Tobacco dominates dairy revenue

A lot is being said about violent robberies of dairies. Tobacco is often the target of thieves, and suggestions have been made that dairies should stop stocking tobacco to protect themselves.

An Associate Minister of Health has said dairy owners should stop selling cigarettes, and the ‘higher security’ of liquor stores means they may be more appropriate outlets.

RNZ: Dairy owners blame cigarette price hikes for robberies

Dairy owners should stop selling cigarettes “if they feel too threatened” by robbers, says Associate Health Minister Nicky Wagner.

A packet of 20 cigarettes will cost about $32 by 2020, after four legislated 10 percent year-on-year price rises.

Dairy owners say the price hikes are making cigarettes more and more enticing for thieves.

Ms Wagner said cigarette sales might be more appropriate for liquor outlets.

“Maybe we should sell them with alcohol because the security systems in an alcohol convenience store is usually much higher than [in] a dairy,” she said.

There’ a major problem with these suggestions. A large chunk of dairy revenue is from tobacco products. Many dairies would be not be viable businesses without tobacco which can represent towards a half of their revenue.

And there are other complications too, as reported by the ODT: Liquor licence in doubt

A Dunedin supermarket  with a perfect record selling alcohol faces losing its liquor licence over the amount of tobacco products it sells.

A report  on the licence application by Brockville Four Square Supermarket said the police, public and Medical Officer of Health did not oppose the liquor licence, and there were no issues about the suitability of the applicants Greg and Zandra Davis.

The problem was a breakdown of the shop’s sales revenue showed the principal income  of the business  came  from the sale of tobacco.

Foodstuffs, which owns the Four Square chain, said tobacco was increasingly becoming shops’ main  revenue stream,  as prices rose each year because of government tax hikes.

Dunedin City Council liquor licensing inspector Tony Mole said in his report  39.50% of the shop’s  revenue was  from  tobacco products, while food products made up 28.64% of  income. According to  the Sale and Supply of Alcohol Regulations Act 2013,  the  shop’s high tobacco income meant it had to be considered its  “principal business”.

I’ve seen claims from elsewhere that suggest tobacco is the principal business of many dairies – this supermarket is in a similar situation to a dairy.

“Under this interpretation of the Act and the regulations, we would conclude that Brockville Four Square cannot be considered a grocery store for the purposes of licensing,” Mr Mole said.

The shop  did not appear to meet the requirements  for a different off-licence application, documents showed.

This is not the only supermarket with this problem.

Cockle Bay Four Square, in Auckland, also had its liquor licence renewal application declined last year on the basis it  sold too much tobacco to be considered a grocery shop.

This is a complex issue.

Security of supermarkets and dairies may need to be increased substantially if they want to safely sell tobacco.

The price of tobacco, pushed up by regularly increasing tax, has in large part created this problem, but it is also a law and order issue. It seems to be getting so bad that the police may need to put more resources into rapid responses to diary robberies – and liquor stores also have high robbery rates in some areas, so they aren’t necessarily the solution.