Smokers hoard cigarettes ahead of price hike
By Jung Min-ho
A tobacco rack in an E-mart outlet in southern Seoul is nearly empty, Friday, as customers quickly hoard cigarettes in response to next year’s 2000 won price hike. / Korea Times photo by Kim Jae-heun
Despite government warnings against hoarding cigarettes, large numbers of smokers across Korea are stocking up on cigarettes ahead of a major price hike next year.
The government has warned of heavy fines of up to 50 million won ($48,000) for those who hoard cigarettes, following its decision to raise tobacco prices in 2015 by 2,000 won per pack.
Yet that did not prevent Kim, a 25-year-old job-seeker, from buying three cartons of cigarettes at once when he heard the news.
“It will save me money in the long run,” he told The Korea Times. “I would buy more if I could afford it. I will continue to stock up on them before it gets more expensive.”
He is just one of thousands of smokers stockpiling cigarettes. And many owners of convenience stores and supermarkets have seen a big spike in cigarette sales since the price hike announcement on Sept. 11.
“Almost half of my revenue these days comes from selling cigarettes,” an owner of a small convenience store in Ansan, Gyeonggi Province, said. “Cigarettes sell out quickly. The same customers often come every few days to buy a couple of cartons of cigarettes.”
Tobacco sales began increasing even before the official announcement: the nation’s three major convenience store chains ― CU, 7-Eleven and GS25 ― said their cigarette sales on Sept. 10, a day before the announcement, rose more than 30 percent compared with the daily average of the previous week.
Such sales increases led the government to come up with the penalty for stashing cigarettes.
The measure, however, seems to have a limited impact since it does not target consumers but tobacco manufactures, importers and retailers who stash cigarette reserves in excessive quantities.
For those who want to hoard cigarettes, it is not difficult to do, as the penalty was not widely promoted, especially towards small and mid-sized stores.
An owner of a supermarket in southern Seoul said he sold four cartons of cigarettes to one customer a couple of days ago. And he had never known about the penalty.
E-mart, the nation’s largest retailer, put up a notice to inform customers that it will restrict tobacco sales to two cartons per person a day. But despite the notice, many brands of cigarettes were out of stock at the discount store chain’s Yangjae outlet Friday.
“Apart from the government policy, our tobacco stocks are depleting quickly and we are not receiving enough supplies from tobacco companies,” a cashier at the southern Seoul outlet said on the condition of anonymity.
An owner of a convenience store near Seoul City Hall also did not know about the new rules. He said he would sell as many cigarettes as the customers wanted if he still had stock available.
The Ministry of Strategy and Finance said that it will cooperate with other relevant authorities, including the National Tax Service and the Fair Trade Commission if necessary, to stabilize the tobacco market.
Yet some people are skeptical if the government can actually limit cigarette stashing.
“Rumors are that big retailers and convenience chains are also hoarding cigarettes, since they do not have an expiration date,” said a convenience store owner, who refused to be named.