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Italiano Minimum price – The EU in tune with Yesmoke
The decision comes on the eve of the license issue to Yesmoke.
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The European Commission has officially announced that it is ready to undertake legal action against Italy (as well as Austria and Ireland), for the decision to fix a minimum price for cigarettes as a measure to dissuade smokers, instead of using the instrument of taxation.
"Taxation has the same effect on prices as a mandatory minimum price, and it doesn't damage the competition on a price basis”, points out the communication.
Contrary to the "Minimum Price", a tax increase, obviously involving all brands, would increase the Statès income, and it would lower the profits of the multinational tobacco producers, as they would have to lower their prices to remain competitive.
At this point, the obvious question is: why in the world was a minimum price policy adopted to start with? Who's directly responsible for this decision? Was it pure idiocy, or is there corruption behind it? Might there be some persons in influential positions who have recently bought themselves a new luxury car, a Yacht, or new summer home??
The “Minimum Price”, or: how to arrive at a single price, the price set by Marlboros, for all cigarette brands…
The Italian minimum price policy will very likely lead to the shutdown of any company that attempts to enter the market.
The mechanism is perverse and flagrant: while Marlboro's price remains unchanged, the minimum price policy obliges other cigarette makers, who could sell their products cheaper, to raise their prices to the minimum dictated by the State. At first glance, it would seem like these minor cigarette producers would earn more.
But, in fact, this doesn't happen. Any economical cigarettes on the Italian market today, because of this law, will have to cost the same as Winstons, Pall Malls and L&Ms, and consumers, finding all brands of cigarettes sold at the same price, will naturally choose the ones that have the advantage of decades of persuasive advertising campaigns.
Philip Morris has always done all it could to neutralise the so-called economical brands using every possible means. These include, as in this case, the imposition of its concept of price increases that ends up raising the prices only of the economical cigarettes - so that they will no longer be "economical". Brilliant!!
The Alternative: "The Political Price", that is: lower cigarette prices and higher taxes - Big Tobacco in a weak position
Today Philip Morris earns with its Marlboros almost as much as the tax collector and taking advantage of all these profits is an army of mysterious backers and parasites of all species and of all political colors. But at the same time, the giant tobacco manufacturers today find themselves in a risky situation: they cannot afford to lose any of their market share because they have very high fixed costs and enormous structures.
That's why they try to neutralize the competition with every means they can find. But, sooner or later, they are going to lose; tomorrow free competition will no longer find the road blocked in Europe. To try to make people smoke less, which measure is fairer: a price increase or a tax increase? Whom would you prefer to give your money to – to foreign tobacco giants or to your own country?
Against the profit that cigarette manufacturers are raking in today, totally unjustifiable and unthinkable in any other trade sector, Yesmoke is going to take a strategic and demonstrative stand: it is going to introduce onto the cigarette market a product of top quality practically at production cost.It will be a so-called “Political Price”; a price that will create an unfillable gap between Yesmoke and its competitors, a price that Philip Morris could never match.
At this point, the Italian State will have to bring cigarette prices to a level judged useful to dissuade tobacco consumption, and it will do this by raising taxes on all cigarettes. So, finally the prices of all the brands will rise, and Big Tobacco, to remain competitive and to not lose market share, will be forced to either raise its prices or lower its profits …. A tough situation!
Going all the way: The "Minimum Excise" - Yesmoke has already set in motion its attorneys
Besides the Minimum Price, there is another big barrier to free competition; it is the so-called "Minimum Excise" ("Accisa Minima") , a complicated system that physically penalises those who sell at cheaper price; combined with the Minimum Price, it has allowed Philip Morris to make profits in Italy on its Marlboros that reach up to 500%.
We should remember that the current value of the “Minimum Excise” was determined by the “Minimum Price”, if the minimum price drops, obviously the minimum excise will have to be re-examined. Yesmoke, as always, is preparing to go into battle also on this issue, and it has already called up its attorneys. The possibilities for success appear to be about 100%!
Waiting
Today at Yesmoke, everything is ready and just waiting to go. We are expecting our manufacturing license any day now, then wèll enter the market. It's only a matter of technical time: the plant has passed all its tests and inspections and so has the Yesmoke brand.
The announcement of European Commission is good news, this step clears the way for Yesmoke and its "Anti - Big Tobacco" Project. The EC decision might just mark the beginning of the end in Europe of the so-called “Cartel of Cigarette Producers”.
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