Australia passes plain-packaging cigarette law | CigarettesReporter.com - Your cigarettes guide

Australia is to become the first country to enforce the plain packaging of cigarettes but tobacco companies have vowed to fight the new legislation in court.

Marlboro cigarette packs with graphic warning labels on them

From December next year, all cigarettes will be sold in olive green packs, which research has shown is least appealing to smokers.

Under the new laws, approved by the upper house of parliament, no trademark brand logos will be permitted on any packaging of tobacco products, although companies will be able to print their name and the cigarette brand in small, prescribed font on the packets.

The boxes will continue to carry stark health warning messages and pictures, which will cover 75% of the front of the pack and 90% of the back.

“If this legislation stops one young Australian from picking up a shiny, coloured packet and prevents them becoming addicted to cigarettes then in my view it will have been worthwhile,” said John Faulkner, a Labor senator, during the parliamentary debate.

The debate in Australia has been keenly watched around the world, including in Britain, Canada and New Zealand where similar plans to curtail branding are being considered.

Cigarette giant British American Tobacco, which owns 46% of the Australian market, plans to challenge the legislation in the high court on constitutional grounds.

“The government can’t take away valuable property from a legal company without compensation,” said Scott McIntyre, spokesman for British American Tobacco Australia.

McIntyre said the company’s brands, including Winfield and Benson & Hedges, were worth billions of dollars.

“We’re a legal company with legal products selling to adults who know the risks of smoking. We’re taking this to the high court because we believe the removal of our valuable intellectual property is unconstitutional,” he said.

Cigarette makers Philip Morris Australia said the legislation meant it had little option but to pursue its compensation claim “through international arbitration against Australia and to also consider domestic legal action under Australian law”.

The health minister, Nicola Roxon, said the government would not be bullied by the tobacco industry’s threat of a legal challenge.

“We’re ready for that if they take legal action. We hope that they don’t. We believe that this is a measure that’s in the interests of the community and it would be better off for tobacco companies to look at ways they could invest in something that’s not so harmful for the community,” Roxon told reporters in Melbourne.

Cigarette companies also say the plain-packaging legislation will increase the sale of illegal tobacco. “Once the packs all look the same they will be very easy to copy,” said McIntyre.

Fifteen thousand Australians die from smoking-related illnesses each year with the social cost of smoking to the Australian economy estimated to be more than A$30bn (£19bn) a year.

Anti-smoking groups have welcomed the legislation. “We believe that it will reduce smoking in younger people and the fact that tobacco companies have been using packs very effectively as one of the last forms of advertising is one reason why they’re so upset about it,” said Professor Ian Olver, chief executive officer of the Australian Cancer Council.

Fifteen per cent of adults in Australia smoke compared with 23% a decade ago. In Britain about 22% of the adult population smokes, according to Cancer Research UK.

Australia already has some of the toughest smoking regulations in the world. Cigarettes must be sold behind closed doors in retail outlets and advertising and sponsorship deals are banned. It is illegal to smoke in any public places including bars, restaurants or entertainment venues. Some local councils have banned smoking in parks and outdoor areas.

How Big Tobacco’s Trying to Regain Lost Ground in the U.S.

With the Big Apple in the grip of a new anti-smoking law enacted late last month, some Red & White cigarette makers are seeing an opportunity to shore up their top lines — a smokeless opportunity.

Quick to capitalize on the situation, Reynolds American has launched print-ad campaigns in some national newspapers to promote Camel Snus, for those who love tobacco but hate smoke.

In an environment that’s becoming increasingly hostile toward smoking, Reynolds America knows that clever marketing is key to an intelligent, sustainable, and successful business strategy. Other tobacco giants are following suit quickly.

Tobacco in the no-smoke zone
Cigarette makers have long been testing out alternative tobacco products. Today, they’re plunging even deeper into it — perhaps out of necessity, but also because that’s where the most innovation is taking place.

This segment is stacked with competition. British American Tobacco sells similar products, and it says that Swedish and Norwegian adults alone consume more than 240 million cans of smokeless tobacco every year.

Thanks to a large takeover several years back, Altria’s U.S. Smokeless Tobacco Company is the world’s leading manufacturer of moist smokeless tobacco. When reporting their first-quarter results, U.S. Smokeless Tobacco and Philip Morris USA said they believed volumes within the smokeless category to have grown by an estimated 7% in the first quarter of 2011.

A company seemingly on the cutting edge of the industry, Star Scientific, markets dissolvable smokeless-tobacco products, the first of their kind on the commercial market.

This is a very competitive industry that may get even more competitive in the near future.

Thank you for not smoking
The market for snus and snuff is already big, with the United States and Scandinavia being the largest regional markets. Swedish Match has estimated that more than 1.5 billion cans are sold annually, with around 30 million to 40 million in the U.S. market. Slap on an average price tag of roughly $5 per can (my own estimates), and you can see how big a business this really is.

In terms of overall share in the U.S. market for snus and snuff, Altria claimed an estimated 56% by volume in 2010, while Reynolds stood at 30.3%.

The market for smokeless tobacco in the United States is forecasted to grow at a compounded annual growth rate of 7% between 2010 and 2012. Considered together with the government’s increased emphasis on stricter smoking bans, this segment should continue to grow.
While cigarette volumes have declined in the U.S., moist snuff volumes grew at an average rate of around 6% annually in the past five years. Even better, moist snuff products generally render higher profit margins than cigarettes do. Combined with tougher regulations in their core businesses, this reality explains why more and more tobacco companies are interested on focusing on such smokeless products.
The key lies in how well the companies market these products and generate profits from their sales.
New York’s citywide smoking ban makes smoking illegal in the city’s 1,700 public parks and beaches, along with several plazas. And at the national level, the FDA is continuing to study measures to curb tobacco use. In the past few months, the agency has contemplated limiting or banning menthol and other mint-flavored cigarettes. Such a move would hit companies heavily reliant on menthols, including Lorillard.
Amid stricter regulation and even outright bans on smoking, it makes a lot of sense for the tobacco companies to diversify their product base. Keep an eye on Reynolds by adding it to your watchlist, so you can watch future developments in the industry.

Tobacco Agreement Funds Being Abused

Tobacco companies have been giving Pennsylvania $350 million dollars a year for the past 10 years and will continue to do so for 15 more. But Auditor General Jack Wagner says $1.3 billion has floated away in recent years as lawmakers raided an unprotected pot of money. ”The general assembly during a recession was looking for money in every way, every direction they could find it,” said Wagner.
Wagner says tobacco money should be funding Adultbasic health insurance, and he points to Cigaronne smoking cessation programs that got $50 million eight years ago.
“Have any of you in the media seen an ad in the newspaper radio or TV related to smoking prevention and cessation?,” asked Wagner. “I would challenge you…I haven’t in recent memory…it’s because there’s no more funds devoted to the program.”
Wagner says trailer bills with convoluted language let Governor Rendell and lawmakers raid the fund. And he criticizes Governor Corbett for moving the money to the general fund.
“That is a major change in how those dollars are utilized moving forward,” Wagner said.
But House Republican Spokesman Steve Miskin says the money will still fund health programs -it’ll just be streamlined.
“These are programs that everyone feels is appropriate for state to fund,” he said. “Just putting it all in the general fund…how many budgets should there be?”
Corbett will also use tobacco money to create a liberty loan fund for investment in health-related industries. Wagner has his doubts.
“To take the majority of those dollars away from health purposes and put them in a so-called loan fund is not in the best interest of Pennsylvania,” Wagner said.