Retailers have reported a “massive” increase in cigarette sales as tobacco manufacturers cut prices and offer cash incentives to bolster brands at a time when new plain packaging and smaller pack regulations are set to shake up the industry.

Philip Morris has been encouraging retailers to sell more of its Chesterfield brand with £1 paid for every extra packet sold above a defined “base rate” during an eight-week period.

An independent retailer, who did not want to be named, said: “I have seen a massive increase in sales.

“We were also given PoS including shelf wobblers to encourage as many customers as possible to buy the brand. I think this is a really smart way of driving sales and is something that retailers will respond to.”

Meanwhile, Imperial Tobacco will knock 10p off the price of four of its biggest tobacco brands – Lambert & Butler, JPS, Players and Gold Leaf – from 1 June, while maintaining cash margins.

The manufacturer said the price cut will help retailers “maintain a strong market position” and is crucial to ensure its “competitive position” remains strong.

Amit Patel, of Stratford Post Office, has been trialling the new Imperial prices at his store. He said: “We sold up to one and a half extra outers a week because of the lower price.”

It follows warnings from manufacturers that independent retailers who over-price cigarettes and rolling tobacco in the wake of new tobacco legislation risk losing trade to the supermarkets.

Imperial Tobacco retail development executive Aman Grewal told RN premium tobacco pricing had contributed to 2,000 Australian retailers closing their shops since the introduction of plain packaging.

An Imperial spokesman said: “While it’s up to each retailer to determine their own retail pricing, we advise all our retailers to adopt the same general approach as us: to price their stock competitively for their customers, to maintain a strong market position.”