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September 8th, 2012:

This time it’s serious

Description: In the Mad Men days of the 1960s, advertising agencies persuaded cigarette companies they needed branding to entice customers. Photo by Reuters.

In the Mad Men days of the 1960s, advertising agencies persuaded cigarette companies they needed branding to entice customers. Photo by Reuters.

The global tobacco industry – which barely flinched when New Zealand banned smoking in pubs and raised cigarette prices – is fighting back furiously against plain packaging. Geoff Cumming, of The New Zealand Herald, examines why.

It’s just a small box, fits neatly in the palm of a hand. With ugly images of cancer victims and health warnings taking up much of the packet, you might think the rest isn’t worth scrapping over. But New Zealand is about to become the front line in one of the biggest battles yet fought between public health campaigners and the tobacco industry – over what goes on the packet.

Hard on the heels of retail display bans, campaigners are wheeling out plain packaging as they seek a decisive blow in their push towards endgame – the point where smoking rates are so low that tobacco ceases to be a dominant public health issue.

Description: Prof Jane Kelsey.

Prof Jane Kelsey.

The industry has endured so many hits in recent years – smoke-free bars and restaurants, the graphic warnings, price hikes and now retail display bans – that we might be forgiven for thinking it was gasping for breath. But global cigarette sales continue to soar and addiction rates here remain stubbornly high.

Researchers are focused on the Government’s target of a (largely) smoke-free New Zealand by 2025 and have yet more weapons in their sights: axing duty-free sales, licensing retailers, banning sales within a kilometre of schools … But the box – the only avenue left for companies to promote their brand – looms as something of a trophy.

As if to vindicate the campaigners’ fixation, the industry – which mustered only token public resistance against tax increases and the display ban – is making a real stand against plain packaging, summoning up its legendary influence and strategic cunning.

Description: Alistair Woodward.

Alistair Woodward.

The companies are behind a volley of legal moves to try to head off Australia’s introduction of plain packs on December 1, after failing to deter politicians with a “hearts and minds” publicity campaign waged on radio, television and the internet. While Australia’s High Court has rejected a challenge brought on constitutional grounds, plain packaging faces a series of tougher hurdles before the World Trade Organisation and investor-state dispute tribunals.

New Zealand has obtained third party (observer) status for the hearings.

Tobacco firms portray their stance as principled: defending their rights to use branding to distinguish and promote their legal products.

“Branding and intellectual property are an integral part of a lawful and free market economy,” says Imperial Tobacco, whose New Zealand brands include Horizon, Peter Stuyvesant and Superkings.

“Plain packaging would fundamentally weaken the robust system of domestic and international intellectual property protection on which New Zealand businesses rely,” says one of two websites launched here to fight the move.

British America Tobacco NZ (BAT) last month launched a print, TV and radio advertising campaign while the companies are also lobbying politicians and opinion leaders. Recent public comments by Winston Peters, Ron Mark and Rodney Hide are strikingly similar to concerns expressed on one website that alcohol and obesity are as big a threat to Maori and Pacific communities as smoking is.

More worrying for decision-makers are the thinly veiled threats about what New Zealand risks if it follows Australia’s lead. Plain packaging would violate trademark rights protected by international law by effectively eliminating the use of trademarks for tobacco products, says Imperial Tobacco.

On BAT’s agreedisagree website and in media statements, the industry says plain packaging would weaken our ability to protect our exports from similar labelling and brand expropriation policies – even suggesting our wine and dairy exports could be forced into plain packages.

We could be shooting ourselves in the foot: New Zealand relies on WTO free trade protections, as we did in forcing Australia to accept our apples. And how hypocritical to demand plain packaging for cigarettes when we’re planning to use the WTO to oppose plain packaging on alcohol in Thailand …

Even the United States Chamber of Commerce has waved its finger, warning that – with the Trans Pacific Partnership negotiations under way – it is “most troubling” that the Government would consider destroying an industry’s “legitimate trademark protection and branding rights long protected under law and international treaties”. The subtext: see you in court.

To health campaigners, this shows the industry is running scared and fears Australia’s legislation could have a domino effect.

“I’ve been in some extremely entrenched campaigns such as the ban on smoking in pubs and sponsorship in sport but I’ve never seen anything as big as their opposition to this,” says Simon Chapman, professor of public health at Sydney University. “The only conclusion is that they have a complete understanding of how this will affect their bottom line.” Australia’s initiative has attracted global interest, with Britain, India and South Africa among countries interested in following suit. Health authorities in the European Union have called a conference in Turkey next month to discuss the measure.

But New Zealand is next cab off the rank. The Government agreed in principle to plain packaging in April and consultation is under way on a Ministry of Health proposal modelled on the Australian approach. There, cigarettes will be sold in olive packs with graphic health warnings covering 75% of the front of the pack. Warnings on the back will continue to cover 90%. New Zealand’s proposals are similar, with logos and embossing banned. Only the brand name and variety would be printed on the front in regulated size, font, colour and position.

Australia faces WTO challenges from Ukraine, the Dominican Republic and Honduras – their claims presumably financed by the tobacco industry.

None has significant tobacco trade with Australia but claim they would like to have, says Prof Jane Kelsey, an international trade expert at the University of Auckland law school.

The claimed violations of WTO rules protecting intellectual property have been widely condemned – including by our Trade Minister, Tim Groser.

“It’s an outrageous thing for these companies to be using the WTO as a backdoor attack on Australia,” Mr Groser said last month.

But legal commentators caution that WTO outcomes are difficult to predict and Prof Kelsey believes claimants might gain traction with their claims that plain packaging constitutes a “technical barrier to trade”.

Labelling rules covered by this agreement mean countries cannot impose measures without scientific proof that the policy will achieve its objective.

Countries are required to adopt the least onerous measures to achieve their objectives.

The industry has claimed a lack of direct evidence that plain packaging will prompt smokers to quit and deter youngsters from starting.

“Tobacco packaging has never been identified as a reason why people start to smoke or continue to smoke,” Imperial Tobacco said earlier this year.

However, research released this week by scientists from Canada, the US and Brazil has found evidence that plain packs reduce the appeal of smoking.

In a study of 640 young Brazilian women, the scientists found the women rated branded packs more appealing and thought the cigarettes would be better tasting and smoother.

Prof Alistair Woodward, head of the University of Auckland’s School of Population Health, said the findings fitted with what had been observed elsewhere – that tobacco packaging affects the opinions and behaviours of smokers.

“The tobacco industry knows very well the value of brand packaging. This is why they have invested so heavily in design and illustration in the past, and why the industry now opposes plain packaging so vehemently,” he said.

Janet Hoek, of the University of Otago’s department of marketing, said the paper added to the growing evidence base supporting the plain-packaging measure.

“Overall, this study reinforces earlier work showing how plain packaging will reduce perceptions of smoking and diminish the benefits smoking is perceived to deliver.

“In addition, New Zealand research has found that plain packaging not only affects smokers’ perceptions, but influences their choice behaviours – significantly fewer select ‘plain’ packages – and likelihood of making a quit attempt.”

A separate legal move shows the tobacco industry has lost none of its dexterity, captured in movies The Insider and Thankyou for Smoking. More than a year after Australia’s plain packaging legislation was mooted, Hong Kong-based Philip Morris Asia bought out Philip Morris Australia. This has allowed the company to seek arbitration under the Hong Kong-Australia Bilateral Investment Treaty, claiming plain packaging would breach the treaty’s intellectual property protections.

The blatant manipulation has been savaged by Australian commentators and few expect the case to go the distance. But it will take time and money to have it thrown out.

New Zealand has a free trade agreement with Hong Kong which contains an exception to allow legislation for public health purposes – but it is not watertight, Prof Kelsey warned.

The Ministry of Foreign Affairs and Trade’s regulatory impact assessment on plain packaging said there is a “reasonably high risk” that New Zealand could face a WTO complaint as has Australia.

“The real worry is the chilling effect these [trade and investor law disputes] could have on government decision-making.” Another worry for campaigners is Prime Minister John Key’s lukewarm support for plain packaging (in contrast to the bullishness of Australian political leaders). Key told Fairfax Media in July: “I don’t see it as critically important as raising the price – I think that’s more likely to have an impact … Yes, it’s important but I wouldn’t die in a ditch over it.

“Plain packaging is one more step in the desire to see fewer New Zealanders smoke but it’s probably going to be less effective than some of the other things we’ve done anyway.”

Prof Kelsey says such statements will be seized on by the industry to use in trade cases, to sow doubt that the measure is justified under the narrow exemptions for public health measures. Others wonder how genuine the Government’s commitment is to the “aspirational” goal of making New Zealand smoke-free by 2025, given the billion dollars it collects from the industry each year, rising with every excise tax increase.

But Prof Chapman expects the Australian measure will survive the WTO. “We’ve got very tough gun laws in Australia – you don’t see Smith & Wesson and Glock taking Australia to the WTO because we have tough gun laws.”

It is many years since the cigarette packet was a blank canvas for the imaginations of advertising and marketing men – as captured in the TV series Mad Men – who persuaded tobacco companies that branding and the images conveyed were as important to sales as the label on a Champagne bottle. With the truth about the product’s lethal impact hidden in a haze of denial and obfuscation, box design helped to convey the allure of the product – none more successfully than the Marlboro man, a rugged cowboy used to counter the feminine image of filtered cigarettes.

Names such as Virginia Slims were introduced to cater for women, while brand variants such as “menthol”, “low tar” and “mild” created a myth that some cigarettes were safer than others. As recently as the 1980s, Camel used a cartoon figure to appeal to children.

Health researchers say that even with graphic warnings, consumers and especially children remain vulnerable to subliminal advertising.

The industry maintains it does nothing to entice children and young adults to smoke. But researchers say “they would say that, wouldn’t they?”.

“Packaging is incredibly important to tobacco companies,” says Prof Hoek.

“Cigarette packets are what’s known as a badge product. We know from research that younger smokers are very influenced by branding.

“The companies are in a really invidious position – they kill half their customers so they have to keep recruiting young people.”

The ability to vary the packaging to distinguish product is also vital to the industry. Prof Chapman says companies have increasingly looked to premium brands for profits as smoking numbers have dropped in developed markets – even though blind tests suggest the products are virtually indistinguishable.

“They know that if all packs look the same, that smokers are going to say: ‘Hang on, why am I going to fork out an extra $3 or $4 for something that tastes the same’?” Philip Morris NZ corporate affairs manager Christopher Bishop says cigarette blends can be very different in the quality and type of tobacco used.

If branding is as crucial – and the industry is as worried – as health campaigners maintain, could plain packaging be the tipping point that pushes smoking rates towards endgame? Evidence suggests shareholders should not be deserting Big Tobacco just yet.

Despite two decades of apparently decisive blows, the industry’s global profits have continued to soar. Philip Morris International alone has more than doubled global cigarette sales, from 400 billion sticks in 1992 to almost 900 billion in 2010.

The industry’s growth has come in developing countries where public health campaigns are less well funded, particularly China, India, Indonesia – the three today account for more than half of global tobacco consumption – and Brazil. The Asia/Pacific region is now the world’s biggest tobacco market, the Sydney Morning Herald reported, with six million new smokers recruited in 2009 and a further 30 million expected to be added by 2014. Companies eye a bright future in Egypt, predicted to become the fifth-biggest tobacco market in the next 40 years.

Researchers say companies have also countered declining smoking trends in “enlightened” countries by introducing so-called premium products. In New Zealand, Imperial Tobacco boosted sales in 2010/11 to $345 million (up nearly $50 million on the previous year) and expects production at its recently expanded Petone plant (which manufactures for the Australian market) to treble from 1.1 billion cigarettes in 2010/11 to 3.5 billion this financial year.

Though falling slowly, the overall adult smoking rate (23.6% in 2009) masks significant distortions, says Prof Richard Edwards, head of public health at the University of Otago’s Wellington campus. In 2009, 44% of Maori (more women than men); 35% of Pacific men and 30% of 20 to 24-year-olds smoked.

“It’s been 50 or 60 years since it was clearly shown tobacco causes cancer,” says Edwards, who also heads the Aspire 2025 research project. “But we still have these significant rates among young adults and Maori and Pacific people. So we need a suite of strategies. Plain packaging is a big step but far from sufficient.

“We need to increase the price, we need to do everything. This is a public health emergency which has been continuing for the last 60 to 70 years.”

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Evidence piles up in favor of plain cigarette packs

By Piriya Mahendra, medwireNews Reporter

A study conducted in Brazil provides further evidence that plain cigarette packaging reduces the appeal of cigarettes.

While Australia has recently passed legislation to ban logos from cigarette packages and make plain packaging mandatory, other countries are still considering whether to take this route, say the researchers in BMC Public Health.

Study co-author Christine White (University of Waterloo, Canada) commented in a press statement: “Our results suggest that plain packaging and the removal of brand descriptors are likely to reduce the appeal of smoking for youth and young adults. “Overall, these findings support the recommendations for plain packaging in the [World Health Organization] WHO Framework Convention on Tobacco Control.”

An online survey by David Hammond and team, from the University of Waterloo, of 640 Brazilian smoking and nonsmoking women aged 16-26 years showed that the highest appeal ratings were given for branded cigarette packs.

Indeed, regular branded cigarette packs were given a mean appeal rating of 6.0 out of 10.0 compared with plain cigarette packs labeled with the name and description of the cigarette brand at 4.3, and plain packs that contained no description, at 3.4.

The branded packs had a significantly higher taste rating at a mean score of 4.9, compared with plain packs at 3.9 and plain no-descriptor packs at 2.3. Branded packs also had a higher smoothness rating, at a mean score of 4.1 compared with plain packs, at 3.1, and plain no-descriptor packs, at 1.6.

Linear regression analysis was performed by combining five smoker image traits: female, stylish, popular, sophisticated, and slim; into a single smoker image index where higher scores indicated more positive traits. Branded packs had a higher positive trait score, at 3.84, than their plain counterparts, at 3.22, and plain no-descriptor packs, at 2.67.

At the end of the survey, the participants were asked whether they would prefer being given a branded cigarette pack or a plain pack as a free gift; 39.6% chose a branded pack while only 12.5% chose a plain pack.

“The women in this study rated branded packs as more appealing, more stylish, and sophisticated than the plain packs,” commented Hammond in a press statement. “They also thought that cigarettes in branded packs would be better tasting and smoother.”

“Removal of all description from the packs, leaving only the brand, further reduced their appeal. In the pack offer test, participants were three times more likely to choose the branded pack as a free gift.”

Licensed from Medwire news with permission from Springer Healthcare Ltd. ©Springer Healthcare Ltd. All rights reserved. Neither of these parties endorse or recommend any commercial products, services, or equipment.

U.K. Cigarette Companies Decline on Smoking Rules: London Mover

By Matthew Boyle – Sep 8, 2012 12:09 AM GMT+0800

British American Tobacco Plc (BATS) and Imperial Tobacco Group Plc, Europe’s two largest cigarette makers, fell today in London after reports that Russia and France plan to impose greater restrictions on smokers.

BAT, the maker of Dunhill cigarettes, declined 2 percent to 3,173.5 pence, the lowest price since June 18, while Imperial, which makes the Davidoff brand, dropped 3.5 percent to 2,262 pence, the lowest since Jan. 26.

France’s health minister will unveil a plan to remove branding from cigarette packs in coming weeks, Le Parisien reported Sept. 5, without citing anyone. The Russian government plans to submit a law banning smoking in public places to Parliament by Nov. 1. The country has the second-largest tobacco market after China. BAT had 20.8 percent of eastern Europe’s cigarette market in 2011, while Imperial had 11.2 percent, according to data compiled by Bloomberg.

“While we think the market reaction to the recent news flow on regulation changes is overdone, there is clearly uncertainty being created,” David Hayes, an analyst at Nomura, said in a note to clients today.

The Russian government wants to reduce premature deaths caused by smoking, Deputy Health Minister Sergei Velmiaikin said Sept. 3. The world’s first plain-pack law is due to take effect in Australia Dec. 1, and governments in New Zealand and the U.K. are considering similar legislation.

Imperial Tobacco, based in Bristol, England, fell for a fourth consecutive day, for a year-to-date decline of 7.1 percent. BAT, based in London, has advanced 3.9 percent this year.

To contact the reporter on this story: Matthew Boyle in London at

To contact the editor responsible for this story: Celeste Perri at