John Player Navy Cut: A Tactic to Evade Price Hikes?

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Back ground

Ceylon Tobacco Company PLC (CTC) introduced a cigarette shorter in length to the market – John Player Navy Cut - on 02nd October 2017 (Image 1).[1][2][3][4] John Player Navy Cut is a cigarette brand originally owned by the tobacco company John Player & Sons (commonly known as Player’s), a British tobacco company currently owned by the Imperial Tobacco. It is reported that Player’s retained the ownership of the ‘Navy Cut’ brand even though it is now sold by the Imperial Tobacco in the global market.[5][6][7]

Image 1: The letter distributed by the CTC among the vendors to introduce the new cigarette “John Player Navy Cut”

The marketing tactics detailed below were observed as the John Player Navy Cut cigarette was launched.

A “Gold Leaf” for a Cheaper Price

John Player Gold Leaf (JPGL), commonly known as ‘Gold Leaf’ amongst Sri Lankans, is a brand manufactured by British American Tobacco (BAT), the parent company of Ceylon Tobacco Company PLC (CTC). It is reportedly the most sold cigarette brand in Sri Lanka. [8]

During the 2016 budget proposals, the government increased the price of cigarettes by increasing the taxes levied upon them. The price of a JPGL increased from LKR 32 to LKR 55 (171.88%) because of the tax revision.[9][10][11][12][13]

The price of the cigarette in Sri Lanka depends on the length of the cigarette stick, a proxy indicator of volume of tobacco it contains.[14] Being shorter in length enabled the JPGL Navy Cut to be cheaper and more affordable at a price of LKR 40 compared to LKR 55 of a JPGL cigarette, 27.3%. Image 2 is a leaflet distributed among the cigarette retailers by the CTC on the launch of the new cigarette. The slogan they used is “A Gold Leaf for a LKR 40” in both local languages.

Image 2: The leaflet distributed among the cigarette retaillers stating that the price of a cigarette is LKR 40

Navy Cut’s shorter length also saved it from a price hike during the excise tax revisions in August 2018. The prices of cigarettes exceeding 72mm increased by Rs 5.00 per stick when the excise tax was increased by LKR 3.80. However, the price of the Navy Cut remained unchanged as it did not exceed the 72mm length prescribed by the gazette.[15][16][17][18][19]

Onsite Promotion

Sri Lanka has a comprehensive ban on tobacco advertisement and promotion prohibiting direct and indirect promotion of cigarettes. However, there were two posters (Images 3 and 4) promoting John Player Navy Cut displayed in the cigarette retail shops and other public places.

  • Poster 1 – Image 3 shows a poster announcing “Coming soon – for a cheaper price” in Sinhala language. The poster contains the logo of John Player Navy Cut – the sail boat.
  • Poster 2 – Image 4 shows a poster seen after the cigarette price increase in 2018 August in and around cigarette retailing shops. The poster, with the unique dark red colour of John Player brands as the background, just states “40” and “21+” printed in gold. It arguably indicates the price – LKR 40 and that only 21 years and older can buy it according to the age limit in Sri Lanka to buy cigarettes.
Image3:Posters displayed in front of cigarette retail shops in 2017 stating that a new cigarette will come to the market "soon" for a lower price.
Image 4:Posters displayed in front of the cigarette retail shops in 2018

Marketing through Cigarette Retailers

The leaflet distributed amongst the retailers (images 2 and 5) included an invitation requesting their “enthusiastic corporation to popularise this product among the consumers”.

Image 5: The leaflet distributed among the cigarette retailers requesting them to popularize the Navy Cut cigarette

Experimenting a Two-Cigarette Pack

Navy Cut was one of the cigarettes in the two-cigarette pack that was seen in the local market in October 2018. Please see the TobaccoUnmasked page Violation of Cigarette Pack Regulations for more details.

Tobacco Unmasked Resources

Notes

  1. A. Ondaatjie, Daily Mirror, Mirror Business Most profitable Asia cigarette maker faces cheap cigar flood,09 October 2017, Accessed April 2018
  2. Sunday TimesLicensing cigarette importers won’t grow CTC’s bottom line, 26 November 2017, Accessed date 30 August 2018
  3. Sunday Times Licensing cigarette importers won’t grow CTC’S bottom line 26 November 2017, Accessed April 2018
  4. A. Ondaatjie, Bloomberg Most Profitable Asia Cigarette Maker Faces Cheap Cigar Flood, 4 October 2017, Accessed April 2018
  5. Wikipedia. John Player & Sons, 21 October 2018, accessed November 2018
  6. Naval Marine Archive. “Navy Cut” Cigarettes and HERO, Canadian Collection, 31 March 2012, accessed November 2018
  7. Wikipedia. Player’s Navy Cut, 24 June 2018, accessed November 2018
  8. Ceylon Tobacco Company PLC. Annual Report 2017, 2018, accessed August 2018
  9. A. perera, Daily FT. Government to lose Rs. 90 b in Excise revenue due to disparate taxes, 21 March 2017, accessed August 2018
  10. Daily Mirror. Cigarette price to increase up to Rs. 55, 23 October 2016, accessed March 2017
  11. Colombo Page. Sri Lanka's Ceylon Tobacco Company Profit After Tax Rs. 12.56 billion in 2016, 28 February 2017, accessed March 2017
  12. B Sirimanna. Cigarette sales drop cuts tobacco tax revenue by half, The Sunday Times, 04 December 2016, accessed March 2017
  13. Mirror Business, The Sunday TimesCeylon Tobacco Company PLC says excise tax drop, 05 March 2017, accessed March 2017
  14. R. Karunanayake, Ministry of Finance Notifications, Excise (Special Provisions) Act, No. 13 of 1989, 03 October 2016, Accessed October 2018
  15. Sunday Times Cigarette prices up by Rs 5, 01 August 2018, Accessed date 30 August 2018
  16. Sirasa News First Excise tax imposed on cigarettes increased, 01 August 2018, Accessed date 30 August 2018
  17. Daily News Excise duty increase on cigarettes, 01 August 2018, Accessed date 30 August 2018
  18. Daily Mirror Cigarette prices increased, 01 August 2018, Accessed date 30 August 2018
  19. M. Samaraweera, Ministry of Finance The Gazette of the Democratic Socialist Republic of Sri Lanka31 July 2018, Accessed on October 2018