Issue link: https://read.dmtmag.com/i/550310
20 tobaccoasia 0 20 40 60 80 100 120 2010 2011 2012 2013 2014 YTD Deep Discount Low Price Mid Price Premium 19.3 54.7 22.6 3.4 18.4 52.7 22.6 6.3 17.5 50.9 21.3 10.4 15.8 46.8 17.7 19.6 13.6 41.9 16.3 28.2 Figure 1: InfoView chart showing change in price segments over recent years. that the black market is booming and Australia has exposed itself to poten- tially damaging trade sanctions." Retailers are also being affected by the Australia's plain packaging law, with dwindling retail bottom lines despite the same volume of tobacco be- ing sold. According to the Australasian Association of Convenience Stores (AACS), the actual volume of tobacco sold by convenience stores in Aus- tralia remains stable, with some reporting an increase in tobacco sales since plain packaging was introduced. Yet, it is the additional costs that small retail- ers in Australia have been forced to absorb that has seriously impacted their bottom line. "Plain packaging has triggered a variety of additional costs for retailers to bear, including costs associated with staff training, labor, product handling errors, increased inventory management procedures, and customer frustra- tion," said AACS c.e.o. Jeff Rogut, "all the while volumes of legal tobacco sold remain constant and the black market trade of tobacco in Australia esca- lates to unprecedented levels." The AACS represents the interests of over 6,000 stores in Australia. While member stores retail legal tobacco products, the AACS is not an arm of, or lobby group for the tobacco industry. According to the AACS, tobacco makes up 35.5% of convenience store sales on average. In 2013, tobacco sales in stores increased by 5.4%, a US$120 million increase from 2012 (when the plain packaging law had yet to come into effect). This increase could be attributed to the 58% increase in the 'sub-value' segment as individual consumers gravitated to cheaper tobacco products. Australia's plain packaging program is being closely watched by other coun- tries including the United Kingdom, which is looking to implement similar measures but has not made any final decisions as to whether it will introduce the policy. However, there has been concern that the British government is consid- ering the introduction of plain packaging before they have even assessed the full impact of the display ban. The phased implementation of the display ban, which removes tobacco products from the sight of consumers, started in large supermarkets in April 2012, and will be implemented in smaller stores from April 2015. As such, it would seem to make sense for policymakers to evaluate the effectiveness of existing tobacco control measures before imple- menting new regulations. Giles Roca, director general of the Tobacco Manufacturers Association, said, "Currently 4% of under 15s smoke in England – the lowest figure for a generation. The focus for government and public health policy-makers should rightly be on reducing this further by preventing children's ac- cess to cigarettes, instead of trying to regulate what they look like." The British government issued a written min- isterial statement on standardized packaging on June 26, 2014 along with a new public consultation document and draft regulations. The consultation will run in the UK for six weeks all the way until August 7, 2014. When asked about the effects on the UK to- bacco industry should plain packaging become law, Roca said, "Plain packaging is a dangerous precedent for all businesses. Once the premise is established that government can censor packaging irrespective of manufacturers' rights, then any- thing that health lobby groups disapprove of in the future could be subject to additional regulation. Tobacco-control groups may claim that tobacco is a unique case, but the current debate on mandato- ry labelling information on items such as alcohol, food, and confectionery mirrors the experience of tobacco control initiatives over the last decade." "Plain packaging will also harm British exports and have implications for any business that creates wealth for the UK economy through IP, brands, and trademarks. That is why organizations such as the CBI, Business Europe, and the British Brands Group are opposed to it." He also said, "The associated businesses of tobacco manufacturers, such as retailers, logistics, warehousing, distribution, marketing, design, and packaging companies – who collectively support approximately 53,000 UK jobs – are also likely to be affected by the introduction of the policy. Such businesses will need to deal with additional, un- necessary red tape; this seems to fly in the face of current UK policy, which aims to reduce un- necessary business regulation – especially as far as smaller businesses are concerned. "Plain packaging will lead to an increased risk of illegal tobacco, as any brand can be replicated easily if they all look alike. The regulations would effectively provide instructions to counterfeit- ers on how to fake the pack. Counterfeit tobacco products are already easily available in markets and car-boot sales across the UK. Criminals do not care who they sell to – and frequently target children. Increasing illicit trade will drive up crimi- nality and could increase children's access to un- regulated illegal tobacco." The Australian government is expected to con- duct its own review of plain packaging and present its findings in December 2014. Deep Discount Low Price Mid Price Premium