One such legal challenge waged against plain packaging took place in 2016 in the United Kingdom during “Tobacco Packaging [2016] EWHC 1169.” In this case, British American Tobacco, Japan Tobacco International, Imperial Brands and Philip Morris International challenged the United Kingdom’s plain packaging regulations imposed on cigarettes. In the final decision, Justice Green argued, “It is wrong to view this issue purely in monetized terms alone. There is a significant moral angle which is embedded in the regulations which is about saving children from a lifetime of addiction, and children and adults from premature death and related suffering and disease.” Justice Green argued that manufacturers being able to plainly display their name on packaging and boxes was enough to differentiate one manufacturer’s products from those of their competitors, and stripping away a product’s attractiveness and branding wasn’t an issue.
However, the livelihoods of tobacco manufacturers and retailers are directly threatened by plain packaging. Julian Luke, co-owner of Victory Cigars in Oshawa, Ontario, Canada, is one of many retailers who feels that premium cigars and pipe tobacco shouldn’t be subjected to plain packaging, and that exemption for these products, as can be seen in countries like the United Kingdom, France and Belgium, is the key to saving the premium tobacco market in Canada.
“If plain packaging is implemented without an exemption, prices will increase, product choice will decrease, and suspicion will arise about counterfeit products,” Luke explains. “This will only drive more Canadian consumer dollars to parallel markets, to international [markets], yet public health issues will not be materially affected. This simply means the death of the cigar industry and 180 cigar and tobacconist shops in Canada.”
Nicolas Brum, general manager of Kretek International Canada, notes that tobacco products are a secure source of tax revenue, and says tobacconists in Canada go to great lengths to ensure that youth don’t have access to these products. According to Brum, tobacconists who have a yearly revenue of $1,000,000 are generating $500,000 in tax revenue for Canada’s provincial and federal governments. Wholesalers and importers also pay a corporate tax rate ranging from 10 percent to 38 percent. If plain packaging were to become a reality in Canada, tobacconists would see a reduction in revenue. The loss of tobacconists in Canada would also mean a loss of revenue for the government, and it would force consumers in Canada to turn to mail-order retailers or the black market that could emerge to supply these products. What is Brum’s prediction for the country’s premium tobacco segment? Consumers will move to other markets, and wholesalers will be forced to seek out other categories and markets, such as the cannabis industry, to make up for lost profits.
A current initiative known as “The Better Cigar Plan” (bettercigarplan.ca), calls for Canada to adopt the British model for plain packaging, which would exempt premium cigars from Bill S-5’s draconian regulations. In Britain, premium cigars were exempted from plain packaging legislation due of the products’ lack of appeal to youth. This is the same argument currently being used by cigar manufacturers, retailers and advocates in the U.S. who are seeking exemption of premium cigars from the FDA’s deeming regulations.
Is plain package effective? Based on research conducted in marketplaces like Australia and the United Kingdom where it’s a reality, yes. Smoking is on the decline in those “plain” countries, although plain packaging hasn’t completely eradicated tobacco use. While plain packaging is leading to a decline in tobacco use, including use among youth, the question is: at what cost? Tobacco retailers and manufacturers each contribute to local economies in their own way, usually through special taxes that are collected through transactions. Plain packaging can keep manufacturers from wanting to have a presence in those markets that are viewed as unfriendly toward their business and its products. If manufacturers pull out of a market, the retailers who carry those products suffer. If there is a lack of variety to choose from, consumers stop supporting certain retailers, and the tobacco market is therefore disrupted, saving the public—but at the sacrifice of business. So, back to the original question: Is plain packaging effective? For tobacco businesses, the answer is plain and clear.
This story first appeared in the November/December 2018 issue of Tobacco Business magazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.
– Story by Antoine Reid, an editor and digital content director for Tobacco Business Magazine. You can follow him on Instagram @editor.reid.
