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Tobacco stocks have traditionally performed strongly as defensive equity assets, but some big investors are now starting to divest from the industry.

The French national pension reserve fund, Fonds de Réserve pour les Retraites (FRR), announced in December 2016 that it was going to exclude investments in the equities and bonds of tobacco-producing companies.

There is growing pressure on institutional investors and others to divest from tobacco, based on strong scientific evidence of the harm caused by smoking. In particular, the efforts of Tobacco Free Portfolios, a campaigning initiative set up by Dr. Bronwyn King, an Australian cancer specialist, have raised awareness of the issue. FRR executive director Olivier Rousseau admits it struck a chord with him: “Morally, it’s a very clear-cut situation; it is indefensible. This is only a harm-producing industry, so from a moral perspective, it was easy to say that we don’t want tobacco in the portfolio.”

But whereas there is a strong rationale for excluding tobacco stocks on moral grounds, applying hard-headed investment logic to it can be sobering for investors. “The returns for tobacco have been absolutely outstanding. Between June 2004 and September 2016, the MSCI World Tobacco index grew by a whopping 632 percent,” Rousseau says. “Whereas the MSCI World index went up 122 percent.” And according to the Credit Suisse Global Investment Returns Yearbook 2015, from the Credit Suisse Research Institute, the tobacco sector was, together with beverages, the star performer since 1900 with an annualized gain of 14.6 percent [see chart below]. We’ve all heard comments from CalPERS, which said that not having had tobacco in the portfolio over the last 15 years has cost it around $3 billion. Similarly the Norwegian GPFG [Government Pension Fund Global] says its tobacco exclusion, which started ten years ago, has cost it some $2 billion. The results may vary depending on the methodology used. If one compares total returns, the difference is bigger than if one assumes, as is the case in real-life portfolios, that the dividends of high-yielding sectors, such as tobacco, are actually pooled with all dividends and reinvested in all sectors pro rata to their index weightings. Anyhow, yes, it is a bad industry, but there is no denying that it has been a very profitable investment.”

However, tobacco may not be such a good investment in the future. One reason to expect lower future returns is tougher public health legislation on smoking. “Many countries have made a commitment to act against smoking, and France is party to a 2005 international agreement on this, which basically says that public institutions should not have tobacco investments,” Rousseau says. “You can argue about its enforceability, but it is clearly a commitment taken seriously by the countries that have signed it.”

“There is a significant probability that more developed countries will take more measures against tobacco in the future. France is the second country, after the U.K., to remove branding from packaging for tobacco since January 1 this year,” Rousseau says. “Taxes are always being increased on tobacco, and regulations are increasingly restricting smoking in public spaces. Just as we can see a shift away from using carbon-emitting energy sources, so there is a similar regulatory move away from tobacco consumption.”

As part of the food and beverage sector, tobacco has performed strongly as a lowvolatility, high-dividend and stable growth sector since the start of the global financial crisis in 2007. As such, tobacco stocks have been valued at high multiples, as one of the darlings of the low-volatility trend in portfolio management, but Rousseau says this is now changing. “There has been a formidable run for the low-volatility, stable-growth types of companies, but it is coming to an end. From last July, after the first few weeks of Brexit scares,” he says, “value stocks have come back with a vengeance. Since then the stablegrowth, ‘low vol’ companies, carrying high multiples, have done poorly relative to the overall market. This tendency has started, and we believe there is more to go, and this could be the case for some time to come.”

FRR’s executive board had to present the case for excluding tobacco to the supervisory board. “There was a good debate, because it was easy to see the moral argument against tobacco stocks,” Rousseau says. “And of course concerns about returns were expressed, so that argument was also discussed. We cannot promise the supervisory board that excluding tobacco companies will pay out in future, but we simply believe that the formidable returns of the past are not going to be repeated in the same fashion. In our view, that would be a very low probability scenario.”

Although many investors engage with companies in an effort to improve their ESG rating and see divestment as a last resort, Rousseau says that this approach is not possible with tobacco producers. “It is typically the only thing that they do, so you would be asking them to stop their activities altogether,” he says. “You either invest, or you divest. The middle-of-the-road approach would be to reduce your weighting, but that is ducking the issue, really. We understand that there is an element of risk to us, but the next decade will most probably not see the same performance as in the past.”

As a result of its decision to exclude tobacco stocks, FRR has joined CalPERS and CalSTRS, in addition to Norway’s GPFG, the Netherlands’ PGGM, a handful of Australian and New Zealand pension funds, AXA insurance group, and, most recently, Sweden’s AP4, in going tobacco-free. “As we understand it, there are still very few investors that have done this so far, and I think the return argument is something that has been very powerful,” Rousseau says.

At the same time as it announced its tobacco divestment, FRR said it will now also exclude companies in which thermal coal extraction, or coal-fired power generation, accounts for more than 20 percent of turnover. Rousseau added that FRR is shortly to reveal the three successful managers it has hired for a €5 billion ($5.34 billion) passive equity mandate with an ESG approach, expressed notably through a smart beta, low-carbon theme and, of course, tobacco exclusion. This mandate will make up 40 percent of FRR’s developed-market equities.

‘World’s ugliest colour’ used on cigarette packets to put smokers off

The shade, described as a “drab dark brown”, was found through a process of seven studies involving 1000 smokers

New plain cigarette packaging in the UK, Ireland and France will bear a colour deemed the ugliest in the world by researchers in Australia.

Pantone 448 C, also known as ‘opaque couché’, is the shade chosen as most likely to put smokers off, a group of academics and market researchers decided after three months of research.

Marketing agency GfK Bluemoon, who headed the project, conducted seven studies with more than 1000 smokers to design the most unappealing packaging possible, according to the Sydney Morning Herald.

The ugly brown colour has been associated with dirt, tar, and even death, without any positive adjectives, say the researchers, who were commissioned back in 2012.

“It had as its aim the antithesis of what is our usual objective,’’ said market researcher Victoria Parr.

‘‘We didn’t want to create attractive, aspirational packaging designed to win customers […] Instead our role was to help our client reduce demand, with the ultimate aim to minimise use of the product,” she added.

Pantone 448 C, also known as 'opaque couché'

Pantone 448 C, also known as ‘opaque couché’

The new packets, in Pantone 448 C with off-putting photographs, were rolled out in the UK on 20 May.

France and Ireland have also adopted the decision to end attractively-branded cigarette packets, which was pioneered by Australia in 2012.

The PM, his pro-smoking aide, and a dirty war over cigarette packaging

The sale of the plain packets is set to become compulsory in the UK from May 2017.

One in five adults is said to smoke in the UK and according to the British Medical Association, smoking costs the NHS £2.7 billion each year.

Disgraceful effort to privilege tobacco business interests over public health has rightly failed utterly – other countries to follow UK lead

The High Court challenge to the Regulations on Standardized Plain tobacco packaging by the tobacco industry met with a humiliating defeat on Thursday, 19th of May 2016.

Thus the landmark judgment in the case will help other countries looking forward to introduce Plain Packaging. France and the Republic of Ireland have already passed legislations and other countries including Canada, Hungary, Norway and Solvenia, are expected to follow soon.

It is learnt that tobacco industry has spent millions of pounds on some of the most expensive lawyers in the country with the hope of blocking the policy. This landmark judgment is a severe defeat for the tobacco industry and it fully justifies the determination of the government to go ahead with the introduction of standardized packaging.

The standardized packaging regulations would come into effect in the UK on Friday, the 20th May 2016. All cigarettes manufactured for sale in the UK after this date must comply with standardized packaging regulations. Cigarettes and hand rolling tobacco will be sold in drab brown packages which have had all the attractive features and colours removed.

The judgment by the Justice Green rejects every argument the industry put forward in court. It is highly critical of the industry’s use of expert evidence it commissioned to back its case and its failure to disclose any internal assessments on how packaging design works for children and young people what the effect on standardized packaging on sales is likely to be. The judgment also notes that the great mass of the expert evidence put to the court by the tobacco industry was neither peer reviewed nor published in an appropriate scientific of technical journal.

At present two thirds of current smokers started when they were children and research shows that dull standardized packs are less attractive to young people. The tobacco industry is now considering whether or not to appeal.

Source of Information: Action on Smoking & Health ASH – UK

– Asian Tribune –

Plain cigarette packaging has arrived, but will it reduce smoking?

UK legislation introduced today bans the tobacco industry from using branding on their cigarette packaging. But will it change the number of smokers?

From today, brightly coloured branding will be stripped from tobacco packs when standardised (or ‘plain’) cigarette packaging legislation comes in to effect.

Cigarette packs will now be a single colour – ‘Pantone 448 C opaque couché’ (according to market research the ‘world’s ugliest colour’), and the brand name will be written in a standard font, size and location. New health warnings covering 60% of the pack will also be introduced. All cigarette packs and tobacco pouches manufactured for sale in the UK from now on will have to comply with these regulations, and within a year there should be no branded packs on shelves at all. Ireland and France are also introducing this legislation today.

But what impact will this new legislation have? After the numerous public consultations, government reports and legal battles (in both the highest European, UK and Australian courts), the government, tobacco industry, and the general public will be keen to know whether standardised packaging will actually reduce the prevalence of smoking.

It’s fair to say that nobody expects standardised packaging to be a silver bullet, and any effects of standardised packaging are likely to develop slowly. However, a large number of experiments, surveys and focus groups (many of which are summarised in two systematic reviews published in 2012 and 2013, and which Suzi Gage has blogged about before) have found that standardised packaging changes attitudes and beliefs around smoking, including reducing the appeal of smoking, increasing the noticeability of the health warnings, and preventing people from being misled about the relative health risks of different brands (people incorrectly assume that packs in lighter colours – i.e. “low tar” – are less harmful than darker coloured – i.e. “high tar” – packs).

The evidence that standardised packaging will change actual smoking behaviour is less clear, as this kind of research is difficult to do, but it is expected that as a result of these changes in attitudes and beliefs, standardised packaging will encourage some smokers to think twice about their smoking behaviour and, crucially, discourage some of the 200,000 children who start smoking every year from taking up the habit.

Quantifying the expected impact of standardised packaging on actual behaviour when implemented in the real world is difficult. Australia was the first (and, until today, the only) country in the world to introduce standardised packaging, back in December 2012. In 2015, 14 Open Access studies were published reporting the effects of standardised packaging there, finding that standardised packaging reduced the appeal of smoking and of cigarettes themselves, encouraged smoking cessation and made the health warnings more prominent. These findings support those observed in the laboratory studies and surveys conducted prior to the implementation of standardised packaging, adding weight to this previous body of literature. In addition, Australian research found no evidence for an increase in the illicit trade of cigarettes, which has been one of the tobacco industry’s main criticisms of standardised packaging policy.

But did standardised packaging change the actual numbers of smokers in Australia? Although the prevalence of smoking has been in decline in Australia for some time, an Australian government report shows that this decline has accelerated since the introduction of standardised packaging. It is estimated that standardised packaging is directly responsible (after taking into account other factors such as tax increases) for 25% of the 2.2% drop in smoking prevalence observed in the 36 months after the introduction of standardised packaging as compared with the 36 months before. This may not sound like a lot, but this is equivalent to 118,000 fewer Australians smoking as a direct result of standardised packaging. Given that two thirds of smokers are expected to die from diseases caused by tobacco use, this is a clinically meaningful decline.

This estimate is by no means perfect – short of interviewing every person in Australia, we can never know the exact number of smokers who have stopped as a direct result of this legislation or the number of teenagers who don’t start. As for the UK, we might expect to see a greater reduction in the number of smokers as compared with Australia due to our higher smoking prevalence (approximately 21% as compared with 13%) and our larger population (65.5 million as compared with 23.5 million). In the UK, the Office for National Statistics reports annual smoking prevalence, so like Australia we will be able to see whether there is a decline in prevalence in the next few years. In addition, a number of UK surveys are planned, including an online survey of 6,000 adult smokers (the Adult Tobacco Policy Survey), an in-home survey of 1,000 children (the Youth Tobacco Policy Survey) and a telephone survey of adult smokers (the Smoking Toolkit Study). Each of these will investigate differences in perceptions and experiences of smoking and cigarette packaging before and after the introduction of standardised packaging.

Standardised packaging is part of the UK’s comprehensive tobacco control strategy which includes tax increases, point of sale display bans, smoking bans and other advertising bans. Together, these strategies are expected to reduce the prevalence of smoking, and ultimately reduce the burden of disease caused by tobacco. It may not be a silver bullet, but it may be one more nail in the coffin.

Olivia Maynard is a Senior Research Associate at the University of Bristol. During her PhD she used cognitive neuroscience techniques to investigate the effectiveness of standardised packaging of cigarettes. Find her on Twitter @OliviaMaynard17.

Plain cigarette packs become law in UK, France

The days of branded cigarette packets in Britain and France are over as new plain packaging laws came into effect today, hailed by campaigners despite resistance from tobacco firms.

The logos and distinctive colours on new cigarette packets will be replaced with neutral packaging, a move hailed by health campaigners as a major step in reducing demand for a “deadly and addictive product”.

The new packs will be introduced in both countries over the coming months following similar legislation in Australia credited with helping to cut down on smoking rates, especially among young people.

British retailers will have a year to sell existing stock and those in France have until January 1, at which point branded packets will become a thing of the past.

“For too long glitzy, cleverly designed packaging has lured young people into smoking,” British Lung Foundation chief executive Penny Woods said.

“Australia introduced plain packaging in 2012 and has already seen a decline in smoking rates.

“If just a fraction of the 200,000 children in the UK who start smoking a year are discouraged, thousands of lives will be saved.”

French Health Minister Marisol Touraine said: “Plain packaging is ugly and intentionally so. The aim is to destroy the attractiveness of many cigarette packs”.

The packs in Britain and France will all have to be a drab green colour and, as in the rest of the European Union, 65 percent of the pack will be taken up by health warnings.

Tobacco giants Philip Morris International, British American Tobacco, Imperial Tobacco and Japan Tobacco International (JTI) failed in a last-ditch legal challenge against the British legislation on Thursday.

JTI has said it intends to appeal.

“The fact remains that our branding has been eradicated and we maintain that this is unlawful,” said Daniel Sciamma, JTI’s UK managing director.

Simon Clark, director of the British smokers’ group Forest, said the packaging rules “treat adults like children and teenagers like idiots”, adding that “no-one starts because of the packaging”.

There were also sceptical reactions on the streets of London.

With cigarette in hand, passerby Faheem Malik said: “When you’re addicted to smoking, you’ll ignore it. I already ignore the warning on the packs”.

“Kids look at the toy, not at the packaging,” he added.

To curb smoking, France adopts ‘neutral’ packaging

A French cigarette package. - Emma Jacobs

A French cigarette package. – Emma Jacobs

It’s practically the American stereotype of France — a Parisian sitting at a round sidewalk table out in front of a bar with a drink and, of course, a cigarette.

In this case, the Parisian is Ibrahim Kalic, a 26-year-old student, whose shiny blue box of Camels plastered with health advisories will soon become an ugly beige, along with every other carton for sale in France.

While practically synonymous in the American imagination with smoking at sidewalk cafes, France rolls out its latest effort on Friday to reduce its high smoking rates with what’s called “neutral” packaging.

While not a fan, Kalic said he does not expect the change to affect his dozen-a-day habit.

“It’s not the packet that influences people. It’s the friends smoking next to you. Once the cigarette is out of the pack, that’s what you see; you don’t see the packet,” he said.

From this point forward, manufacturers must produce only these plain cartons with even more prominent health warnings. Companies may deliver their existing stocks to retailers until November, but only the plain packaging will be allowed in stores by the end of the year.

Kalic said he’s more impacted by price. France has also been raising taxes to cut smoking rates, so cigarettes now cost on average about 6.50 euros a pack, or a little over $7.

“I feel a little, how would you say, oppressed in the sense that it’s also a right to be able to smoke. If they’d only leave us alone,” he said. “It’s more that.”

But Stephen Lequet, who led the lobbying efforts for the plain packaging law on behalf of France’s anti-smoking organizations, said Kalic is wrong about packaging having no impact.

In fact, he said, there’s growing scientific consensus that neutral cartons alone can cut consumption by reducing brands’ appeal and making the health warnings really pop.

“It puts off some nonsmokers and especially young people from starting to smoke,” Lequet said. He added that this is a particular concern for France, which has high youth smoking rates relative to other countries. About 40 percent of French 17-year-olds smoke he said, versus 32 percent of the general public.

Plain packing has already been implemented in Australia, which introduced it in 2012.

When the European Union ordered all member nations to put health warnings on cigarette cartons back in 2014, they allowed each country to make its own decision on neutral packaging. But the measure now seems poised to sweep Europe. France is acting simultaneously with the United Kingdom and Ireland. And other countries across the continent have announced plans to follow their lead, despite the objections of manufacturers and store owners.

France and UK join Australia as plain packaging leaders

Congratulations to France and the UK, which on 20 May 2016 join Australia as countries that have adopted plain packaging for tobacco products.

Plain packs are free of colours and all other branding, except for the manufacturers’ name written in a uniform plain style. Plain, or standardised, packaging is recommended in the tobacco control treaty, the WHO Framework Convention on Tobacco Control (FCTC).

In France and the UK, all packs manufactured after 20 May 2016 must be in plain packages. In France it will be an offence to sell branded tobacco packages after 1 Jan 2017. In the UK, plain packs must be on retail shelves by 20 May 2017.

Ireland on the way

A start date has not yet been set for plain packaging to come into force in Ireland.

As you’ll see on the map, many other countries are working towards plain packaging, despite predictable, costly legal challenges from the tobacco industry.

The Government of Australia, which adopted plain packaging in 2012, faced multiple lawsuits from Philip Morris, within the country and via an international investment agreement. The industry lost them all.

Industy ‘airily dismisses’ research

On 19 May 2016 a UK High Court rejected an industry challenge to plain packaging. The judge damned the evidence presented by the industry because it largely “ignores or airily dismisses the worldwide research and literature base which contradicts evidence tendered by the tobacco industry; and, is frequently unverifiable”.

Japan Tobacco and Imperial Tobacco have already said they will launch suits against the French Government’s plain packaging law.

Get ready for plain packaging is the theme for World No Tobacco Day 2016 (31 May). On our website you’ll find resources for tobacco control advocates and information about what FCA members are doing to get ready.

– See more at:

No good news on packaging regs

The European Court of Justice has backed the EU Tobacco Directive and told producers of packaging for tobacco products that they cannot use fancy substrates, designs or techniques to differentiate brands following the plain packaging requirement that comes into force on 20 May.

One such firm is Amcor, whose designs include the ‘scissor’ pack, which opens sideways to reveal hidden branding.

The directive will also ban packs of 10 cigarettes, rolling tobacco in packs under 30g and all menthol cigarettes, from 20 May 2020. Packs across the EU are required to have health warnings across 65% of their surface.

Meanwhile, the sector is on tenterhooks awaiting the decision of the UK High Court in an intellectual property case brought by Philip Morris International, British American Tobacco, Imperial Tobacco and Japan Tobacco International.

Many businesses due to be affected by the legislation are reserving comment until the decision comes through but the mood is not good. In Australia, which introduced plain packaging in December 2012, a similar high-profile and very expensive legal battle between the Australian government and tobacco titans did not go the tobacco lobby’s way.

Mike Ridgway of the Consumer Packaging Manufacturers Alliance says: “A lot of printing will be badly affected by the implementation of plain packaging. Plain packaging means standardised packaging doing away with branding and ID, having health warnings and an olive green background with a small font.

“It’s not just graphics, it’s the construction and the substrates. There’s no hot-foil stamping, no embossing, graining or anything that gives the pack any sort of particular graphical marketing characteristics.”

While the plain packaging law, barring a last-minute reprieve by the court, will be introduced in the UK, Ireland and France, the EU directive affects all EU states. Any converter who has decided to make up for lost printing income through focusing on packaging shape, will find itself at the mercy of a double whammy.

Ridgway, a former Chesapeake Branded Packaging executive, adds: “I’m a non smoker; I just think it’s excessive regulation and there’s no proof it works, from a packaging and printing point of view it’s affecting tins, pouches, the whole packaging industry. They have really got issues.”

The pro-plain packaging lobby, however, claims Australian cigarette packs which feature large, gory photographs, do work.

Research by the Cancer Council, published in the medical journal Tobacco Control last year, found 20% of smokers were trying to quit the month before the ban and 27% the month after.

UK substrate manufacturer API is one company that was actively targeting tobacco packaging and at Packaging Innovations at London’s Olympia in September last year, cigarette packets featuring its signature Fresnel Lens PET laminate took pride of place on its stand. API also produces foils used on the front of cigarette packs and the plain packaging legislation has “badly knocked” its business, according to Ridgway.

Printed tobacco packets will not suddenly disappear from shelves. Retailers have a year for ‘sell-through’ and the introduction of standardised packaging could also produce opportunities for creative businesses.

When the Australian ban was introduced in December 2012, enterprising label printers, including Box Wrap and Stickerette, decided to print sticker covers for cigarette boxes.

Stickerette has patented its whole pack wraps and now calls itself a global brand which aims to increase sales in the UK and the US under its ‘Your Pack – You Decide’ slogan.

The standardised plain pack design can be produced litho or even digitally, according to Ridgway.

Parkside, Amcor and Multi Packaging Solutions are among the packaging firms likely to be hit. The latter prints cigarette packets on gravure. Amcor Tobacco Packaging president Jerzy Czubak said the legislation posed “a real risk” to consumers.

“Standardised packaging lowers barriers of entry into the tobacco market, leading to de facto creation of scale benefits for criminal organisations trading in counterfeit tobacco. Consumers are exposed to hazardous contents in illicit tobacco products and there will be a limited capacity to authenticate and differentiate between products.

“Amcor Tobacco Packaging believes that standardised packaging represents an unnecessary intervention into not only tobacco, but also packaging in general – a legitimate and essential industry that employs hundreds of thousands of people worldwide.”

Another gravure printer which is likely to be affected by the rules is Benkert. Its Alva, Clackmannanshire plant prints the paper which goes around cigarettes.

“Our argument has always been that if you take complexity out of the packs you’re opening the market up to illicit trade,” Ridgway says. “Over £2bn is lost through tax revenue losses per year through counterfeiting. That’s £8m a day. This business about increasing price is just not going to help. The projection is that by 2020 a packet of  cigarettes will be £20 and 14% of trade will be illicit.”

Countefeiting also concerns the BPIF. General manager at BPIF Cartons Neal Whipp, says: “BPIF Cartons supports any packaging initiative that has been proven to improve public health by reducing smoking. However thus far we have not seen sufficient evidence to this effect and so there is a risk that plain packaging may make matters worse by facilitating more counterfeit products at lower prices.”

Another fear is that the incoming rules will have a knock-on effect, in other countries and in terms of other sectors coming under the plain packaging microscope.

Alcohol is the obvious contender but concerns, espoused by the anti plain-packaging fraternity at least, is that fatty and sugary foods could also be in the firing line, as a way to be seen to be doing something to appease the health lobby.

The government claimed sound reasons for pressing ahead with plain packaging. In 2012-13 it spent £87.7m on services to help people stop smoking. It says the new packs will save lives and, in addition, money. Public Health England estimates a £500m healthcare saving if the fall in smoking seen in Australia is mirrored here.

So why not ban them completely? In 2014-15 the government received £9.5bn in revenue from tobacco tax and that excludes VAT. So we have a compromise which benefits some, but packaging printers and converters least of all.

Tobacco Firms Lose Packet Legal Challenge

The European Court of Justice dismisses the final legal challenge to EU rules which aim to stop youngsters from starting smoking.

Europe’s highest court has rejected a legal challenge by tobacco firms against standardised packaging rules for cigarettes.

The ruling, at the European Court of Justice, essentially dismissed complaints that changes to EU laws went beyond what was necessary on health grounds.

It also paves the way for member states to impose further requirements such as plain packaging measures proposed in the UK, France and Ireland.

In addition, the ruling removes legal barriers to the banning of menthol cigarettes from 2020 and also electronic cigarette advertising.

The updated Tobacco Products Directive will take effect on 20 May though cigarette retailers will have a year to sell off their remaining stocks before the standardised packaging rules take effect.

They are designed to make the cartons less attractive to youngsters – with health warnings more prominent and covering 65% of a packet.

The EU hopes the move will cut smoking numbers by 2.4 million and prevent 700,000 premature deaths.

A separate legal challenge by tobacco firms against UK Government plans to remove all branding from cigarette packs is due to be heard on 18 May at the High Court and could be subject to appeal.

The packaging case against the EU was brought to by Philip Morris International, the maker of Marlboro, and the firm behind Rothmans and Benson & Hedges, British American Tobacco.

They argued that the bloc was abusing its authority.

But the ruling said: “The court finds that, in providing that each unit packet and the outside packaging must carry health warnings … the EU legislature did not go beyond the limits of what is appropriate and necessary”.

The Directive was due to be introduced in 2014 but was held up in the courts.

Deborah Arnott, chief executive of the anti-smoking charity Ash, welcomed the ruling.

She said: “We (now) await the UK court judgement, which is expected shortly, but we are optimistic that the court will confirm that the introduction of standardised packaging in the UK is lawful.

“From 20 May, all packs manufactured for sale in the UK will have to be plain, standardised, in the same drab green colour with the product name on the pack in a standard font”.

A spokesman for British American Tobacco said: “The reality is that many elements of the directive are disproportionate, distort competition and fail to respect the autonomy of member states.”

Doubts rise over TTIP as France threatens to block EU-US deal

French president rejects trade pact in current form as lead negotiator blames Washington for impasse a day after leak revealed ‘irreconcilable’ differences

Doubts about the controversial EU-US trade pact are mounting after the French president threatened to block the deal.

François Hollande said on Tuesday he would reject the Transatlantic Trade and Investment Partnership “at this stage” because France was opposed to unregulated free trade.

Earlier, France’s lead trade negotiator had warned that a halt in TTIP talks “is the most probable option”. Matthias Fekl, the minister responsible for representing France in TTIP talks, blamed Washington for the impasse. He said Europe had offered a lot but had received little in return. He added: “There cannot be an agreement without France and much less against France.”

All 28 EU member states and the European parliament will have to ratify TTIP before it comes into force. But that day seems further away than ever, with talks bogged down after 13 rounds of negotiations spread over nearly three years.

The gulf between the two sides was highlighted by a massive leak of documents on Monday, first reported by the Guardian, which revealed “irreconcilable” differences on consumer protection and animal welfare standards. The publication of 248 pages of negotiating texts and internal positions, obtained by Greenpeace and seen by the Guardian, showed that the two sides remain far apart on how to align regulations on environment and consumer protection. Greenpeace said the leak demonstrated that the EU and the US were in a race to the bottom on health and environmental standards, but negotiators on both sides rejected these claims.

The European commission, which leads negotiations on behalf of the EU, dismissed the “alarmist headlines” as “a storm in a teacup”.

But Tuesday’s comments from the heart of the French government reveal how difficult TTIP negotiations have become.

France has always had the biggest doubts about TTIP. In 2013 the French government secured an exemption for its film industry from TTIP talks to try to shelter French-language productions from Hollywood dominance.

Hollande, who is beset by dire poll ratings, indicated on Tuesday that the government has other concerns about TTIP. Speaking at a conference on the history of the left, Hollande said he would never accept “the undermining of the essential principles of our agriculture, our culture, of mutual access to public markets”.

Fekl told French radio that the agreement on the table is “a bad deal”. “Europe is offering a lot and we are getting very little in return. That is unacceptable,” he said.

The director of Greenpeace EU, Jorgo Riss, said the French president’s concern was “unsurprising given that the commission is clearly not following the mandate it was given by EU countries to protect European environmental and health standards”.

The question marks over TTIP are a setback for the British prime minister, David Cameron, who last year vowed to put “rocket boosters” under the talks as he described TTIP as “a deal we want”. But Barack Obama has made it clear that the UK would not get any special treatment if it left the EU and tried to negotiate a separate trade deal. On a visit to London last month, the US president said the UK would be at “the back of the queue” in any post-Brexit trade talks.

The most recent round of TTIP negotiations took place last week, where EU and US officials reiterated that they hoped to reach a deal in the second half of 2016, before Barack Obama leaves the White House next January.

Talks began in July 2013, but rapidly became bogged down amid widespread public concern on both sides of the Atlantic. Reducing tariffs is only a small element of the trade pact. The most contentious issues centre on aligning consumer and environmental standards and opening up markets to transatlantic rivals.