JULY 2 — The world’s ugliest cigarette packets aren’t going away.
Australia’s plain-packaging laws, which mandate that all tobacco in the country be sold in drab brown packs with no logos, writing in uniform fonts and gruesome health-warning photographs, have been upheld by the World Trade Organisation six years after the measures came into effect.
The WTO complaint brought by Indonesia, Honduras, the Dominican Republic and Cuba, has relevance beyond the small Australian market. The long-term risks to the tobacco industry are in the burgeoning populations of Africa and Asia.
“Start them young” is one of the secrets of cigarette companies’ longevity. Older people rarely take up smoking: A 2013 study in New Zealand found that between the ages of 15 and 17, about one in seven children take up smoking while one in 14 do the same at 18 or 19. But after the age of 24 it becomes rare for anyone to start. Those who begin younger generally consume more cigarettes and find it harder to quit, too, making them particularly valued customers.
That’s why the battleground of tobacco control is in emerging markets. There are about 750 million people under the age of 25 in India and another 507 million in China, with Nigeria, Indonesia and Pakistan each counting more than 100 million apiece, according to the United Nations Population Fund. Young populations and rising incomes deliver the best hopes of cultivating a new generation of addicts, as a Bloomberg editorial argued last week.
The argument most commonly made against the Australian rules is that they haven’t made a difference. That doesn’t stand up to a lot of scrutiny: Studies supporting that claim have either been based on non-public data that can’t be checked, or commissioned by the industry, or both, according to a 2016 analysis by Australia’s Department of Health.
An analysis of tobacco tax payments found that legal volumes fell 3.4 per cent in the first year of the packaging rules and 7.9 per cent in 2014. Another based on market research data found the new regulations had in their first three years caused smoking prevalence to fall by 0.55 percentage points, equivalent to about 108,000 people or 3.2 per cent of the population who’d otherwise have been smokers. Adolescents, in particular, seem to be taking up the habit at notably lower rates, especially during the pivotal mid-teenage years.
To date, few countries have followed Australia’s path.
Comparable rules have come into force in New Zealand, the UK, France, Hungary and Norway only over the past 18 months, while Ireland is in the process of following suit. The likes of Thailand and Burkina Faso have laws in the works, though, suggesting the plain-packaging trend may soon spread from rich countries and toward the poorer ones that have adopted measures such as graphic health warnings at increasing rates in recent years.
That’s likely to be further bad news for the world’s biggest tobacco companies, which are already trading around multi-year lows.
In the near term, the global crackdown on advertising might take some dollars out of the big firms’ marketing budgets and pass it on to shareholders.
In the long term, though, tobacco companies’ slavishly loyal consumers die 10 years earlier than those who don’t partake. With each move to make the recruitment of new customers harder, the industry’s future prospects glow a little weaker. — Bloomberg Opinion
