The evidence is building that Australia’s plain packaging law for tobacco is failing is now prompting other countries to learn from the Australian debacle and ditch plans for plain packaging.
New Zealand should be looking at ditching our ill conceived proposed law as well.
Ireland’s government recently took steps toward becoming the first EU country to require plain packaging for tobacco products, and the UK would like to follow its lead.¬†In light of recent reports coming out of Australia, the only country to enact the measure, showing the law is not achieving its intended effects, it is paramount these governments reconsider.
Free market and taxpayer groups are concerned about the consequences of such extreme laws, not just in terms of health and safety of consumers, but their impact on national treasuries. As reported in the Sun newspaper the UK Government faces a potential compensation bill of between ¬£9-11 billion if it proceeds with the removal of internationally protected trademarks and intellectual property.
Already Indonesia is threatening to introduce plain packaging for beers, wines and spirits. And if other countries followed their lead this could have a significant effect on the Britain‚Äôs ¬£38 billion alcohol industry which directly employs around 650,000 people.
But the Ireland and the UK still have a chance to stop this bad policy.
The stated purpose of plain packaging is that once you take away tobacco companies‚Äô branding, people will be less inclined to buy their products.¬† The results thus far appear to be the opposite.¬† More than a year after Australia enacted the policy, studies by¬†London Economics¬†and renowned professors at the¬†Universities of Zurich and Saarland¬†(Switzerland and Germany) concluded it‚Äôs not deterring adults nor adolescents from smoking.
In fact, according to the tobacco industry‚Äôs sales volume data,¬†cigarette sales increased¬†by 59 million sticks in Australia during the first year of plain packaging, offsetting a four year downward trend. The Australasian Association of Convenience Stores even reports that its members‚Äô sales grew by 5.4 percent.
Why are more cigarettes being sold when the goal of plain packaging was to reduce smoking? As any elementary course in marketing will teach you, a product becomes commoditized when it is stripped of its branding. The industry is forced to compete on price and consumers buy cheaper cigarettes, less expensive loose tobacco or even turn to the black market.
This is exactly what¬†The Australian, a leading newspaper Down Under, recently reported is happening: nearly half of the country‚Äôs cigarettes are now purchased from the lowest price segments, up from just a third before plain packaging was introduced.
As the leading taxpayer rights group in the United States, the number that is even more offensive is the AUD $1.1 billion that KPMG reports Australia‚Äôs Treasury lost last year due to the growth of the black market for tobacco products.
While these tax dollars should have been in the government‚Äôs coffers, they were not because a record number of Australians purchased one of the cheapest type of cigarettes: those manufactured in branded packs and smuggled into the country.¬† The market for these ‚Äúillicit whites,‚ÄĚ as they‚Äôre called, saw a shocking 151 percent rise during the year.