Big tobacco groups fear spread of plain packaging

Ciggies

Health campaigners are pushing for tobacco companies to package their cigarettes in plain packs displaying the product name in a standard typeface and with graphic health warnings as a way of discouraging youngsters from taking up smoking.

 

Ciggies

Cigarettes

Australia aims to become the first nation in the world to force tobacco groups to sell cigarettes in these plain, brand-free packets by December this year, while Britain this week launched a three-month consultation over the issue.

Analysts say the real risk from plain packaging to industry profits would be if it spreads to emerging markets such as Brazil, Russia and Indonesia and so slow the process of smokers moving to more pricey and profitable cigarette brands.

Emerging market smokers aspire to westerns brand such as Marlboro, Lucky Strike and Camel, which confer status on the individual, and these mean bigger margins to the cigarette makers than the local brands that smokers are abandoning.

Smokers in mature markets like Western Europe and North America are more fixed in their habits and reluctant to change brands and so changes to packaging are likely to have a relatively low impact on smoker’s choices, analysts added.

This growth has been helped by tobacco groups introducing innovative packaging to attract consumers, and if this avenue is closed by plain packaging rules, the cigarette companies will find it harder to push smokers towards more expensive products.

The industry is fighting against the proposed plain packaging legislation in Australia taking its battle to the high court and have been giving evidence over the last three days as analysts say tobacco groups are fearful that many other governments are looking to Australia as a test case.

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