Prof Simon Chapman: Plain packs will kill profits

THE ALLIANCE of Australian Retailers is running a big budget ad campaign against the Labor government’s plan to require all tobacco products to be sold in plain packs.

Only the gory health warnings and the name of each brand in a standard font will appear on these plain packs.

The ads feature shopkeepers making bold claims about the supposed ineffectiveness and foolishness of such a law.

The central claim is that plain packaging “won’t work”.  You will be forgiven for asking that, if it won’t work, why then are the big three tobacco companies bankrolling the reported $5m campaign to stop it from happening?

But almost all issues of the tobacco industry trade magazines brim with a far more candid assessment. One recent cover story didn’t muck around: “Plain packaging can kill your business”.*

Umm … that’s actually the idea, fellas. Plain packs are meant to reduce sales. Plain packs will gut the last bastion of tobacco advertising in Australia.

Focus-group tested, glossy, metallic packages promising wealth and sophistication or bright and cheerful days at the beach will no longer be available to lure new smokers to the deadly habit.

And the local industry is terrified these plain packs will be rolled out globally under their watch.

The Australian success story in reducing smoking to among the lowest in the world is about to have another major chapter added.

The retailers argue that there is no reliable evidence anywhere in the world that plain packaging will stop people from taking up smoking, or help people to quit.

But these retailer arguments are a smokescreen for what really worries Big Tobacco. Brand image is essential in luring new smokers.

After plain packaging, legions of smokers will wake up to the fact that, aside from the pretty packaging, there are few differences between brands.

Many are likely to trade down from the highly profitable, premium, expensive brands to cheaper brands for their nicotine hit.

The big tobacco companies today chase what they call the “value market” because they know that total sales volume is in steady decline.

A 2001 Australian tobacco company training DVD reveals that a company needs to sell five packs of budget brands to get the same profit from one pack of a premium brand.

Plain packaging strips the industry of this vital source of revenue while gutting the industry’s entire ability to distract smokers from thinking about what they are buying.

Future generations will wonder why plain packaging took so long.

* Tobacco Journal International 2008 (4).

Simon Chapman is Professor in Public Health at the University of Sydney. He has published numerous articles in peer-reviewed journals, books and major reports. His book Public health advocacy and tobacco control: making smoking history was published by Blackwell (Oxford) in 2007.

Becky Freeman coauthored this article. She is a researcher at the University of Sydney, School of Public Health, and has worked in the field of tobacco control since 2000.

Posted 13 September 2010