Exposing industry-driven retail incentive programs that undermine tobacco tax policies

Abstract

Background and challenges to implementation As of 2008, Canadian cigarette manufacturers established retailer incentive programs. These programs were largely unknown to the public and, despite numerous complaints from independent stores, retailer associations remained silent on this issue. In accordance with recommendations of the FCTC, the Quebec Coalition for Tobacco Control (CQCT) sought to ban them. Intervention or response The CQCT's first and most important step was to build a dialogue with a small number of retailers. Thanks to their testimony and the corporate documents they provided, the CQCT was able to determine how retail incentive programs undermined Quebec's tobacco taxation and promotion policies. Typically, programs force retailers to respect various pricing conditions, including price ceilings on already low priced cigarette brands, and meet sale volume targets. In exchange, retailers obtain substantial rebates on the wholesale price of these or other brands. In addition to putting pressure on retailers to sell more products than they would otherwise, these programs artificially lower the market price of various cigarette brands. Results and lessons learnt Following the CQCT efforts exposing to the media and to politicians the inner workings of such programs, the Quebec government decided to act. Since November 26 th 2016, the province formally prohibits manufacturers "from offering rebates, gratuities or any other form of benefit related to the sale or the retail price of tobacco products to operators of retail outlets, including their employees". Conclusions and key recommendations Retail incentive programs are complex and the tobacco industry tries to keep them secret. Health advocates, researchers and officials need to better understand how they work — especially the way they undermine tobacco tax policies — in order to ultimately ban them. A ban on industry retail programs will help protect vulnerable price-sensitive populations (namely youth and the economically disadvantaged) from industry manipulations that artificially lower cigarette market prices and drive retailers to push sales.

Keywords

• WCTOH