"This Is My Support Fund, Stocked Up" ... Unexpected Boom in Cigarette Sales with Consumption Coupons

Slight Increase in Cigarette Sales After Distribution of Consumption Coupon
Concerns Raised Over Potential for Cigarette Stockpiling and Cash Conversion Due to Easy Storage

As cases of people using the "Livelihood Recovery Consumption Coupon," distributed to all citizens to boost domestic demand, to purchase cigarettes continue to emerge, some are raising concerns that restrictions should be placed on eligible items. On July 25, Yonhap News reported that, as citizens flock to convenience stores and local supermarkets?where the consumption coupon can be used, unlike at large discount stores?the tobacco industry is enjoying unexpected benefits.

On online communities and social networking services (SNS), photos certifying the purchase of 15 packs of cigarettes with the consumption coupon are quickly being shared, with some dubbing it the "Livelihood Support Grant Despair Edition." Among some smokers, the term "smoking support fund" is also circulating as a joke. However, although cigarettes account for about 40% of convenience store sales, the government is reluctant to disclose sales figures due to sensitivity over tax revenue and other reasons.

Residents visiting the Siheung 1-dong Community Service Center in Geumcheon-gu, Seoul, on the 24th are applying for the livelihood recovery consumption coupons. Photo by Kang Jinhyung

While the industry refrains from revealing exact figures after the distribution of the consumption coupon, it is estimated that sales have grown by around 10% compared to before the distribution. In fact, there have been sightings of people stockpiling cigarettes at retail locations, and among some smokers, the term "smoking support fund" is being used as a joke. A man in his 40s, identified as Mr. A, who runs a supermarket in Yeongdeungpo-gu, Seoul, told Yonhap News, "From the very first day the consumption coupon was distributed, elderly customers have been buying two to three cartons of cigarettes at a time," adding, "I had a similar experience during the COVID-19 disaster relief fund distribution, so I'm considering whether to order more alcohol and cigarettes."

A Similar Situation Occurred During the COVID-19 Emergency Disaster Relief Fund Distribution

A similar increase in cigarette sales was observed during the distribution of the COVID-19 emergency disaster relief fund. According to the Ministry of Economy and Finance, cigarette sales from May to August 2020, when the first round of disaster relief funds was distributed, reached 1.25 billion packs. This was a 4.0% increase compared to the same period the previous year, when 1.202 billion packs were sold. The problem is that the profit margin for cigarettes is only about 5%, much lower than that of general products (20?30%). When Mr. A sells a pack of cigarettes for 4,500 won, he only earns about 200 won. Since cigarettes are easy to store and have no expiration date, some are raising concerns about the possibility of "cigarette cashing," where cigarettes are used as a form of currency. As a result, some are arguing that restrictions should be placed on cigarette purchases with the coupon.

Yoon Hojung, Minister of the Ministry of the Interior and Safety, visited Bidan-gil Hyundai Market in Geumcheon-gu, Seoul, on the 24th and attached stickers indicating stores where livelihood recovery consumption coupons can be used. Photo by Kang Jinhyung

On July 25, the fifth day of the first application period for the "Livelihood Recovery Consumption Coupon," which provides 150,000 to 450,000 won per person to all citizens, those eligible to apply are citizens whose birth year ends in 5 or 0, according to the day-of-the-week system based on birth year. According to the Ministry of the Interior and Safety, as of the fifth day since applications opened both online and offline at 9 a.m. on July 21, the number of applicants has continued to rise. From July 21 to 23, a total of 21,486,247 people applied for the first round of consumption coupons: 7 million on the first day, 7.31 million on the second day, and 6.98 million on the third day. This accounts for 42.4% of the total eligible population of 50,607,067 people. A total of 3.8849 trillion won has been distributed. For the first round of the Livelihood Recovery Consumption Coupon, 150,000 won is provided per person, with 300,000 won for those in the second-lowest income bracket and single-parent families, and 400,000 won for basic livelihood security recipients.