If you’re not a smoker from Australia, then you might not be familiar with plain tobacco packaging. It’s pretty much exactly what it sounds like—packaging that removes branding, including colors, images and logos, and only allow manufacturers to print the brand name on the pack, along with legally mandated information like health warnings.
Segmentation of global tobacco packaging market by material 2015 (revenue %)
Source: Technavio
The purpose of this is to standardize the look of tobacco products, and stop manufacturers from using creative labeling to attract customers.
Plain packaging has been the law in Australia since 2012, with the UK, France, and Ireland coming on board this year. Canada may also be looking to go the plain packaging route. According to a Global News article published today, theTobacco Control Directorate recently published a call for tender for a contractor to “undertake a cost-benefit analysis of plain packaging of tobacco products.”
But instituting plain packaging laws isn’t a walk in the park for regulatory bodies. British American Tobacco, a large tobacco company, has already announced that it will take legal action against the Government of New Zealand for plain packaging legislation, which follows a case brought against Australia by Philip Morris. While the latter case failed, there is still a World Trade Organization case pending.
Big Tobacco won’t give up on packaging without a fight
While generic packaging makes sense from a consumer safety standpoint, it’s easy to see why manufacturers are up in arms. Plain packaging has emerged as a major threat to the tobacco packaging market, and to tobacco manufacturers in general. The market will see little growth over the next five years, growing from a value of $14.26 billion in 2015, to reach just $16.11 billion by 2020.
While using packaging of tobacco products to warn consumers of their health implications is nothing new—for years we’ve seen gruesome imagery of the long-term effects of smoking splashed across cigarette cartons—plain packaging is a completely different story, and tobacco manufacturers and vendors are balking at the regulations. Generic cartons will cause problems for vendors looking to enter new markets, since they will have no visible way to differentiate their product. This means that vendors have to compete in terms of price, which makes it extremely difficult for manufacturers with small market shares to strengthen their position.
For more information on tobacco packaging, check out Technavio’s new report.
