In recent years tobacco manufacturers have introduced larger pack sizes, offering considerable cost benefits to the consumer. Up until 1976 almost all Australian brands were available only in the standard packs of 20; now cigarettes may be purchased in packs containing between 20 and 50 cigarettes. Cigarettes in larger pack sizes are generally smaller and lighter than those sold in smaller packs.
The first 25s were launched by Rothmans in late 1976, with Winfield 25s, an extension of their 20s configuration. Winfield 20s were first launched in 1972, featuring actor and comedian Paul Hogan. The brand had achieved moderate success, capturing around 9% of the market, but the move to 25s catapulted Winfield to market leader, displacing Benson & Hedges (Wills) and Marlboro (Philip Morris). Launched following the television advertising ban, Winfield 25s continued to use Hogan in cinema, billboard and print advertising(77) until Hogan's association with the brand was halted (see also Chapter 15, Section 3).
The new 25s were in the same price bracket as Marlboro and Benson & Hedges 20s. In 1978 Winfield had gained 20% of the total market share; and 25% by 1980.(78) Winfield 25s have continued to dominate the market, retaining market leadership in 1995 (Tables 14.4 and 14.5).
Other companies rapidly launched larger packs, and Philip Morris, whose market share had been most adversely affected by the rise of Winfield, created the next marketing phenomenon by introducing Peter Jackson 30s in late 1983, at a price competitive with 25s. Although quickly copied by the other companies, Peter Jackson become the biggest selling 30s in the market(79) and was the second most popular brand in the market place for several years until overtaken by Longbeach 40s (see Table 14.4 above).
Packs of 35 were introduced by Rothmans with 'Special Milds' in April 1987, priced to compete with packs of 30s.(80) One year later, Rothmans again took the market initiative, introducing Brandon Slims 40s in October 1988, apparently as part of a strategy to reduce its reliance on Winfield 25s and maintain market share.(80) Philip Morris introduced Twins and Longbeach, both in configurations of 40.(6) Rothmans introduced Holiday 50s, the first 50-pack, in October 1990, and claimed immediate success, stating that it grew at the expense of its competitors' 35s and 40s.(17) Although Wills had declared that it had no intention of launching ever larger pack sizes,(6) competition forced their hand and in 1991 Wills entered the 50s market with Horizon, which it claimed contained '50 truly full-size cigarettes'.(81) Horizon is now the company's best, and the nation's fourth ranking seller(5) and has lifted Wills' sales figures and market share commensurately.(7) In a direct attempt to attract smokers of Philip Morris' Peter Jackson 30s, Wills launched Horizon 30s in July 1994, undercutting the pack price of Peter Jackson by 52 cents.(9)
As more brands have been introduced in larger pack sizes, packs of 20s have become less common. In 1982 64% of configurations available in Australia were 20s (including imports)(72); by August 1994 this had declined to 32%,(71) and around half of these were imported brands.
Successive launches of larger pack sizes have competed directly on price with the smaller pack sizes. To date, the pack size innovator has tended to lead the field in that particular segment, and afraid of falling behind in the price cutting war, other companies have fielded brands in new package configurations. According to the Prices Surveillance Authority (PSA),(10) at least one Australian manufacturer has the capacity to package cigarettes in packs of 60, although they do not intend to do so, at least at present. The PSA observes that the apparent purpose of having the machinery is to deter other manufacturers from launching a 60s brand, by promising rapid retaliation.
Although increasing the number of cigarettes to the pack may benefit the industry, by enabling savings on packing and other production costs,(82) and particularly through reductions in tobacco usage and hence federal excise paid(83) (see Chapter 7, Section 1 for further discussion), profit margins are lower on the larger pack sizes, and the companies must make a correspondingly high volume of sales.(80) Companies must also beware that their low margin packs do not cannibalise their other, more profitable brands,(84) although in some cases the cheaper packs may serve to protect the premium packs, by allowing the manufacturer to compete at the value end of the market without having to discount or otherwise compromise the image of their more expensive brands.(75) See also Section 14.13 below.
In 1985 and early 1986 packets of 15 were introduced to the market by Philip Morris. Alpine and Peter Jackson 15s were priced at a little over a dollar a pack, around a dollar less in cost than other, larger packets of cigarettes. Philip Morris justified the new configuration on the grounds that they suited the consumption patterns of the average smoker, and were therefore more convenient, reducing the cost outlaid per pack.(85)
A South Australian survey conducted soon after the packs' introduction showed that the smaller packets were especially popular among young people,(86) and as a result of pressure from the health lobby small packs have been banned from sale in South Australia, Victoria, Western Australia and the ACT, and are no longer manufactured in Australia.(71) There are some exemptions for individual small importers.
In New Zealand, Rothmans Holdings has recently extended its major brands into packs of 10.(25)
Table 14.7 shows that packs of 25 have been the most popular in the market place for over a decade. Packs containing fewer than 25 seem to be losing popularity, while packs containing 40 or more cigarettes are growing in popularity.(87)
Larger packs are more commonly purchased by those in lower blue collar occupations and with lower attained education levels. Purchasers of the larger sized packs of cigarettes show a higher daily consumption(88) (see Chapter 2, Tables 2.9 and 2.10).
In 1987, packs of 25s were most popular among schoolchildren who smoked, followed by 30s, then 15s(89) (Table 14.8). At the time of that study, few brands were available in 35s and there were no larger pack sizes on the market. In 1993, 25s were still the most popular pack size, followed by 30s, with the larger sizes (35+) gaining a greater following among the younger smokers.
The trend in a number of overseas markets has been to respond to tight marketing conditions by introducing low price, unbranded 'generics'. At one stage generics were planned for Australia, but were never released, probably because of the already highly competitive prices offered by branded products.(90)
Generic packaging has been proposed by health professionals as a means of undermining the attractive imagery associated with tobacco packaging. The importance of packaging as advertising is discussed in Chapter 15, Section 8.
