Regulatory Innovation in Drinks and Tobacco

July 2021

Emanating from the innovation of tobacco regulators, legislation in the drinks and tobacco industries promises to spread, increasingly shaping the nature and characteristics of the products we can consume and when, how and where they can be marketed and sold to us.

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This report comes in PPT.

Key Findings

A cluster of industries (mostly) exhibiting mature growth dynamics

The drinks and tobacco cluster, by and large, are developed industries with modest growth trajectories struggling with disruption from consumer disaffection, trends towards moderation and upstart propositions. The one exception, legal cannabis, is a disruptor in its own right, with elevated growth prospects.

Consumption in drinks and tobacco is perceived to be discretionary, yet it is often routine

Consumption in these industries is, arguably, especially vulnerable to regulatory scrutiny because it is both perceived as non-essential, at best health-neutral, but also often forms a central part of people’s routines and lifestyles, making it a legitimate and fruitful focus of legislative effort.

Taxation and promotion are key areas of focus of regulatory policy

Regulatory innovation in tobacco has created a range of legislative tools but across the cluster taxation (in the form of sugar levies, alcohol and cannabis excise) and promotion restrictions (in the form of warning labels, advertising bans and packaging restrictions) predominate.

Balance between restricting youth and allowing adult access

Each industry is wrestling with its own calculation of the balance between availability to adult consumers (sometimes to whom the products may be very beneficial eg adult smokers and e-cigarettes) and ensuring children are not being exposed to and encouraged to use those same brands.

Precedent of collective action during COVID-19 may fuel further measures

The communal action witnessed across markets to mitigate the impact of the pandemic, as well as understanding of certain risk factors (eg obesity) will prompt regulators to tighten restrictions in many areas, though equally some regulatory relaxations through the crisis may become permanent.


Key findings
With the exception of cannabis, drinks and tobacco exhibit mature growth trends
Exploring regulatory innovation in drinks and tobacco
Regulatory innovation in drinks and tobacco in depth
“Sin” taxation and ingredient curbs
Dark markets
Post-COVID-19 push
Preventing youth access
Defining addiction and harm
Regulating for sustainability
Regulatory innovation in drinks and tobacco in focus
Companies are addressing regulatory innovation using various strategies
Innovating to attempt to resolve core concerns: JUUL C1
Innovating to attempt to resolve core concerns: Guinness 0.0
Engaging in voluntary regulation: Diageo’s alcohol warning labels
Engaging in voluntary regulation: PepsiCo’s European rPET commitment
Attenuating impact on consumers: pacha mama shortfills
Refocus on areas of lighter regulation: LYFT/LAB
Awareness-raising, education and advocacy : YSUB
Testing the limits of regulation: san rafael
Regulatory innovation in drinks and tobacco
Key Industry takeaways
Challenges to overcome
Managing regulatory innovation

Alcoholic Drinks

Alcoholic drinks is the aggregation of beer, wine, spirits, cider/perry and RTDs.

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