Supply and Demand Curve in Tobacco Industry

2004 Words May 15th, 2013 9 Pages
Economics Report and Demand & Supply curve
Of cigarettes in Australia
Introduction:
Recently, there has been a new trend in the tobacco industry in Australian society due to the increased prices of cigarettes, mainly for the reason that “with more than 3.1 million people still smoking today, tobacco still being the leading cause of death by a wide margin… “ (Scollo & Winstanley, p.xiii, 2008). Therefore, this report will illustrate the market structure of Australia tobacco industry, and then make analysis about the price chances on the demand and supplies for cigarettes. The third and the fourth part of the report are about the impacts of this change and some government policies for the tobacco industry, respectively.
The
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BATA’s major brands in Australia are Dunhill, Winfield and Benson & Hedges. Its success is due to higher margins, reductions in overheads and improved supply chain efficiencies, and strong performances by its key brands, Winfield, Dunhill, Benson & Hedges and Holiday. (Scollo & Winstanley, 2008, p.12)
Philip Morris (Australia) Ltd (PMA) is the Australian subsidiary of Philip Morris International (PMI), accounts for approximately 34% of the national market. Its locally manufactured cigarettes are Alpine, Longbeach, Marlboro and Peter Jackson.
Imperial Tobacco Australia Ltd (ITA) is the smallest and most recently formed of the tobacco companies in Australia. ITA’s overall market share in Australia is about 18% with the major brands: Brandon, Escort, Horizon, John Player Premium and Peter Stuyvesant.
However, although the products in this industry are very similar as they are cigarettes, the companies just differentiate their products by creating different brands with different packaging and names. The price competition does not significantly exist in the industry as these companies are price makers rather than price takers. In addition, the entry into the industry is quite difficult because of three big companies with high competition, Government