Japanese retailers have experienced a bit of a rush recently—of the nicotine variety.
An increase in tobacco tax added around 100 yen ($1.20) to the price of a pack of 20 cigarettes at midnight on Thursday, sucking the nation’s smokers into stores earlier in the week to stock up on cartons of their favourite fix beforehand. Convenience store managers have aggressively advertised the price hike for weeks, hoping that nicotine-addicts will buy an extra box or two from their shops.
And it seems that those determined to keep their habit up are content to shell out the cash now for a fix later. Some tobacconists have reported people splashing out up to 300,000 yen ($3,600) on dozens of cartons, with others having sold out of popular brands.
This last-gasp spending may temporarily boost the nation’s wheezing economy, with some analysts predicting a quarterly boost to consumer spending of up to 0.5 percent. But retailers are concerned that the hike will hit sales in the long-term, especially with cigarette sales accounting for more than 20 percent of revenue at some of Japan’s ubiquitous convenience stores (not to mention spin-off sales of snacks and drinks).
While Japan is the world’s fourth-largest market by volume for tobacco, smoking has lost its allure for many Japanese over the years (perhaps due to the high number of deaths from cancer). Smoking peaked here in 1966 when more than 80 percent of adult males enjoyed having a puff, but a health ministry survey late last year showed the smoking rate had fallen to 36.8 percent for men and 9.1 percent for women.
Local authorities are also making it harder to light up in a country that was once a smokers’ paradise. Many city and ward governments have banned smoking in public buildings and restrict outdoor smoking to designated booths. And murmurings abound of city and prefecture assemblies mulling smoking bans in restaurants and bars, although concrete legislation has yet to be passed.
In a recent Johnson & Johnson survey, 60 percent of smokers said they would give up because of the price increase, but this figure should be taken with a grain of salt given that smokers (this writer included) are notorious for constantly putting off their final drag.
While the effect of the tax hike (in both health and revenue terms) will take a while to manifest, it will clearly lead to lower smoking levels. Yet with cigarettes in Japan (around $5 a pack) still much cheaper than in other advanced nations (a pack of 20 in Britain costs nearly $10), the government should have considerable scope for future increases.
Ministers, though, are now less likely to make such decisions in smoke-filled rooms.