4|Retail News|December 2014|www.retailnews.ie
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Aussie Rules on Plain Packaging Have Flopped! NEW statistics from Australia on the impact of plain cigarette packaging suggest that its introduction has not had the desired results in terms of reducing smoking rates. Two years after the introduction of plain packaging in Australia, data reveals that the amount of 12-17 year olds who smoke daily has increased from 2.5% in 2010 to 3.4% in 2013. “The evidence coming out of Australia suggests there is an increase in the number of children smoking since plain packaging was introduced,” Deirdre Drennan, Irish representative for the National Federation of Retail Newsagents (NFRN), told Retail News. “NFRN believes that evidence-based decision making is the best form of decision making.” But can we trust the evidence? The introduction of plain packaging in Australia has resulted in a quagmire of opposing statistics from tobacco and health lobbies. This data, however, comes from the 2010 and 2013 National Drug Strategy Household Surveys, compiled by the Australian Institute of Health and Welfare (AIHW) - a government agency responsible for health statistics. “This evidence comes from the Australian government itself, so it’s not biased by anybody with a particular interest,” said Drennan. Another apparently non-partisan report from Australian National University, titled The Plain Truth about Plain Packaging: An Econometric Analysis of the Australian 2011 Tobacco Plain Packaging Act, suggests plain packaging has flopped: “There is no empirical evidence to support the notion that the plain packaging policy has resulted in lower household expenditure on tobacco than there otherwise would have been. There is some faint evidence to suggest…
household expenditure on tobacco increased.” “There is no evidence to support the view that plain packaging contributed to a decline in household expenditure on tobacco,” author of the Australian National University report, Sinclair Davidson, Professor of Institutional Economics at Melbourne’s RMIT University, told Retail News. “In coming to that conclusion, we controlled for the long-term decline in household expenditure in tobacco.” He described the results of the University report as “consistent with the EY analysis, done subsequently to ours and using a different data set, and also a Treasury analysis done prior to the introduction of plain packaging, showing that most public health interventions don’t have much impact on tobacco expenditure or consumption, once you control for the long-term decline in smoking incidence.” This report also suggests smokers are moving from higher-priced to lowerpriced brands. “There hasn’t been a decrease in sales of tobacco products,” said Vincent Jennings, CEO of Ireland’s Convenience Stores and Newsagents Association (CSNA). “There has been a shift in purchase habits from premium products down into value. That is clearly as a result of the product being
commoditised and branding being removed. It hasn’t reduced demand.” The Australian experience proves plain packaging will not work in Ireland, according to tobacco companies here. “These facts have been deliberately ignored by plain packaging advocates,” said Igor Dzaja, General Manager of JTI Ireland. John Player’s Market Manager, Peter Lassche, added: “This must be of great concern to plain packaging lobbyists in Ireland.” When Retail News approached Ireland’s Department of Health with the statistics, a spokesperson pointed out a disclaimer in the AIHW’s 2013 survey. While the report recognises “a slight rise in the proportion of people aged 12-17”, it adds that “this increase in daily smoking was not statistically significant and the trend for those aged 12-17 should be interpreted with caution, due to a high relative standard error.” The Department of Health spokesperson said AIHW’s data, in fact, proved the success of plain packaging: “What is hugely encouraging in the data from Australia is that 95% of 12-17 year olds have never smoked. Of greater importance was the finding that shows there has been a statistically significant decrease in daily smokers aged 14 years or older in Australia, falling from 16.6% in 2007, 15.1% in 2010 to 12.8% in 2013. The Australian Department of Health has stated that plain packaging operates as part of a comprehensive set of tobacco control measures. It is an investment in the long term health of Australians and its full effects will be seen over the long term.” What about the black market in Australia? “Our concern was always that [plain packaging] would fuel illicit trade,” said Drennan. “The black economy not only takes away tobacco
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News sales for retailers, it takes away our customers. It has had a detrimental effect on some of our members’ businesses. Plain packaging, we believe, will fuel the growth of that market.” The black market is a smoking gun for the tobacco industry. JTI Ireland claim that, according to data from the Australian Customs and Border Protection Service, seizures of illegal tobacco increased by more than 41% over 2011-12 and 2012-13. A recent KPMG report, Illicit Tobacco in Australia, claimed that “consumption of illicit tobacco products jumped from 11.5% in 2012 to 14.3% in June 2014”. There is little doubt the rise in cigarette prices here in Ireland has led to an increase in smuggling into the country, although customs are cracking down on these criminals. From January to October this year, revenue officers seized 50m illegal cigarettes. Despite these latest results on the impact of plain packaging in Australia, Ireland is pushing to be the first EU state to introduce the same policy. In June, the government approved the publication of the Public Health (Standardised Packaging of Tobacco) Bill. “As detailed opinions on the measures were received, the standstill period on the Bill was extended to December 18, 2014,” a Department of Health spokesperson told us. “The legislative process cannot continue until after this standstill period elapses.” The government faces opposition from the US Chamber of Commerce and other powerful business groups. There are also legal implications over intellectual property rights of tobacco companies. All this will
NOffLA Calls for Minimum Pricing on Alcohol
Vincent Jennings, CEO of the CSNA.
come at a cost to the Exchequer. “That’s a matter at the fore for taxpayers,” said Jennings. “The Department of Health has decided this is a project worth pursuing, regardless of the cost to the Exchequer. The recent increase in price on tobacco suggest the government are bracing themselves for a reduction of excise, because reduced consumption will follow. Price is a determining factor for people buying legitimate products. Unfortunately, price is also instrumental in people moving out of the legitimate market. It’s being filled by smuggled products. Secondly, a significant amount of people are importing tobacco from other European communities. The government are expecting Irish retailers to take the hit.” The question of whether plain packaging works remains. Do people start smoking as a result of seeing logos and colour schemes on packs? “We can only go on evidence-based policy,” said Drennan. “The evidence suggests [plain packaging] has made it easier for kids to access cigarettes. Criminals don’t ask for ID.”
Public Consultation on Tobacco Legislation THE Department of Health wants your views on legislation in relation to the sale of tobacco products and non-medicinal nicotine delivery systems (NMNDS), including e-cigarettes. The details of the measures are set out in a consultation paper, available at http://health.gov.ie/blog/noticeboard/tobaccoconsultation2014. You can submit your views using the online questionnaire at the same web address. If you’d rather read a hard copy of the consultation paper and questionnaire, e-mail tobaccoconsultation@health.gov.ie or write to: Tobacco & NMNDS Consultation Tobacco and Alcohol Control Unit Department of Health Hawkins House Hawkins Street Dublin 2. The closing date for views is Friday, January 16. A consultation report will be prepared and published on the DOH’s website.
THE National Off Licence Association has come out in support of plans in Northern Ireland to introduce minimum pricing per unit of alcohol. The province’s Health Minister Jim Wells plans to introduce a policy that would set a baseline price, below which alcohol cannot be sold. “We are in favour of minimum pricing, but we are also in favour of a ban of below cost selling,” said Evelyn Jones, chairperson for NOffLA. “The two can work in tandem. One will prevent the sale of extremely cheap alcohol, the other will prevent the discounting of premium brands to exact footfall. Very cheap alcohol tends to appeal to marginalised people in society. For the average consumer, the problem is the below cost selling of alcohol, where a premium branded product is discounted to drive footfall to sell other grocery products.” Ireland’s Minister for Health, Leo Varadkar TD, has vocally supported an all-Ireland approach to minimum unit pricing (MUP). NOffLA has called on the government to introduce MUP as part of its Public Health (Alcohol) Bill. How would the industry choose an appropriate price? “It’s a matrix,” explained Jones. “The minimum price chosen must work across three categories – wine, beer and spirits – allowing for the differing strengths.” The Drinks Industry Group of Ireland has also called on the Government to address the sale of cheap alcohol. Earlier this year, all members of DIGI signed a pledge for the introduction of policy options to tackle misuse, including: addressing the widespread sale of alcohol at very low prices in a meaningful way, banning price-based advertising, which encourages an incorrect image of alcohol and the ways in which it should be enjoyed, and also introducing a statutory code on alcohol merchandising.