Cigarette supply OK, firm assures

SPECULATION： Taiwan Tobacco said it is limiting sales of its top product in light of concerns over product hoarding ahead of an expected tax increase

By Jessie Ho  /  STAFF REPORTER

Fri, Mar 18, 2005 - Page 10

Taiwan Tobacco & Liquor Corp (台灣菸酒公司) yesterday assured consumers that they would keep sufficient supplies of cigarettes amid speculation that some retailers have been hoarding tobacco products after the government proposed increasing a health tax levied on cigarettes.

But in a bid to ward off hoarding by retailers, Taiwan Tobacco decided yesterday to set a sales quota for its most popular brand, Long Life cigarettes, chairman Morgan Hwang (黃營杉) said at a press conference.

The Cabinet earlier this month passed a proposal by the Department of Health to raise the so-called "health tax" on cigarettes from NT$5 to NT$10 per pack. The proposal is now awaiting review by the legislature before implementation.

Hwang said that the alleged hoarding by retailers also occurred in August, September and October of last year, amid speculation of higher retail prices for cigarettes if the health tax was levied.

To meet the rising demand, Taiwan Tobacco began increasing cigarette production after the Lunar New Year holiday and this month doubled production levels from a year earlier, Hwang said.

Additionally, the company has also increased supply by 15 percent to traditional retailers and 30 percent to convenience stores and supermarkets, he said.

"If consumers cannot buy cigarettes at traditional retailers, they can shop at the 8,000 convenience stores [around the country] or Taiwan Tobacco's outlets," Hwang said.

The company currently has more than 100 outlets across the nation.

Consumers can only buy five packs of Long Life cigarettes per person per purchase at these outlets, Taiwan Tobacco said in a statement yesterday.

But the company is apparently worried about the hoarding situation as there's no law governing such behavior by retailers.

"There's nothing we can do about it ... but use moral persuasion against those retailers," Hwang said.

Therefore, he said the company hopes the legislature can soon review and decide whether to pass the health tax proposal.

Asked whether Taiwan Tobacco will adjust its cigarette prices, Hwang said there will be no change in prices before the tax proposal is passed by the legislature.

But retailers may adjust retail prices to reflect the possible cost increase, he added.

There are an estimated 4.89 million smokers in Taiwan, according to Department of Health statistics.