Government agrees to disagree with Big Tobacco regarding plain packaging

Parliament announced today it’s introducing plain packaging requirements for cigarettes and other tobacco products sold in New Zealand, only the second country in the world to do so.

Associate health minister, Tariana Turia, told Stuff the legislation will not be brought into effect until Australia, the first country to take this step, completes legal challenges from tobacco companies. A step New Zealand will likely follow once plain packaging measures are introduced next year, she adds.

“While opinions were divided, with many smokers and tobacco retailers expressing opposition, overall the consultation process confirmed that plain packaging will be an effective means of reducing the appeal of smoking and removing the impression that tobacco may be less harmful than it is,” says Turia.

The Cancer Society says it’s over the moon with the government’s decision today, something the non-profit has been campaigning for many years.

“This is a major step. No longer will tobacco products be decorate with desirable colours and prominent branding – future plain packaging, with large graphic warnings, ail depict the reality instead,” says Skye Kimura, tobacco control advisor for the Cancer Society. 

StopPress has contacted British American Tobacco New Zealand (BAT), which ran the Agree/ Disagree campaign against plain packaging last year. In that campaign, BAT raised the argument that plain packaging would take away the tobacco company’s brand power, pushing the argument “if this, what next?”.

Rachel Ramsay looked at both sides of the plain packaging argument in NZ Marketing’s November/ December 2012 issue. She asks IP & branding experts and anti-smoking activists their take on the issue.

Argument One: Plain packaging marks the start of a slippery slope for packaging regulation across other products. 

For: Imagine not being able to differentiate a bottle of Cloudy Bay from a $6.99 sav from the local supermarket. It is hard to envisage, but John Hackett, partner at intellectual property law firm AJ Park’s Auckland office, says if plain packaging is introduced for cigarettes, the alcohol industry could be next in line. 

“I’m not sticking up for the tobacco lobby, but if you smoke 20 cigarettes you’re not going to get into a car, drive, and be under the influence of something that kills you,” he says. “Assuming it goes ahead with tobacco, it’s probably likely your public health watch dogs will put pressure on to introduce legislation in areas such as alcohol. And I think that would be terrible. When I buy a bottle of wine, I like to know about the history, the wine producer, what this particular wine’s about. It’s part of the emotional enjoyment of selecting the product.”

Against: Ben Youdan, director at Action on Smoking and Health (ASH), does not think plain packaging will extend to other industries because cigarettes are not comparable with any other consumer product. 

“It’s a different ball game entirely,” he says. “The tobacco companies have been doing their best to say it’s a slippery slope. They said the same thing in 1990 when New Zealand banned tobacco advertising. They are the only product which, when the consumer uses them as the manufacturer intends, are likely to kill that person.”

Thailand is currently looking at a law that would see graphic images like those seen on tobacco packaging placed on booze bottles and New Zealand, Australia and some other wine producing nations have taken a challenge to the World Trade Organisation over this decision.

The British Government has also issued a White Paper on alcohol that includes plain packaging as a policy option, while the South African health minister has stated he would like to remove branding from alcohol. But Clare Morgan, general manager of marketing at DB Breweries, is not concerned that alcohol could soon be wrapped in plain packaging. 

“It’s certainly not top of my mind keeping me awake at night.”

Argument Two: Plain packaging will mean cheaper cigarettes and more counterfeit products

For: If they cannot advertise or promote their brands on packaging, what marketing power does that leave tobacco companies with? Not counting the addictive properties of the smokes, they have one pulling factor remaining: price. 

Cheap cigarettes are exactly what Lindsay Mouat, chief executive of the Association of New Zealand Advertisers (ANZA), sees resulting from plain packaging. 

“A brand provides a perception around value of a product. By removing that, it’s making products generic. My assumption is that the only thing left for the industry to do is lower prices, so you end up with cheaper tobacco products. If that’s the case, does that not go against what the government is trying to achieve, which is to reduce consumption?”

Hackett says it would be naive to discount counterfeiting.

“You won’t see any evidence yet of counterfeiting because plain packaging is only coming up now, but I think it’s naive to say counterfeiting of products—whether it’s cigarettes or wine—is unlikely to happen.” 

And in the case of wine, it already has, with former wine consultant Simon Mickelson sent to jail for two years for defrauding customers by altering labels. 

Against: Youdan’s response is simple. Firstly, New Zealand does not have a large illicit tobacco industry. Secondly, tobacco packets are just as easy to copy regardless of whether they are plain or decorated.

“The UK has had a much bigger market, and many of them are copies of legitimate brands. Whether you’ve got the brand on there or not, it makes no difference as to whether you can make a fake box,” he says. 

Argument Three: Plain packaging will contravene trade agreements

For: There is a risk that if New Zealand implements plain packaging legislation, a World Trade Organisation dispute settlement case or investment arbitration may be brought against New Zealand. There is also the potential for challenges to be brought under regional or bilateral trade and investment agreements, particularly those containing investor-state dispute settlement clauses. 

Australia has faced such challenges, and Nick Booth, spokesperson for British American Tobacco (BAT), says it is likely New Zealand will too. 

“We only need to look to the Australian experience to see that plain packaging has created concern in the international arena with trading partners. It’d be fair to say we’ll be looking at the same problems,” he says. 

Against: Youdan says while tobacco companies will make threats to sue the government on the grounds that their intellectual property has been “stolen”, their success is unlikely.

“In Australia, BAT put a challenge under the Australian constitution around their freedom to use their branding. The Australian High Court awarded damages against BAT,” he says. “The other thing that they are making threats around is through free trade agreements and trading treaties and those are the other challenges that are happening in Australia,” he says.

However, Youdan points out that New Zealand trade laws contain clauses that allow legislation to be protected if there is strong evidence that it will benefit the public health. 

“We’re very confident that will apply to plain packaging regulations.” 

Argument Four: There’s nothing to show plain packaging will work

For: Plain packaging has never been tested as a way of reducing tobacco consumption. In December, Australia will become the first country to enforce the legislation. 

Booth does not believe studies conducted in Australia, the UK and New Zealand are adequate proof that plain packaging will reduce smoking. 

He says while there is evidence to suggest unbranded packets are less appealing than branded ones, there is no solid proof to say people would choose to quit smoking over smoking from an unbranded packet. And, overseas, a number of governments have looked at the issue and decided  not to implement it. 

Against: A New Zealand study interviewed 292 young adult smokers on their response to cigarette packet designs. The study found that removing brand elements and increasing in graphic health warning size significantly reduced the attractiveness of the packet and suggested that branding elements undermine the effect of graphic warnings.

Youdan says the most sound proof that plain packaging will work comes from British American Tobacco’s resistance to the proposal. 

“If BAT don’t think branding or no branding makes any difference, why do they invest so much in developing the branding? Their own marketing tactics confirm that branding appeals to smokers, and entirely supports the rationale to get rid of that brand.”

The argument is ongoing, and all parties essentially agree that the proposal suggests a verge into unchartered territory. 

“Plain packaging is part of the broad range of policies which are about ending the way tobacco is being sold as a regular consumer product,” says Youdan. “It’s one part of breaking that relationship between the tobacco companies and the consumer that allow them to associate their brands with certain demographics or aspirations, marking them as cool or adult or urban.”

It boils down to the classic utilitarian argument. Does the greater health benefit outweigh the value of intellectual property niceties? 

“With any regulation, what you’ve got to look at is what are the potential unintended consequences of making this decision, and we will only see these outcomes through various studies,” says Mouat. “We have never been in this situation before. These are interesting times we live in.” 

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