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British American tobacco PLC: an analysis of the group's pricing strategy across its key markets
Tobacco products are subject to substantial excise and sales taxes. In most countries these increase over time, but the rate of increase varies between countries and across different types of tobacco products. The tobacco industry is opposed to increases in tobacco taxes, changes in relative tax rat...
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| Format: | Thesis |
| Language: | English |
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School of Economics
2022
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| _version_ | 1867613253492801536 |
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| access_status_str | Open Access |
| author | Mathebula, Peter-Wallace |
| author2 | Van Walbeek, Cornelis |
| author_browse | Mathebula, Peter-Wallace Van Walbeek, Cornelis |
| author_facet | Van Walbeek, Cornelis Mathebula, Peter-Wallace |
| author_sort | Mathebula, Peter-Wallace |
| collection | Thesis |
| description | Tobacco products are subject to substantial excise and sales taxes. In most countries these increase over time, but the rate of increase varies between countries and across different types of tobacco products. The tobacco industry is opposed to increases in tobacco taxes, changes in relative tax rates for different tobacco products, and adjustments to excise structures because these adversely affect their profits. However, the tobacco industry can mitigate these shocks by means of its pricing strategies. This paper investigates how the British American Tobacco Group has reacted to excise tax increases and declining industry volumes in order to maintain profitability in its 31 key markets (i.e. key countries) over the period 2006 to 2019. The Group's most common response to the excise tax increases was to overshift the excise increases. This meant that the retail price was increased by more than the increase in the excise tax. In a scenario of decreasing sales volumes and shifting consumer preferences, it is the relatively price-inelastic demand for the Group's products and its substantial market power which often make this strategy possible and successful. However, even though this strategy is most common, the trading environment differs in each market, which meant that the Group had to sometimes apply different strategies. These strategies include undershifting the tax (especially for cheaper brands), oversupplying the market in anticipation of excise increases, timed price changes, and adjusting product attributes in response to regulatory changes. Furthermore, as traditional combustibles are coming under increased pressure, the Group is developing new product categories. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/36484 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:33:12.104Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2022 |
| publishDateRange | 2022 |
| publishDateSort | 2022 |
| publisher | School of Economics |
| publisherStr | School of Economics |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/36484 British American tobacco PLC: an analysis of the group's pricing strategy across its key markets Mathebula, Peter-Wallace Van Walbeek, Cornelis economics Tobacco products are subject to substantial excise and sales taxes. In most countries these increase over time, but the rate of increase varies between countries and across different types of tobacco products. The tobacco industry is opposed to increases in tobacco taxes, changes in relative tax rates for different tobacco products, and adjustments to excise structures because these adversely affect their profits. However, the tobacco industry can mitigate these shocks by means of its pricing strategies. This paper investigates how the British American Tobacco Group has reacted to excise tax increases and declining industry volumes in order to maintain profitability in its 31 key markets (i.e. key countries) over the period 2006 to 2019. The Group's most common response to the excise tax increases was to overshift the excise increases. This meant that the retail price was increased by more than the increase in the excise tax. In a scenario of decreasing sales volumes and shifting consumer preferences, it is the relatively price-inelastic demand for the Group's products and its substantial market power which often make this strategy possible and successful. However, even though this strategy is most common, the trading environment differs in each market, which meant that the Group had to sometimes apply different strategies. These strategies include undershifting the tax (especially for cheaper brands), oversupplying the market in anticipation of excise increases, timed price changes, and adjusting product attributes in response to regulatory changes. Furthermore, as traditional combustibles are coming under increased pressure, the Group is developing new product categories. 2022-06-21T09:13:30Z 2022-06-21T09:13:30Z 2022 2022-06-21T09:13:12Z Master Thesis Masters MCom http://hdl.handle.net/11427/36484 eng application/pdf School of Economics Faculty of Commerce |
| spellingShingle | economics Mathebula, Peter-Wallace British American tobacco PLC: an analysis of the group's pricing strategy across its key markets |
| thesis_degree_str | Master's |
| title | British American tobacco PLC: an analysis of the group's pricing strategy across its key markets |
| title_full | British American tobacco PLC: an analysis of the group's pricing strategy across its key markets |
| title_fullStr | British American tobacco PLC: an analysis of the group's pricing strategy across its key markets |
| title_full_unstemmed | British American tobacco PLC: an analysis of the group's pricing strategy across its key markets |
| title_short | British American tobacco PLC: an analysis of the group's pricing strategy across its key markets |
| title_sort | british american tobacco plc an analysis of the group s pricing strategy across its key markets |
| topic | economics |
| url | http://hdl.handle.net/11427/36484 |
| work_keys_str_mv | AT mathebulapeterwallace britishamericantobaccoplcananalysisofthegroupspricingstrategyacrossitskeymarkets |