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Plain packaging has tobacco industry spinning in desperation

The tobacco industry is stepping up its campaign against plain packaging, as you may have seen in the news today.

It would be shame if those covering this story haven’t at least had a look at this report, Tobacco Control in Australia: making smoking history, which was prepared for the Preventative Health Taskforce. It outlines the rationale for plain packaging as well as giving some of the broader context as to why the industry’s campaign should be taken with a shovelful of salt.

Interesting to see that the Daily Telegraph’s online story included a live chat with Dr Andrew Penman from Cancer Council NSW.

More critique of the campaign is at The Conversation.

Meanwhile, below is Professor Simon Chapman’s analysis of the campaign “against the single greatest threat” the industry has ever faced, published in Crikey today. And at the bottom of the post you can see some of the Twitter comments about the industry’s campaign.

***

Tobacco lobby’s plain-pack threat not based on reality

Simon Chapman, professor of public health at the University of Sydney, writes:

British American Tobacco’s long-threatened campaign against plain packs kicked off today. Has there ever been a more complete demonstration of Shakespeare’s “the lady doth protest too much”?

It’s now very plain the global tobacco industry sees the move as arguably the greatest single threat it has ever faced, and is spending millions to say that — really, honestly — plain packs just won’t work and will cause chaos throughout the economy.

I’ve done many interviews on this in the past year and even normally sceptical radio hosts quickly make the point that ordinary Australians are asking “well, if it won’t work, why are they so concerned and spending all this money?”

This farcical opposition is causing the industry to inhabit truly bizarre personae. We’ve seen the industry-as-friends-to-Treasury (“it will cause a tsunami of smuggling that will cause tax losses”). Compassionate friends of confused shop staff (“they won’t know where to find a brand … they all look the same” — actually, they will continue to be stacked in the same brand rows, fellas).

But most amusing of all, is when it tries to cosy up to public health concerns, arguing it too really wants the government to introduce effective controls that will really cut use. Sure guys, we believe you.

Then we have the peculiar argument that given no country has ever introduced plain packaging there is no evidence that it will work in reducing sales.

This has become a centrepiece of tobacco industry opposition — a modern example of satirist F. M. Cornford’s 1908 Principle of the Dangerous Precedent: “Every public action which is not customary either is wrong, or if it is right it is a dangerous precedent. It follows that nothing should ever be done for the first time.”

Today’s focus from BAT — splashed across today’s newspapers — is on the alleged impact on illegal sales, with an industry commissioned Deloitte report that claimed — wait for this — that 16% of all tobacco sales are illegal (that is, loose “chop chop” tobacco, counterfeit brands and duty-not-paid smuggled brands). This figure has been conjured from economic alchemy originally undertaken by Price Waterhouse Coopers that I critiqued on Croakey last year.

So while one in six smokers apparently know where they can repeatedly buy illegal tobacco, strangely, with more than a billion dollars supposedly being lost, the gormless Federal Police with all their intelligence and resources and impressive history of major smuggling busts cannot find any of these same retail outlets and prosecute.

The PWC and Deloitte estimates contrast this with findings of the 2007 National Drug Strategy Household Survey (amazingly, not compared or even referenced by PWC), which found that while 8.7% of adult Australians had ever smoked unbranded, only 0.2% of the population (about 33,000 people) used it more than half the time.

Smuggled tobacco is a major issue in nations with high corruption indexes and open borders. It has never been a major problem in Australia.

A leaked BAT internal training DVD from 2002 explains much about the industry’s real fears in plain packaging.

Profitability in the tobacco industry today rests largely on high-priced premium brands, which are able to attract higher retail prices purely on the strength of branding and pack image. If all packs will look the same, many smokers will wonder why they should shell out far more for a pack that looks the same as every other brand except for brand name and that internal tobacco industry research shows cannot be distinguished from cheaper brands in blinded smoking experiments. The illusion that premium brands are “better” will evaporate, and much profitability with it.

David Crowe (now BAT CEO): “I mean, I can tell you categorically … [total sales] volume isn’t going to go up. OK, in this market we’ve got a government that’s very smart, they’re world class, they know exactly how to manage the tobacco industry and they’re doing it very well. Guys, the days of managing volume with the current business model is probably not relevant anymore. We’ve got to manage the market, we’re got to manage this percentage of trading profit.”

Romano Espinoza: “Another example is our guys in marketing and trade marketing, they need to sell five packs of Holidays to get the same profit they would get from one pack of Dunhill.”

Crowe: “I mean, five packs of Holidays for every pack of Dunhill, I mean it’s just a clear statement of fact of what our intentions are. If we don’t sell Dunhills and Bensons and Winfield, the amount of sheer volume we have to do of Holiday to make up for that is just ridiculous. I mean, the factory couldn’t produce it.”

Public health is not concerned about industry profitability, but with smoking rates and the diseases caused. If smokers were to drift down to lower-priced brands, smoking rates could well rise, particularly among low-income groups and kids who are most price responsive.

But there is an obvious solution, should this happen or if, as threatened, BAT slashed its prices by 70% (which would  cut only $2 from the cost of the pack).

The government could easily restore the price by increasing excise duty by 20% overnight as it did in April 2010 when first announcing plain packs and the tax rise. Consideration could also be given to introducing a minimum or floor price on tobacco, as the Scottish parliament is actively considering for alcohol.

***

…and from the Twitterverse

Comments 4

  1. rmackenzie says:

    The industry’s main concern is that enactment of plain pack legislation in Australia will create a decidedly unwelcome domino effect in other countries.

    In October 2010 Nicola Roxon reported interest in Australia’s proposed legislation from health ministers attending an OECD conference in Paris, and the websites of ASH Australia and Physicians for a Smoke-Free Canada describe further interest among legislators in the EU, France, the UK, Belgium and New Zealand since the proposal was announced here last year.

    As has been the case with graphic warnings and other existing tobacco control measures, establishing a precedent in one country makes it far easier for the public health community in others to make the case with policy makers for similar legislation.

  2. Alasdair says:

    When the CEO of BAT shows the Coke can in the same colour as the supposed cigarette packs it is a mark of desperation. He should know that while coke isn’t good for you it is much healthier option than his product which he is trying so Desperately to save from these new laws. His point is flawed and he should know it.

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Summer reading 2020-2021
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Croakey Conference News Service 2013 – 2019
2013 conferences
Australian Centre for Health Services Innovation Forum 2013
Australian Health Promotion Association Conference 2013
Closing the Credibility Gap 2013
CRANAplus Conference 2013
FASD Conference 2013
Health Workforce Australia 2013
International Health Literacy Network Conference 2013
NACCHO Summit 2013
National Rural Health Conference 2013
Oceania EcoHealth Symposium 2013
PHAA conference 2013
2014 conferences
#IPCHIV14
AIDA Conference 2014
Congress Lowitja 2014
CRANAplus conference 2014
Cultural Solutions - Healing Foundation forum 2014
Lowitja Institute Continuous Quality Improvement conference 2014
National Suicide Prevention Conference 2014
Racism and children/youth health symposium 2014
Rural & Remote Health Scientific Symposium 2014
2015 conferences
#CPHCEforum
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#HSR15
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Population Health Congress 2015
2016 conferences
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#ATSISPEP
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#cphce2016
#CPHCEforum16
#CRANAplus2016
#IAMRA2016
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#PreventObesity16
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#VMIAC16
#WearablesCEH
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2017 conferences
#17APCC
#ACEM17
#AIDAconf2017
#BTH20
#CATSINaM17
#ClimateHealthStrategy
#IAHAConf17
#IDS17
#LBQWHC17
#LivingOurWay
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