As the first dispatches from Australia indicate that plain packaging has had no initial impact since its introduction there, momentum towards its introduction in further markets appears to have stalled - even in countries such as New Zealand and the UK which up until recently had seemed near certainties to follow the Australian government down a standardised path. While the lack of significant market changes in Australia is no more than was predicted by Euromonitor and for other governments there was always going to be an element of wait and see, the tobacco industry appears to have regrouped in its rearguard action against plain packaging and shifting political realities are also contributing to the lengthening of odds and timescales.
After an initial flurry of activity and controversy in Australia around the time of plain packaging’s introduction, the Australian market is steadily reconciling itself to the existence of unbranded tobacco products. In the immediate aftermath, manufacturers engaged in disruptive tactics as Imperial produced Stuvyesant packs with tear strips declaring ‘It’s what’s inside that counts’ and BAT pushed to the limits and beyond the on-stick coding clauses in the legislation. But the only ongoing points of tension are the continuing brand name extensions from Imperial and BAT and the on-box stickers produced by third party manufacturer Box Wrap, which promise to curb the drudgery of standardised packaging for tobacco consumers.
Political complexities in New Zealand confuse the issue
Australia’s neighbours New Zealand completed a consultation on plain packaging in October 2012 and had seemed poised to follow hot on the heels of Australia into a standardised universe. However, the enforced publication of submissions to the consultation on the Ministry of Health’s website has been something of an on-goal for the Ministry as it is has led to accusations of misrepresenting certain submissions and applying undue weight to others. The political leadership and urgency in New Zealand towards plain packaging has come from the small Maori Party which supports the minority government in a confidence and supply arrangement. However, New Zealand’s current Minister for Trade, Tim Groser (who has served as the country’s Ambassador to the World Trade Organisation and its chairman of agricultural negotiations in the Doha round) is a candidate for the Directorship-General of the WTO and there is a sense that a rush to introduce plain packaging in New Zealand would detract from the strength of his case.
While it is important to note that the New Zealand government, including Groser himself, are vocal supporters of plain packaging it may be that the government can add a supply side element to its already extensive activity on tobacco control (retail display ban and massive excise increases) but fall short of standardised packaging and still appease the Maori Party’s demand for strong action. It would thereby delay the introduction of plain packaging by a year or two, perhaps even until after the scheduled 2014 general election.
In Europe, the Tobacco Products Directive has drawn intensity from the debate
In Europe, developments have also made the imposition of plain packaging less rather than more likely. Firstly, the revised Tobacco Products Directive has eschewed mandatory plain packaging for member states. However, it does introduce 75% graphic health warnings – de facto, rather than de jure plain packaging. While certain member states such as Germany and Poland would have been distinctly unenthusiastic regarding mandatory plain packaging anyway, the promise of pervasive graphic health warnings perhaps provides a third way for governments such as those in the UK and France who are inclined towards standardisation but may not be relishing the contentious process involved.
UK government may opt for the path of least resistance
The UK too has completed a public consultation on plain packaging, a development which ostensibly heralds its introduction. However, it has also lost the political first mover behind the plan, as Secretary of Health Andrew Lansley paid the price in the government’s last reshuffle for his poor handling of another sensitive issue – reform of the National Health Service. His replacement, Jeremy Hunt has publicly given no indication of cooling on plain packaging and while we still believe it is marginally more likely than not to appear in the UK within the next 2 years, it may be that he and the wider cabinet eventually decide against expending political capital on a measure that, in a time of economic malaise, could be framed as severely damaging small retailers and businesses in the supply chain.
Manufacturers making their voices heard
The tobacco industry has also been industrious in communicating its opposition to plain packaging. Advertising paid for by tobacco manufacturers has appeared in publications for the first time in many, many years in both New Zealand and the UK. In the former, BAT’s ‘Agree/Disagree’ campaign has invited the ire of anti-smoking groups but nonetheless does appear to have raised awareness of what it regards as the intellectual property and business issues at play in the debate. It has also begun to openly discuss the scope for increase in the illicit trade in New Zealand, as the current low level of penetration (1.3%) implies untapped black market demand. Japan Tobacco has also been highlighting the threat of an increase in illicit trade in the UK in its anti-plain packaging campaign: ‘Plain Packs Don’t Make Common Sense’, suggesting that standardised packaging would make counterfeiting of cigarettes easier.
A global issue but larger markets a long way from standardisation
However, certain countries remain as far from even the hint of plain packaging as ever. The major tobacco markets of China, Russia and Indonesia have all recently passed comprehensive tobacco control legislation without even so much as a passing mention of the concept. In the US, the federal regulatory authority the FDA has become embroiled in a legal wrangle regarding the imposition of a 50% graphic health warning which has found its way to the Supreme Court and which suggests that standardised packaging in the world’s 3rd largest tobacco market is a non-runner for the foreseeable future. Indeed, there was an intriguing vignette last week as the Irish Independent newspaper reported US trade groups’ less than gentle warning to Enda Kenny, Taoiseach (Prime Minister) of anti-tobacco regulation pioneer Ireland that the introduction of standardised cigarette packaging there would be seen as an ‘assault’ on the rights of tobacco companies which would send a ‘troubling message’ to Ireland’s trade partners. Further evidence, if it were needed, that the plain packaging debate has gone global and has a tortuous, rough and tumble road yet to run.