The tax increases in tobacco products have spurred a price war between the sector's three main players.

ı (PMI) has dropped the prices on its main segment products. Due to the tax increase implemented on tobacco products, PMI, on 3 January and BAT on 4 January have had price increases for similar segment products. However, Japan Tobacco International (JTI), which has announced a lower price increase for lower and medium segment cigarettes, has caused disruption in the market’s price equilibrium. “JTI has started the price fight in the sector and so it should end it,” said a sector representative. “While a TRY 1.20 increase was expected in the main segment product, JTI has hiked its prices TRY 0.75. It was an attack planned to get the market share of other products.”
While PMI, BAT and JTI are fighting, smaller players such as Imperial Tobacco and European Tobacco are troubled due to the price struggle. “We want companies to behave with common sense,” said Hulusi Kaymaz, director general of European Tobacco, which has hiked prices up by 12.5 per
cent to 28.5 per cent. “Due to this disagreement, companies and the government will be hurt. A solution should be found immediately. We have reflected the tax increase to our products and we will continue to preserve our position,” he noted.
Philip Morris has dropped the price of a pack of Marlboros to
TRY 5.50 to 5.75 from TRY 7. BAT has lowered the price of its best sellers, Viceroy and Tekel 2001, to TRY 3.50. Japan Tobacco, which had increased the price of Winston to TRY 5 a pack, has dropped the price to TRY 4.50. Officials from the finance ministry, on standby for a new tax increase, think that companies will be obliged to increase their prices sooner or later, not being able to resist more losses. The finance ministry officials have said that in case of net revenue loss, some new measures including another tax hike may be implemented. In such a situation, the lump-sum tax collected from cigarettes would be increased. The lump-sum rate is currently TRY 2.65 while it can climb up to TRY 4.10 with a government decree. (pi)