Cigarette companies won't go down without a fight: What plain packaging means for Britain’s tobacco industry
MPs yesterday voted in favour of introducing plain cigarette packaging in the UK by 2016.
This has come as a big shock to the tobacco industry who are now rightly concerned about the future of their market.
Plain packaging and what it means for Britain’s tobacco industry
Whilst the sentiment behind the government’s proposed legislation might be well intended, it could have some less than desirable consequences.
Since virtually all advertising of cigarettes and cigars has now been banned, branding is extremely important for tobacco companies.
There is also an emotional attachment to the brand because the packaging is the last bastion of any brand identity – why else would tobacco companies still pump millions of pounds into branding despite most shops hiding cigarettes behind closed doors?
Also, the majority smokers are loyal to one particular brand of cigarettes and packaging plays a large role in that; remove the branding and you remove the loyalty.
However, getting rid of brand loyalty could have a potentially dangerous effect as competition will become about price rather than brand.
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This could see tobacco companies driving down the price of cigarettes to compete with cheaper makes. Price is a huge factor in keeping people off tobacco, making them cheaper will destroy this deterrent.
Nevertheless from a marketing perspective there is an argument that plain packaging will accelerate a reduction in smoking levels, primarily by reducing the emotional link with smoking. Similarly, plain packaging would reinforce the embarrassment that surrounds smoking – making it even more of a social taboo than it already is.
Now the elephant in the room is the question of where big tobacco will focus its incredible investment and marketing power?
The obvious choice for cigarette companies is to increase their dominance in the electronic cigarette (vaping) industry.
Not only are there bigger margins to be made, besides VAT, the products aren’t currently taxed but the rules on advertising them are much less stringent.
On top of that vaping is fast becoming a popular lifestyle choice with its own community built around it.
The debate around plain packaging is not going to quieten down over the next 12 months and the arguments on both sides are going to get increasingly fierce.
Already many cigarette companies are sabre-rattling with legal challenges to the bill over trademark violations.
What is certain is that tobacco companies are so attached to their brands they’re not going to go down without a fight.
Jacques de Cock is a spokesperson for the London School of Marketing