive premium to be seen with this pack about their person.
Compare that to John Player Special Blue, which as a young boy I started smoking behind the bike sheds, which now retails for around £4.50. Unless they are paying a very different level of tax on this, they have only got 17p worth of margin left with which to make, distribute and share profit with the retailer.
Hardly a moneyspinner, is it?
Who in their right mind wanting to look uber cool would consider being seen with anything else but the Marlborough’s? – Despite the fact they are an almost identical product and 33% more expensive.
During the 70’s JPS was a heavily promoted brand, but was left to die in peace through lack of investment in the core of the brand. It now it seems to have snuck quietly back onto the market.
Surviving on that tiny margin would seem to be impossible, but it does reinforce the power of a really strong and well loved brand like Marlborough.