A ban on branding for cigarette packs has not worked in Australia, the only country where it is in place. So why are other governments around the world considering the same policy?

What is plain packaging?

Plain, or standardized packaging, is the latest regulatory measure aimed at reducing smoking rates. Plain packaging legislation was implemented in Australia in December 2012. Since that time, branding on tobacco packaging has been banned. This means that all packs must now be the same, government-mandated color. All trademarks, logos and graphics have been removed and only the brand name in a certain font and size is allowed.

With all consumer products, packaging is used to differentiate between brands. It helps brand owners to communicate quality and innovation to consumers. It also helps to differentiate between products, distinguish real brands from fakes, encourage innovation by manufacturers, and allow fair competition.

A failed experiment

Since plain packaging was introduced in Australia in 2012, the Government’s own data fails to demonstrate any change to the decline in smoking rates. However, plain packaging has changed the market dynamics in terms of competition and price, pushing many Australians to down-trade to cheaper brands. In addition to down-trading, more and more Australian smokers are turning towards the black market in cheap illegal tobacco.

Figures show that smoking rates have been declining steadily in Australia for decades. The charts below, based on the data published by the Australian Government, show that the existing rate of decline continues. The same set of data, from the Australian Institute of Health and Welfare, also fails to demonstrate any reduction in youth smoking rates, or an increase in the effectiveness of health warnings over this time period. 

The decline in smoking prevalence between 2010 and 2013 is consistent with the pre-existing linear trend. Plain packaging has not accelerated this downward trend.

In addition to the lack of effect on smoking prevalence, sales estimates show that the number of cigarettes legally sold continues to decline as it has since 2010. This confirms that Australian smokers are not buying fewer cigarettes as a result of plain packaging.

Illegal trade

Plain packaging has not further reduced smoking, but it has had an impact on where smokers buy their cigarettes. Although Australians are not smoking less, they are ‘down-trading’ - buying cheaper cigarettes. Research also shows an increase in illegal tobacco in Australia since the introduction of plain packaging.

Levels of illegal tobacco consumption in Australia are higher than prior to the introduction of plain packaging in 2012. The figure now stands at 14.3% of total consumption in H1 2015 according to KPMG.

Other negative impacts

Plain packaging has had a major impact on tobacco sales in Australia. In fact, since plain packaging was introduced in 2012 the competitive landscape and market dynamics have changed significantly.

Sales data shows that premium brands are rapidly losing market share to value and sub –value brands. This is another indication that consumers are increasingly looking for cheaper alternatives.

The market share of value brands has more than doubled over the last two years, from less than 20% to more than 40%.

This down-trading trend suggests that because of the ban on branding, the price of cigarettes has become an increasingly important factor for consumers when choosing a product.

Alternative measures

We support the objective of reducing youth smoking. However, there are less restrictive, more targeted and proportionate alternative measures that can be implemented, as appropriate, to achieve this objective, such as:

Effective enforcement of the minimum legal purchase age.

Reinforcing retail access prevention measures, such as: 'No ID, No Sale!'

Greater resources and man power for effective, targeted enforcement strategies.

Focused public information campaigns.

Implementation of a negative licensing scheme for retailers.

Criminalization of proxy purchasing by adults for minors.

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