The anti-tobacco efforts of Ireland and UK will come into force once again on the 20th of May, 2016. This time, they will be introducing tobacco plain packaging that will standardize all tobacco products from that date.
Products will appear only with the brand name and images endorsing public health warnings.
Tobacco Plain packaging will have several effects, considering varying perspectives. However, it would be a naive outlook to suggest that it will result in a demand contraction, causing a decreased number of smokers, thus bringing down the profits of tobacco manufacturing firms. It’s important to consider different effects of this packaging, beyond and even opposite of theoretical predictions.
Tobacco Plain Packaging Policy Set to Bring Permanent Changes to the Tobacco Industry
Introduction of plain packaging policy is set to create a perpetual structural change in the tobacco market. Incumbent firms will get affected in terms of both performance and conduct.
Smokers often identify and associate brandings with personality and generally like to keep this at a superior level compared to other factors. For instance, someone may link a premium brand with higher social status, which could include aspects such as attractiveness or wealth.
Thus, such branding would act as a barrier and refrain new firms from entering the market. With the introduction of tobacco plain packaging policy, this barrier will be reduced as the intrinsic value and product differentiation will be removed while substitution ability amongst brands will increase.
Tobacco Plain packaging policy may even have some drawbacks. It could trigger a predatory type behaviour in pricing, which may increase the demand, quite contrary to what the policy plans to achieve. However, the policy could encourage a decrease in consumption, due to the mandates on marketing and reduced quality required to maintain profit margins even as prices go down.
Thus, it could be said that how plain packaging will effect tobacco consumption is somewhat of a paradox. Still, it’s believed that such packaging will play a significant role in deterring fresh smokers. This will gradually contract the market, which is the most important thing in terms of ensuring the long-term health of any population.
It seems that down the line, tobacco plain packaging policy will become an essential measure to bring down the smoking rates in many countries across the globe.
To enjoy reading more such stories on tobacco packaging policy click to see our artice on Plain Packaging in Australia.