Australia announces plain packaging

April 29, 2010

CANBERRA-Ratcheting up world-wide efforts against tobacco, Australia’s government said Thursday it plans to ban brand labels and other marketing imagery on cigarette packaging by 2012, a move that would erase iconic logos like Marlboro’s red-and-white chevron from store shelves.

Under the proposal, the tobacco industry would be prohibited from using logos, colors, brand imagery or promotional text on tobacco product packaging. The brand name would be reduced to small, uniform letters at the bottom of each pack. The dominant image would instead be the often-graphic antismoking warnings that Australian government has required since 2006.

Cigarette companies vowed to fight the measure Thursday. A spokeswoman for British American Tobacco PLC, the largest cigarette maker in Australia by sales, said the company believes the plain packaging proposal will “not hold up to close scrutiny.”

A box of cigarettes with generic packaging and a health warning, in a composite image showing the front (on the left) and back of the box, in this handout image from the Australian government Thursday.

But Australian Prime Minister Kevin Rudd, who has seen his popularity drop in recent months and will have to face an election within a year, vowed to press on. “Cigarettes kill people, therefore the government makes no apology whatsoever over what it’s doing,” he said Thursday. He also enacted Thursday an immediate 25% hike in cigarette excise taxes, a move that will raise 5 billion Australian dollars (US$4.62 billion) over the next four years.

Australian officials Thursday described the move as the first of its kind in the world, and it potentially marks a new front as governments around the world look for ways to curb tobacco use. Earlier this year in the U.S., a federal judge ruled that the U.S. Food and Drug Administration can’t block tobacco companies from using color and graphics in their advertisements, though he upheld other restrictions.

Two years ago, U.K. policy makers declined to pursue a ban on logos on packaging when they pushed forward a ban on in-store cigarette displays. However, in February the U.K.’s Department of Health said it would consider mandating generic packaging for all cigarettes as part of a campaign to halve smoking rates by 2020.

Australian Prime Minister Kevin Rudd displays a packet of newly labelled cigarettes in Sydney Thursday.

The move could be challenged on a number of fronts. Tim Wilson, an expert in intellectual property at the Melbourne-based Institute of Public Affairs, said there is a clear argument under Australia’s international trade obligations that even if tobacco companies’ property rights aren’t being taken by the government, they certainly are “being devalued to the point where they’re being ex-appropriated and there would be a very legitimate argument that you should seek compensation for that.”

Cigarette company executives in Australia Thursday complained that the rule would devalue brands but wouldn’t reduce smoking. They also said plainer packs are easy to counterfeit. “Our industry is already losing over 12% of market share to the criminal black market and the taxpayer A$600 million a year. And as everyone knows the criminal black market doesn’t pay taxes and doesn’t ask kids for identification,” said Louise Warburton, a spokeswoman for the Australian unit of BAT.

A spokeswoman for Philip Morris International Inc., the New York-based company that offers the Marlboro brand outside the U.S., said no executives were immediately available for comment.

Health Minister Nicola Roxon said the government is acting on World Health Organization advice that plain packaging of cigarettes should be considered as a measure to curb smoking. The legislation will be carefully drafted to withstand any legal challenge, she said.

“Information from tobacco companies themselves that they use their packaging as a way to market their products that kill people convinces us that this is the next step that should be taken,” Ms. Roxon said.

The government’s aim is to cut smoking rates to 10% or less of the adult population by 2018. The Australian government says smoking is the largest preventable cause of disease and premature death in Australia, killing over 15,000 Australians each year.

Australian tobacco regulations already are quite strict, with restrictions on tobacco advertising in broadcast and print media and in sponsorship of sporting and cultural events since the early 1990s. Since 2006, all cigarette packets have carried graphic images of smoking-related illnesses designed to motivate smokers to quit.

Mr. Rudd wants the legislation to be in place by January 1, 2012, with the ban to take effect by July 1 of that year-an extended time frame that suggests a confidence his government will win the next federal election due by April 2011 at the latest, but which also acknowledges the possibility of a protracted court battle with the tobacco giants.

The tax increase will raise the price of a pack of 30 cigarettes by around A$2.16. Cigarettes currently cost around A$12 to A$15 a packet, depending on the brand. Mr. Rudd said he hopes to use the A$5 billion from the higher cigarette taxes to fund public hospitals.

“Tobacco companies will hate this measure, they will oppose it, nonetheless this and other measures will help to reduce smoking,” he said. “This sort of thing should have been done by governments years ago.”

Australia’s main conservative Liberal-National opposition said Thursday it hasn’t yet seen evidence that introducing plain packaging would be effective in reducing cigarette consumption.

“There is evidence that an increase in [tobacco] excise can result in a reduction of consumption but we need to see the government’s evidence on the measures that they are proposing,” opposition health spokesman Peter Dutton said.


Source: Wall Street Journal (April 29, 2010)