• Open Access

Price discounting of cigarettes in milk bars near secondary schools occurs more frequently in areas with greater socioeconomic disadvantage

Authors


Correspondence to:
Melanie Wakefield, Centre for Behavioural Research in Cancer, Cancer Council Victoria, 1 Rathdowne Street, Carlton, Victoria 3053; e-mail: melanie.wakefield@cancervic.org.au

Abstract

Objective: To examine differences in price discounting of cigarettes in milk bars located near secondary schools in metropolitan areas of Victoria, according to neighbourhood socioeconomic status (SES).

Method: Milk bars within one km of randomly selected secondary schools in Victorian metropolitan areas were audited to assess the advertised price of the most popular cigarette brands.

Results: Cigarette brands were available below the recommended retail price (RRP) at between 10% to 14% of the 62 milk bars visited. Price discounting was occurring significantly more frequently in areas of lower SES, with between 23% and 33% of milk bars in these neighbourhoods selling the leading cigarette brands at below RRP.

Conclusions: Price discounting was found to be occurring to a greater extent in milk bars near secondary schools in low SES areas compared to mid to high SES areas.

Implications: Promotional tools that make cigarettes more affordable risk undermining efforts to reduce smoking prevalence, especially in price sensitive populations of lower SES.

The affordability of cigarettes has consistently been associated with smoking prevalence and consumption.1,2 Additionally, there is reliable evidence that young people3–5 and those from more socioeconomically disadvantaged groups4,1 tend to be more sensitive to price changes than the general population, making these groups more vulnerable to promotional strategies that make tobacco more affordable. Recent North American research has found that communities with lower cigarette retail prices had comparatively greater smoking uptake among local school students.6,7

Where adolescents most frequently purchase cigarettes is a critical consideration when examining the impact of cigarette retail price on adolescent smoking. A 2005 survey of Victorian secondary school students found that 22% of students who were current smokers had purchased their last cigarette most commonly at milk bars (46% of those who bought cigarettes), followed by petrol stations (14%) and supermarkets (13%), with affordability a key reason given for brand purchased.8

To date, there has been limited research on the occurrence of price discounting, namely, increasing the affordability of cigarettes by selling them below the Recommended Retail Price (RRP). A previous examination of the extent of price discounting during the late 1990s in Australia found that supermarkets and tobacconists sold cigarette packs at approximately 9.3% and 10.9% lower than RRP respectively, while milk bars only discounted on average 2.6% of the RRP.9

Currently in Victoria, Australia, retail tobacco advertising and promotion is highly restricted, and a complete ban on the display of tobacco products at point-of-sale (POS) will be implemented in January 2011.10 As such, the promotion of tobacco through price discounting is one of the few remaining marketing strategies.

Our study aimed to assess the prevalence of price discounting of the most popular youth cigarette brands in POS tobacco displays in milk bars near Victorian metropolitan secondary schools, by comparing the advertised price with recommended retail price (RRP). Since low socioeconomic status (SES) is associated with greater adolescent smoking,11 we also examined whether price discounting occurs disproportionately in milk bars located in low SES neighbourhoods.

Methods

Sample and Procedure

Sixty-two milk bars were audited from July to December 2008. For the purposes of this study, milk bars were defined as smaller-sized outlets, typically family owned and run. Larger convenience stores (including franchises) and newsagents (outlets selling primarily newspapers and magazines) were excluded. The audit included Victorian metropolitan areas with a population of 100,000 or more (Melbourne and Geelong).12 Milk bars were selected within one km of a Victorian metropolitan secondary school, which had been randomly selected to participate in the Australian Secondary Schools Alcohol and Drug (ASSAD) survey – a triennial national Australian survey examining drug and alcohol use among secondary school students. A maximum of two milk bars were selected per school.

The audit was conducted by pairs of trained observers who travelled to the location of each school, then drove within a one km radius of the school to identify the two closest milk bars. At each milk bar, permission was sought from the storeowner/attendant to record information about the POS tobacco display, which would remain confidential. Where retailers declined to participate, field workers endeavoured to locate replacement milk bars within the one km radius. Records were also kept of the presence of supermarkets within the 500 metre radius of each school.

A total of 44 secondary schools were included in the sampling frame. Of these, eight were excluded due to either having no milk bar located within a one km radius of the school (n=6) or their only eligible milk bar refusing permission (n=2). Of the remaining 36 schools, the maximum two milk bars were audited for 26 schools. For the 10 schools where only one milk bar was audited, this was due to no other milk bars being located within a one km radius of the school (n=7) or eligible milk bars declining to participate (n=3).

Information on the availability and price of the top four cigarette brands usually smoked by Victorian secondary school students (Peter Jackson, Winfield, Longbeach, and Benson & Hedges)8 was collected at all milk bars. Field workers were also instructed to record the availability and price of other prominently displayed cigarette brands, leading to Horizon being identified as a further brand of interest. Only the price of packs of 20 cigarettes were considered, as this pack size was common across all five cigarette brands. The advertised prices for each brand were dichotomised based on whether they were being sold below RRP or above/equal to RRP by milk bars at the time of auditing.13,14 Horizon and Longbeach (‘discount’ brands) had the lowest RRP's at $8.65 and $8.85 respectively. The next expensive were Peter Jackson at $9.00 and Winfield at $9.65 (both classified as ‘mainstream’ brands). The ‘premium’ brand of Benson & Hedges had a RRP of $10.00.

Data analysis

Analysis was undertaken using Stata version 8. A measure of SES was determined according to the SEIFA Index of Relative Socioeconomic Disadvantage as described by the Australian Bureau of Statistics,15 based on the postcode location of each milk bar. This index ranks postal areas (postcodes) on a continuum of high disadvantage to low disadvantage, taking into consideration characteristics such as income, education, occupation and housing (for example) that may reduce socioeconomic conditions of the area. Using the Victorian quintile values, milk bars were categorised into the following socioeconomic groups: low SES (1st and 2nd quintiles) and mid to high SES (3rd, 4th and 5th quintiles).

Exact logistic regression analysis (for binary analysis of small sample sizes)16 was used to examine the relationship between milk bars selling popular youth brands below RRP and neighbourhood SES. Clustering milk bars according to the nearest school was not possible in this analysis, as the SES variable was constant within the school clusters. The presence of a supermarket within 500 metres of the school was entered as a covariate to examine whether the availability of cigarettes with greater discount margins at a nearby supermarket influenced the degree to which the milk bars discounted cigarette prices.

Results

In total, 62 milk bars were included in the analysis, constituting 91% of all milk bars originally approached for auditing. Thirty-five per cent of milk bars audited (n=22) were located in low SES neighbourhoods and the remaining 65% (n=40) in mid-high SES neighbourhoods. Of the 62 milk bars audited, 97% sold Peter Jackson 20s and 92% sold Winfield 20s. Longbeach 20s and Benson & Hedges 20s were slightly less common, sold by 86% and 76% of milk bars respectively. Information on Horizon 20s was recorded at 71% of milk bars.

Price promotion by neighbourhood socio–economic status

As illustrated in Table 1, between 10% and 14% of milk bars that sold packs of 20 cigarettes advertised them at below RRP. Milk bars in low SES neighbourhoods were significantly more likely to sell Peter Jackson 20s at below RRP than milk bars in mid-high SES neighbourhoods (27% cf. 0%, OR=17.9, p=0.003). Low SES milk bars were also significantly more likely than mid-high SES milk bars to sell Winfield 20s (33% cf. 3%, OR=16.6, p=0.005), and Longbeach 20s (29% cf. 3%, OR =11.8, p=0.024) below RRP. Although not statistically significant, a similar pattern of findings was also observed for Benson & Hedges 20s (23% cf. 6%, OR= 4.6, p=0.243) and Horizon 20s (28% cf. 4%, OR = 9.1, p=0.068). Presence of a nearby supermarket was unrelated to price discounting in the milk bars.

Table 1.  Price discounting of popular cigarette brands by neighbourhood SES.
BrandPriceAlla% (n)Low SES % (n)Mid-high SES % (n)OR95% CIp
  1. Note: a) Proportions are based on those milk bars who had pack sizes of 20 available for purchase for that particular brand.

Peter JacksonBelow RRP10% (6)27% (6)0% (0)17.92.4-infinity0.003
 Above/equal to RRP90% (54)73% (16)100% (38)   
WinfieldBelow RRP14% (8)33% (7)3% (1)16.61.9–810.40.005
 Above/equal to RRP86% (49)67% (14)97% (35)   
LongbeachBelow RRP13% (7)29% (6)3% (1)11.81.3–588.20.024
 Above/equal to RRP87% (46)71% (15)97% (31)   
Benson & HedgesBelow RRP11% (5)23% (3)6% (2)4.60.5–62.50.243
 Above/equal to RRP89% (42)77% (10)94% (32)   
HorizonBelow RRP14% (6)28% (5)4% (1)9.10.9–472.40.068
 Above/equal to RRP86% (38)72% (13)96% (25)   

Discussion

Our results indicate that price discounting of leading youth cigarette brands is occurring in milk bars located close to secondary schools in Victorian metropolitan areas, with popular cigarette brands available below the RRP at between 10% and 14% of milk bars visited. Furthermore, there was evidence that price discounting was occurring to a significantly greater extent in milk bars near secondary schools in low SES neighbourhoods, with between 23% and 33% of milk bars in these neighbourhoods selling the leading youth cigarette brands at below RRP. A recent US study found a greater likelihood of lower-priced cigarettes, particularly premium brands, in neighbourhoods with larger number of youths, a greater likelihood of lower-priced discount brands in school neighbourhoods and a greater likelihood of both lower-priced discount and premium brands in neighbourhoods with a higher non-white population.17

In the current study, we found evidence that brands in the premium (Benson & Hedges), mainstream (Winfield and Peter Jackson) and discount (Longbeach and Horizon) categories were available at below the RRP in milk bars located close to secondary schools; however, we did not assess to what extent this was occurring in milk bars that were not located in secondary school areas. We also found evidence of significantly greater occurrence of price discounting for brands within the mainstream (Winfield and Peter Jackson) and discount (Longbeach) categories in areas of greater socioeconomic disadvantage.

With evidence of greater price sensitivity among young people and those from socioeconomically disadvantaged groups, it is concerning that milk bars near schools are employing promotional strategies that are increasing the affordability of cigarettes, and that this strategy appears to be targeted particularly at those low SES neighbourhoods.

Research in jurisdictions with less regulation has found greater POS tobacco advertising and promotional activity at retail outlets within low SES neighbourhoods.18,19 The findings of the current study suggest that in jurisdictions such as Victoria, where POS advertising is banned, a similar targeted strategy is continuing to be employed in low SES metropolitan neighbourhoods close to secondary schools, but this time with price discounting as a primary promotional tool.

A limitation of this study is the relatively small number of sampled milk bars. Despite this, we found relatively strong effects by SES. A second limitation is that since our price discounting measure was dichotomous, we did not take into account the size of the discount. However, we were interested in the relationship between the advertised price and the RRP, which could not be assessed using a continuous measure of price. Also, we are unable to know with certainty whether our findings apply more broadly to low SES areas that do not have close proximity to secondary schools. However, it is possible that it does so, since other goods, such as food products, are available at lower prices in lower SES neighbourhoods.20,21 If this were the case for tobacco, it is a potential promotional strategy that could undermine efforts to reduce smoking prevalence among low SES groups. This is an issue of particular relevance, given the tobacco tax excise increase implemented by the Federal Government in April 2010, adopted with the assumption that this would lead to increases in tobacco price, thereby reducing smoking prevalence.

A potential strategy for preserving the public health benefit of a price increase on cigarettes would be to introduce minimum sale price legislation for cigarettes, preventing retailers from selling cigarettes below the RRP or a given fixed price. Approximately half US states have introduced minimum price cigarette laws, in order to protect small retailers from discounting strategies employed by the bigger retail chains.22 However, loopholes in this legislation have meant that tobacco companies are still able to offer retailers promotional incentives, which have the effect of lowering the legislated minimum sale price.22 If similar legislation were to be considered in Australia, it would need to ensure that discounts and incentives provided by tobacco companies to retailers could not be included in the calculation of a minimum retail price.

Although adolescent smoking has been steadily declining in recent times,23 it is important that efforts to reduce youth smoking, particularly in socioeconomically disadvantaged neighbourhoods, are not undermined by increased affordability of cigarettes.

Acknowledgements

We thank Kylie Lindorff, Policy Manager, and Indra Haslam, Legal Policy Advisor, VicHealth Centre for Tobacco Control, for their policy expertise, and Matt Spittal, Senior Research Fellow, and Anna Machlin, Research Officer, Centre for Behavioural Research in Cancer, Cancer Council Victoria, for their statistical advice and assistance.

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