British American Tobacco Australia has launched yet another attack on the Australian government’s plain packaging legislation. On top of its latest “Where’s the proof?” campaign, launched today, it is arguing for the legislation to be delayed, calling the proposed timeline “unworkable”.
This comes on the back of one of the tobacco industry’s biggest setbacks: the opposition’s decision last week to support the government’s proposed legislation. This takes Australia a step closer to becoming the first country in the world to implement plain packaging, but it’s not a done deal yet.
Cigarette companies are continuing their fight because they’re worried the introduction of plain packaging in Australia sets a potentially devastating precedent for global tobacco industry profits.
With cigarette sales declining in mature, high-value markets, multinationals like British American Tobacco (BAT) are focusing their efforts on developing countries, such as those in the Asia Pacific region. Not only do these markets tend to have lenient tobacco legislation – they have rapidly growing populations with increasing consumer spending power.
A fall in tobacco sales in Australia would champion the case for removing branding from cigarette packs in these international markets.
These international implications explain why Australia’s big three cigarette companies are bankrolling the Alliance of Australian Retailers (AAR) campaign of adverts on TV, radio, press, and online media.
AAR claims that plain packaging is unnecessary, confusing and inconvenient for small retailers and smokers alike. The key message is that “The Government has no real evidence that the plain packaging of cigarettes will work.”
The tobacco industry is playing on the ignorance of consumers, who are often unaware of how significantly packaging impacts their behaviour.
Marketing practitioners widely acknowledge that apart from increasing sales, effective pack design also improves the “brand health” by raising brand awareness, brand recognition and influencing positive brand attitudes.
For cigarettes, the pack is the brand. Multinational companies such as BAT spend millions developing the most effective pack designs that hold the greatest appeal to their target consumers.
If plain packaging is enforced, cigarette manufacturers lose their ability to market their brand ranges, particularly in the face of increasingly prohibitive policies relating to pricing, promotion and advertising.
A recent Philip Morris report acknowledges this, but concludes that plain packaging would result in price reduction, which would in turn lead to an increase in cigarette consumption.
While simple economic laws may relate lower prices to increased consumption, this argument is far too simplistic. Many other more significant factors come into play, which would suggest the opposite scenario.
Removing the brand from consumer sight dramatically reduces impulse purchase potential, as does removing them from optimum selling locations – out of sight, out of mind.
Removing the medium for promoting the values associated with different brands reduces the appeal of smoking. Obvious ones include the luxury status or “rebel without a cause” values that some smokers and non-smokers find so appealing.
While it is likely that people will always smoke, reducing cigarettes to a generic brand status with plain packaging will dramatically limit the capacity to market the product. Australia can then be the much-needed pilot market to test out the scenario predicted in the Philip Morris report.
Cigarette manufacturer protests will no doubt increase in the lead up to 2012. It will be interesting to see if the Australian Government can stick to its guns and not cave into the tobacco industry pressure.