Impact of Tobacco Plain Packaging on Policy Implementation.

The anti-tobacco efforts of Ireland and the UK government will come into force on May 20th, 2019.

This time they are implementing plain packaging with standardised foil packaging across all products from that date forward with a new design that features graphic health warnings in the form of images on all cigarette packaging. This is an effort that is said by many experts to have been successful at decreasing smoking rates even further due to the graphic health warnings previously being hidden away amongst cigarette branding on retail packaging. Once fully implemented these products will appear only with the brand logos and images endorsing public health warnings.

The implementation of plain packaging of tobacco products will have several effects, considering varying perspectives. One effect which has been widely predicted is a demand contraction for cigarettes, meaning less tobacco consumption (including both adult smokers and young people) and fewer people will start smoking due to the new packaging regulations and stronger warning labels on tobacco products.

These changes would cause profits from manufactured firms’ revenue streams, including those involved directly or indirectly through manufacturing processes such as the packing house worker who handles raw material suppliers, to decrease dramatically over time since fewer consumers mean lower sales numbers overall. Small retailers will also potentially be affected when companies are forced to introduce plain packaging legislation as fewer tobacco sales will reduce profits earned. The changes may cause the larger tobacco companies to cut the cigarette prices so the prices paid by the end consumer are less thus encouraging additional demand, but this would not be welcomed by authorities.

Tobacco Plain Packaging Regulations – Permanent Change to the Industry
The tobacco industry is a classic example of how a tobacco company oligopoly can control the market. There are two tobacco companies, Philip Morris and Imperial Tobacco that hold most of the power in this field with their vast resources making them the most well-known brands internationally. With the introduction of plain packaging for tobacco products, barriers to entry into the tobacco industry will be reduced. This is because branding can act as an intangible barrier and new firms are discouraged from entering markets with high levels of competition like this one. The removal in package design should increase substitutability among brands while also increasing their value-to-cost ratios which means they have less incentive not just to operate within these shores but take over entire countries.

The introduction of plain packaging is set to create a structural change in the tobacco market. Incumbent firms will get affected both positively and negatively depending on how they react, with their performance being particularly impacted by this new policy. People who smoke often identify and associate branding's with personality, which is probably why they like to keep this at a superior level compared to other factors. For instance, someone may link their premium brands together by thinking that one has a higher social status which includes aspects such as attractiveness or wealth. Plain packaging implementation will create more of a plain and standardised appearance on tobacco products potentially reducing the consumer attachment to one brand.

Plain Tobacco Packaging – Implementation of plain packaging
Plain packaging laws for tobacco could have some drawbacks. It might trigger a predatory type of behaviour in pricing, which would increase demand and quite contrary to what the policy plans; however, there is potential that this new law could encourage less consumption due since now companies need only meet minimum quality requirements rather than maximise profits at any cost. Plain cigarette packs may seem like a paradox, but it’s believed that such a plain package will play an important role in deterring fresh smokers and gradually contracting the market. This is key when looking at the long-term health of any population.

Whether you’re a smoker or not, the plain packaging policy for cigarettes sounds like an excellent idea and health policy. Tobacco control measures and standardised packaging that bring down rates of smoking will become an essential measure in many countries around the world and no doubt there are plenty who support these measures already but just need someone with authority to make their voices heard about how good they think it could be! To read similar stories on tobacco packaging policy click to see our article Plain Packaging in Australia.