The price of individual cigarettes varies greatly depending on the type of tobacco tax increase

Widespread in low- and middle-income countries, sales of loose and single cigarettes behave differently following increases in tobacco taxes. One study finds that massive increases are more effective at influencing the price of single cigarettes than incremental increases.

The sale of loose and single cigarettes is widespread in many low- and middle-income countries and exists more or less marginally in high-income countries. This market, which is essentially informal, is also poorly documented, both in terms of its size, characteristics and dynamics and the levers that could reduce it. A team of British and South African researchers therefore looked at the driving forces behind this market, focusing on the question of price.

A large and relatively unknown market

The study produced by this team is based on data from the African Cigarettes Prices Project from the Economics of Excisable Products Research (REEP) and on the ITC Policy Evaluation Project for all low- and middle-income countries, excluding Malaysia and Vietnam.[1].

Analysis of these data shows that the single cigarette market is significant in most low- and middle-income countries, particularly in African countries. It can account for 34% of total cigarettes sold in Thailand and up to 80% of those sold in Zambia or Kenya. Single cigarettes are more often sold informally by street vendors, and to a lesser extent in established shops. Not all brands are sold as single cigarettes, but one-third of available brands are sold in this way in African countries, with the structure of the market varying from country to country. Single cigarette consumers are poorer and younger than those who buy their cigarettes in packs.

Uneven impact of tobacco tax increases

In terms of price, cigarettes sold individually are generally more expensive than those sold in packs, the difference between these products being very variable and dependent on multiple factors. This difference can thus be 5.1 % in Tanzania against 54.3 % in Namibia. A "denomination effect" consisting of rounding the price of cigarettes sold individually can also play a role, fluctuating according to the currency of each country. Finally, the level of inflation can affect cigarettes sold individually or in packs differently.

It has already been shown that tax increases on tobacco products of at least 10 % are the most effective in reducing smoking prevalence. The authors note here that, in particular because of the "denomination effect" and rounding affecting single cigarettes, progressive tax increases are less systematically passed on to single sales. These authors therefore advocate significant tax increases, which they observe are better passed on to the selling price of single cigarettes.

However, the dynamics of the shift from single purchases to pack purchases of cigarettes and its consequences on smokers' consumption levels are still poorly understood. More data and research on retail cigarette sales would be needed to better understand this market and reduce overall tobacco consumption.

Keywords: single unit sale, bulk sale, low- and middle-income countries, taxation.

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[1] Gallien M, Occhiali G, Ross H, An overlooked market: loose cigarettes, informal vendors and their implications for tobacco taxation, Tobacco Control, Published Online First: 23 May 2023. doi: 10.1136/tc-2023-057965