Leslie Massey
Australia's tobacco industry has a long history, with cigarettes and tobacco products providing a significant source of revenue and jobs for the country. British American Tobacco (BAT) is a prominent player in this industry, with a presence in Australia for over 100 years and iconic brands like Winfield under its belt. However, as of 2016, no tobacco products are manufactured in Australia. This article will explore the history of cigarette manufacturing in Australia, the major players, and the impact of tobacco production on the country's economy.
| Characteristics | Values |
|---|---|
| Cigarette manufacturing in Australia | No tobacco products are manufactured in Australia as of 2016 |
| Cigarette brands in Australia | Winfield, owned by British American Tobacco |
| British American Tobacco Australia (BATA) | Employs approximately 400 people in Australia and 1,100 across Australia and the South Pacific |
| BATA market share in Australia | 40% in 2004 |
| Cigarette excise tax contribution in Australia | 2.5% of total government revenue, approx. $A12.1 billion in 2019/2020 |
| Average tax on a packet of cigarettes in Australia | Above 70% |
| Cigarette sales as a percentage of grocery sales in Australia | 15.8% |
| Tobacco plant growth in Australia | Not grown legally |
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What You'll Learn
Tobacco excise tax
Currently, there is no legal tobacco manufacturing occurring on Australian soil. However, tobacco excise tax contributed approximately 2.5% of Australia's total government revenue—approximately $12.1 billion in the 2019/2020 budget period. This revenue is generated through a 'per stick' levy on cigarettes and a weight-based levy on roll-your-own (RYO) tobacco. In addition to the excise tax, a 10% GST is applied at the time of purchase, bringing the average tax on a packet of cigarettes to over 70%, one of the highest rates in the developed world.
Excise duties are a form of indirect tax levied on certain goods produced and/or sold within a country. In the context of tobacco, excise taxes are applied to cigarettes and other tobacco products. These taxes are typically imposed in addition to the standard sales or value-added tax and are often used as a tool to reduce tobacco consumption due to their impact on the final retail price.
The Australian government has periodically increased tobacco excise taxes over the years, with notable increases of 12.5% and 25% between 2001 and 2017. These tax hikes have been accompanied by other tobacco control measures, such as the introduction of plain packaging and mass media quit-smoking campaigns. The combined effect of these interventions has been a decrease in smoking prevalence in Australia.
International agencies recognise tax increases as a cost-effective intervention to reduce tobacco use. Research supports this, showing that sufficiently large increases in tobacco taxes lead to an overall reduction in tobacco consumption. For every 1% real increase in price, high-income countries typically see a 0.4% reduction in tobacco consumption, while low- and middle-income countries experience a 0.5% reduction.
While tobacco taxes have proven effective in curbing smoking rates, it is important to acknowledge that tobacco companies employ various pricing and marketing strategies to mitigate the impact of tax increases. Lower-income populations may be more vulnerable to these industry tactics, potentially undermining the effectiveness of tobacco tax hikes within these demographic groups. Nevertheless, tobacco excise taxes remain a significant component of Australia's tax system, contributing substantially to government revenue and playing a critical role in public health initiatives aimed at reducing tobacco consumption.
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Cigarette manufacturing companies
Cigarette and tobacco product sales represent approximately 15.8% of all grocery sales in Australia, providing a significant source of revenue and jobs. British American Tobacco Australia (BAT Australia), for example, directly employs about 400 people in the country and over 1,100 across Australia and the South Pacific. The company has been in operation in Australia for over 100 years and is proud of its iconic brands and the role it plays in the Australian economy, careers, and the success of Australian retailers.
Tobacco is not grown legally in Australia, but it is grown in over 100 countries worldwide. While I couldn't find the names of many cigarette manufacturing companies operating in Australia, here is a list of companies from Lusha's database of tobacco manufacturing companies in the country:
- Cignall
- Devlins
- Free Choice Tobacconist
- Freechoice Australia
- Hypnosis to Quit Cigarettes Perth
- Inner Vape Co. Pty Ltd
- JBento
- Ozilite - Flameless Cigarette Lighter
- QSN Health
- Smoked Paprika
- The Smoke BBQ
- From the fields Pharmaceutical Pty Ltd
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Tobacco advertising
While tobacco and cigarettes provide a significant source of revenue and jobs in Australia, tobacco advertising has been banned in the country since 1 September 1976. The lead-up to the ban was marked by several key events.
In the middle of the twentieth century, the connection between cigarette smoking and lung cancer became more widely known and accepted. The influential British Medical Journal published results of a study in 1950, and in 1956 the first report of the British Doctors Study, a study of some 34,000 doctors, linked smoking to both lung cancer and coronary thrombosis. The United States Surgeon-General announced in 1964 that smoking caused lung cancer, and cigarette advertising on television was banned in the UK in 1965, with health warning labels becoming compulsory on US cigarette packets that same year.
In Australia, the Menzies government introduced a voluntary tobacco advertising code for television in 1966, which was strengthened and extended to radio in 1971. By this time, both the UK and US had banned cigarette advertising on radio and television. In 1972, the McMahon government made health warnings mandatory for radio and television tobacco advertisements. In 1973, the Whitlam government decided to phase out tobacco advertising.
In 1975, a change in government meant the Fraser ministry had to decide whether to implement or delay the total ban. The Health Minister, Ralph Hunt, submitted medical evidence to the Federal Cabinet against smoking, detailing its financial and health costs to the community. This was opposed by the Post and Telecommunications Minister, Eric Robinson, who argued that more time was needed to evaluate the issues and hear from interested parties. Despite Robinson's arguments, Cabinet decided to continue with the ban.
Today, cigarettes in Australia are sold in unbranded packets that feature graphic health warnings. Billboards, outdoor and illuminated signs advertising cigarettes are banned, and most forms of tobacco sponsorship have been phased out. However, Big Tobacco is reportedly spending millions of dollars on campaigns to get vaping legalised in Australia, which has the potential to undermine past tobacco control activities.
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Tobacco imports
Tobacco is not grown legally in Australia, although it is grown in over 100 countries worldwide. Cigarettes and tobacco products are a significant source of revenue and jobs in Australia, with tobacco excise tax contributing approximately 2.5% of the total government revenue (approximately $12.1 billion) in the 2019/2020 budget period.
British American Tobacco Australia (BAT), for example, directly employs approximately 400 people in Australia and more than 1,100 across Australia and the South Pacific. BAT has a history of more than 100 years in Australia and contributes significantly to the economy through corporate tax, direct employment, and the revenue and jobs provided to Australian retailers.
While specific information on tobacco imports to Australia is limited, it is evident that the tobacco industry, including imports, is subject to strict regulations and excise tax. The Australian Taxation Office provides an overview of how excise tax applies to those who grow, produce, deal in, move, store, or manufacture tobacco or tobacco products.
To import tobacco into Australia, one must apply for permission, suggesting that the process is carefully monitored and regulated.
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Tobacco's economic impact
Tobacco products, including cigarettes, have a significant economic impact in Australia. While tobacco is not grown legally in Australia, its industry provides a reliable source of revenue and jobs. For instance, British American Tobacco Australia (BAT), one of the top three employers in the country, directly employs approximately 400 people in Australia and over 1,100 across Australia and the South Pacific.
The tobacco industry also contributes to the Australian economy through corporate tax, excise tax, and indirect employment. In the 2019/2020 budget period, the tobacco excise tax contributed approximately 2.5% of the total government revenue, or about AU$12.1 billion. This excise tax is collected through a 'per stick' levy on cigarettes and a weight-based levy on roll-your-own (RYO) tobacco. Additionally, a 10% Goods and Services Tax (GST) is applied at the point of purchase, resulting in the tax on a packet of cigarettes often exceeding 70%—one of the highest rates in the developed world.
The sale of cigarettes and tobacco products accounts for a significant proportion of grocery sales in Australia, with tobacco products representing approximately 15.8% of total sales. This is particularly beneficial for small mixed businesses and tobacconists, as it boosts their profitability and ability to contribute to local economies.
On a global scale, tobacco farming provides a sustainable crop that thrives in poorer soils and benefits crop rotation. It offers a high income to farmers and supply chains involved, impacting the economies of over 100 countries where tobacco is legally grown.
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Frequently asked questions
No tobacco products have been manufactured in Australia since 2015, when British American Tobacco (BAT) ceased production.
Winfield is an Australian brand of cigarettes, owned by British American Tobacco. Winfield cigarettes are manufactured and imported by British American Tobacco Australia (BATA).
Cigarettes and tobacco products provide a significant source of revenue and jobs in Australia. In 2019/2020, the tobacco excise tax contributed approximately 2.5% of the total government revenue, or approximately $12.1 billion AUD.
