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Last Updated: Wednesday, 1 February 2006, 13:45 GMT
Price war over Spanish cigarettes
Two Spanish smokers
More than 30% of Spaniards smoke
A cigarette price war has broken out in Spain after US firm Philip Morris cut prices for its Marlboro brand.

Altadis, the Franco-Spanish producer, has responded by slashing prices on leading brands by 26%.

The government has tried to discourage smoking - a habit admitted to by 30% of Spaniards - by raising cigarette taxes and banning smoking in the workplace.

But Prime Minister Jose Louis Rodriguez Zapatero has already been accused of breaking the law.

In private

A newspaper reported that Mr Zapatero shared several cigarettes with a Catalan politician at La Moncloa, which he uses both as his ministerial office and main private residence.

Altadis has decided to drop the prices of its main brands with a view to remaining competitive on the Spanish market
Altadis statement

But government sources said the Prime Minister had lit up in the private apartments of his residence where the smoking ban does not apply.

The price war was sparked by Philip Morris' surprise decision to cut the price of a packet of Marlboro from 2.75 to 2.35 euros ($2.83; 1.60).

Marlboro, historically viewed as a prestige brand in the market, was temporarily cheaper than rival brands such as Altadis' Fortuna.

Tit-for-tat

Having increased prices earlier this year, Altadis has now done a U-turn in response to its rival's move.

It cut Fortuna prices to 1.85 euros a packet while also reducing the price of other brands such as Nobel and Ducados.

"Altadis has decided to drop the prices of its main brands with a view to remaining competitive on the Spanish market," it said.

The price war is a setback to the Spanish government which has taken a range of steps to reduce smoking including raising cigarette taxes.

But smoking remains commonplace in the country and is considered fashionable among many young Spaniards.

Smoking is the country's largest killer, however, with 50,000 smoking-related deaths a year.




SEE ALSO:
Spain stamps on smoking at work
15 Dec 05 |  Europe
Spanish MPs barred from smoking
01 Sep 04 |  Europe
Smoking curbs: The global picture
26 Oct 05 |  In Depth


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