Imperial to roll with VAT blow

Imperial Tobacco has said it will effectively absorb the VAT rise scheduled to come in from January 4 on price-marked packs of its products.

The company has just added Lambert & Butler King Size at £5.85 for 20 and £2.99 for 10 to its price-marked packs range, and has released price-marked 12.5g pouches for Golden Virginia Green rolling tobacco at £3.32, 25g at £6.47 and 50g at £12.78.

Imperial said the cost price of its price-marked packs would be adjusted from December 13 to ensure that trade margins are maintained following the VAT increase to 20%.

“The last time VAT was increased, from 15% to 17.5%, some retailers were uncomfortable about stocking price-marked tobacco brands,“ said Mike Laney, Imperial’s head of distributive channel. “Given that price-marked packs can constitute a maximum price recommendation, they feared trade margin would be eroded.

“Imperial will try to ensure no trade margins are adversely affected and that consumers can continue to benefit from lower prices associated with those recommended on price-marked packs.

“In fact, retailers will be able to temporarily improve their price-marked pack margins in the run-up to the VAT change.”?Plain packs for all products remain in place for retailers who want to determine their own resale prices.