Plain packaging, a not so plain problem

By Lal Gunatunga

Sri Lanka’s Cabinet recently voted to introduce standard or plain packaging to tobacco products with the objective of reducing the appeal of smoking. Australia and the United Kingdom are two countries that have already enacted the rule, with the land down under doing so in 2012, whilst Britain followed in May last year. 
With its length of application, Australia’s experience offers the best evidence on the success of the measure – if indeed it has reduced the appeal of smoking and improved health and economies of citizens in the country. Having returned from a regular visit to ‘down under’, a recent article by Forbes summed up the proceedings – “it’s been a disaster”. 

There is no question concerning the noble objectives behind plain packaging but that purpose must be complimented with the anticipated results. For instance, since 2012, illicit tobacco consumption in Australia rose from 11.5 percent to 14 percent over five years, according to a study published by KPMG, costing the Aussie government over AUD 1.6 billion in losses annually. 

Unbranded cigarettes account for 58 percent of illicit in Australia, growing at 1.3 percent a year. The argument presented here by the tobacco industry being that unbranded plain packaging makes it difficult for consumers and traders alike to discern between legitimate and contraband, opening avenues for smugglers to steal in their product. Sri Lanka, with its burgeoning beedi market and increased attention from smugglers globally, potentially has a lot more to lose. 

The article on Forbes states that last December marked five years since the introduction of plain packaging in Australia and with it the long decline in smoking has actually stalled, whilst illicit tobacco, which is more harmful to health, has increased. It goes onto quote Australia’s National Drug Strategy Household Survey, which states “the daily smoking rate did not significantly decline over the most recent three-year period”.

It also quotes Professor Davidson from RMIT University who adds that in “actual fact there are more people smoking in Australia today than five years ago when the policy was introduced”. The bureaucrats would argue otherwise and in 2014, the Australian Bureau of Statistics announced that the household expenditure on tobacco products had reduced but this is in relative terms to price of overall products.

“While we do not want to overemphasise these results, we do conclude that any evidence to suggest that the plain packaging policy has reduced household expenditure on tobacco is simply lacking,” the University report finds. These reports only confirm what we see out on Australia’s streets. 

Back home in Sri Lanka, besides the proposed plain packaging, we are blessed with some of the most stringent laws pertaining to tobacco control. Sri Lanka is a dark market with absolutely no marketing or promotion of tobacco products in any manner with sales restricted by law to persons over 21 years of age, plus, a public place smoking ban in addition to graphic health warnings that dominate 80 percent of the pack – which is almost as good as plain packaging in this writer’s opinion. 
Cigarettes in Sri Lanka are very expensive and as per the financial reports published by its manufacturer, the high price has severely impacted volumes. However, it adds that there has also been a marked increase in the presence of smuggled illicit products in the market and this is corroborated by multiple media reports of detections of contraband by our Customs Department.

It is estimated that Sri Lanka has over 450 million smuggled cigarettes entering the market annually, which is a loss of Rs.22.5 billion to the government annually. Australia has a much stronger border protection force and law enforcement agency. Despite that, illicit has grown by 2.5 percent over a period of five years.
What will plain packaging do to Sri Lanka? The already established 400 percent growth in smuggling may very well reach irrepressible heights with significant losses to the state and a break down in law and order. The economic fallout of such needless action is something that the Sri Lankan governments must pay a great deal of attention to in this time of need to reduce our national debt. 

There is no question concerning the noble objectives behind plain packaging but that purpose must be complimented with the anticipated results

Furthermore, we have the question of beedi. Alongside cigarettes, beedi too is a tobacco product that is produced and consumed all over Sri Lanka. How do we apply these laws to the beedi trade? Beedis are sold in loosely stringed bundles of 20 with no health warning or packaging but it qualifies as a tobacco product so they too must fall subject to the same laws governing the industry. The argument that beedis constitute a meagre cottage industry is rubbish and it is because we tend to turn a blind eye on the trade that it has grown into a burgeoning industry with political backing. 

The Cabinet Paper submitted by the health minister suggests that the standard package has only two colours – black and white, whilst no other picture or mark can be displayed other than the trade name, product name, quantity of the production and information or mark determined or made compulsory by the government such as health warnings.

Tobacco companies the world over are embroiled in legal battles with governments on plain packaging violating intellectual property and branding rights and the argument in Australia is prolonged and lingering. Time and dollars gone to waste, is the view I take on this matter, efforts that could have been put to good use elsewhere. 

In his article in Forbes, Lorenzo Montanari, wrote: “Branding, even of cigarettes, helps consumers make informed choices. In Canada, a country considering plain packaging, a study was recently conducted by a leading public opinion firm that found 81 percent of consumers there believe branding matters because of the distinguishing information it provides, 74 percent said they believed tobacco companies should be allowed to brand and 64 percent said plain packaging was a waste of government resources.

Five years is long enough. The WHO should reverse course on plain packaging and choose to protect intellectual property rights instead of pioneer their eradication. It is clearly demonstrable, by Australia’s own records, that it has been ineffective. The country has borne several costs since implementing the measure, a rise in illicit tobacco funding criminal organisations not the least among them.”

At its current state of development, Australia and many other countries as such can afford a little mistake such as plain packaging with not much more than some egg in the face. But for poorer nations like Sri Lanka, which are juggling a balance of payments crisis, foreign debt and a plethora of economic and social issues, it’s not so plain and simple as an egg. 

(Lionel Gunatunga is a retired superintendent of government and private plantation organisations and counts over 40 years of experience in the Central and Southern Provinces, engaged in plantation administration and operations. He can be reached at [email protected])