Plain packaging for cigarettes: at best, ineffective; at worst, harmful

In anticipation of new federal regulations that will increase the space reserved for health warnings on cigarette packages from 50 to 75%, the Montreal Economic Institute (MEI) today unveils a second Economic Note on the growing tendency of governments to regulate advertising. In practice, increasing the space reserved for warnings may be seen as a form of plain packaging, and this is all the more true when a sticker is added (on the section left for the brand) to show that duty has been paid.

In Canada, health warnings on packages of cigarettes went from taking up 20% of the front and back of each package in 1989 to 50% in 2001. Over the same period, warnings in the United States took up only around 5% of each package, leaving ample room for advertising the product brand. However, there has been no observable difference in the reductions in smoking rates in the two countries, including for young smokers, despite the fact that packaging and marketing restrictions are harsher in Canada.

It should be noted that this MEI publication does take into account research that supports plain packaging. However, it also points out that according to several studies, that research has important methodological shortcomings and does not follow recognized statistical analysis techniques.

In addition to not providing the hoped-for beneficial results, plain packaging, which consists in removing all distinctive signs (logo, colour, etc.) associated with the product, could even ultimately lead to an increase in the number of smokers. This counter-intuitive result is explained by the fact that consumers are prepared to pay more for a product with a well-known name that is a synonym for quality. As a result, if plain packaging makes it harder to distinguish one cigarette package brand from another, a price war would inevitably follow, since this would be the only means of differentiation left to cigarette manufacturers. Therefore, backed up by studies, the MEI publication shows that this price drop would likely entail an increase in tobacco consumption.

For the purposes of this publication, the MEI estimated the increase in the number of smokers to be expected for the Canadian market using the most conservative hypotheses from the studies consulted. The result is an anticipated rise of nearly 3% in the number of smokers, the equivalent of 135,000 new smokers in Canada.

"If all cigarettes are sold in indistinguishable packages, why pay more for a particular brand? And in a price war, it's usually contraband products that end up having the last word," explains MEI president Michel Kelly-Gagnon.

"For reasons explained in detail in our publication, the measures the federal government is preparing to adopt will be very effective if the goal is to do as much harm as possible to legally established Davidoff cigarette manufacturers, but it will prove to be much less so if we suppose that the goal is rather to reduce the number of smokers. At the very least, the government should make a commitment right now to carry out an objective assessment of these new regulations three years after they come into force in order to see if they were effective and if unintended consequences have materialized," adds Mr. Kelly-Gagnon.

British American Tobacco Says World Coming Out Of Recession

British American Tobacco PLC (BATS.LN) Wednesday said the world is coming out of recession, as the second-biggest tobacco group by revenue recorded a rise in profit and sales driven by robust demand in emerging markets, and the rate of volume decline slowed.

BAT, which competes with U.S.-based global market leader Philip Morris International Inc. (PM) and U.K. peer Imperial Tobacco Group PLC (IMT.LN), is focused on building its position in developing economies such as Eastern Europe, Africa, the Middle East and Asia to offset a weaker performance in developed markets like Western Europe where smokers are struggling with tough economic conditions.

Consumers in mature markets are cutting back on spending in the light of government austerity measures, and switching to low-cost brands. The company has clawed back margin erosion caused by weak volumes and excise tax hikes through raising prices.

The London, England-based maker of Dunhill, Kent, Pall Mall and Lucky Strike said first-half cigarette volumes fell 1% to 344 billion, compared with a 3% drop in the same period a year ago and a 2.4% fall in the first quarter.

Explaining the deceleration, Michael Prideaux, director of corporate and regulatory affairs, said, "On an industry basis, the world is gradually coming out of recession. On a company basis, it is the ability to grow market share."

Prideaux added the share gains are well-spread, including Germany, Russia and Argentina. "We are doing pretty well all round. We look at our top 40 markets and we grew share in 26 of them."

The company improved its position in Spain, where falling demand due to economic woes led to a price war, even though it only has a small market share in the country.

Free Cigarettes Results In Assault

Ruffin, NC -- A man attempting to get free cigarettes from a gas station told deputies the store clerk assaulted him.
Rockingham County Sheriff's Office says a David Kendrick purchased $50 worth of gas from Ruffin Grocery Convenience Store Tuesday night. He saw a sign on the pump saying customers who buy at least $10 in gas would receive a free pack of cigarettes.
Kendrick went inside the store to get his free pack of cigarettes, but the clerk said he wasn't familiar with the offer. The two men got into a verbal altercation, with the clerk demanding Kendrick leave. When he didn't immediately leave the store, the clerk punched kendrick in the ribs.
Kendrick was transported to Anne Penn Hospital. He later obtained a warrant for the arrest of the clerk, Kenneth Stone. Stone is is charged with assault and given a $5,000 bond.

Cigar bars face legal fog

LINCOLN — It will be at least October before the first patron can legally light up in a Nebraska cigar bar.
Hobert Rupe, executive director of the Nebraska Liquor Control Commission, said Thursday the wait will depend on how quickly a set of rules and regulations moves through the approval process.
He commented after a commission hearing on draft rules and regulations. The commission is expected to vote at its September meeting on adopting — and possibly amending — those rules.
A new state law takes effect Aug. 30 exempting specially licensed cigar bars from the statewide public smoking ban.
The exemption is in addition to those for tobacco shops, some hotel rooms, laboratories used for research on smoking and home-based businesses.
Charles Kline of Omaha said cigar bar owners recognize the opportunity the Legislature has provided and will put their best foot forward. Kline owns the S.G. Roi smoke shop and hopes to open a cigar bar.
But Mark Welsch, president of the Group to Alleviate Smoking Pollution, urged the commission to close potential loopholes in the draft rules.
Among his suggestions was a rule banning people from bringing food into cigar bars or smoking thin cigars, which are similar in size to cigarettes. Under the new law, cigar bars cannot sell food or allow cigarette smoking.
They also must get at least 10 percent of their gross revenue from selling tobacco products other than cigarettes and cannot boost tobacco revenue by offering drink specials with tobacco purchases.
The bars must have walk-in humidors — special rooms with temperature and humidity controls for storing and displaying cigars. The draft rules would require the humidors to be large enough for two adults.
Welsch said the rules should require cigar bars to keep their smoke from infiltrating other businesses.
The cigar bar law also faces a pending legal challenge. Big John's Billiards, an Omaha pool hall, has argued in Lancaster County District Court that exemptions to the smoking ban are arbitrary and amount to special legislation in violation of the Nebraska Constitution.

Police hunt cigarette thieves

A search is on for a gang who made off with R120 000 worth of cigarettes after robbing a truck in Nyanga, Western Cape police said.
Captain Ntomboxolo Sitshitshi said the robbers struck at around midday on Thursday, demanding boxes of cigarettes from the delivery truck driver before fleeing in a bakkie.
"They are still at large," he said.
A short while later, police recovered some of the stolen cartons at a house in Crossroads.
"The vehicle that was used during the incident was found abandoned nearby," said Sitshitshi.
Police established that the vehicle was reported stolen.
A search was on for the cigarette thieves.

Tobacco laws to cost Victorians

Australian Retailers Association (ARA) has warned Victorian retail outlets will need to make costly adjustments to their store configuration and operating procedures to comply with a proposed retail display ban on cigarette packets.

ARA Executive Director Russell Zimmerman said the proposed retail display ban on tobacco products would cost Victoria's small retailers $182 million in the first year.


"The total bill would be shared across 5000 convenience stores and 1000 grocery outlets in Victoria that would each be liable for up to $10,000 to meet their obligations under the planned tobacco display laws.

"In an indicative regulatory cost analysis by Deloitte, it was also found that a Victorian retail display ban would result in recurring costs of $116 million. This translates into the average 'mum and dad' convenience store having to bear ongoing costs of up to $17,560 per year, due to deterioration in customer transaction and service times.

"Under the proposed regulations, store owners can be fined or banned from selling tobacco products if cigarette packets are within the view of customers, which will result in a complete refit of current displays, as well as ongoing training, customer service and restocking issues.

"This is potentially a massive financial burden for small retailers to carry when we consider there is no international evidence that restricting the display of cigarettes actually reduces the uptake of smoking. In fact, New Zealand has dismissed similar regulations based on the huge expense and lack of supporting evidence.

"While retailers fully appreciate the health dangers associated with smoking, the financial impact of these regulations is not a public health issue. The ARA's concern is about an increased cost to retailers when they can least afford it.

Zimmerman said that to ease the burden and cut costs for small retailers the Brumby Government must reconsider and make amendments to the proposed tobacco display regulations to allow retailers to display price tickets or labels, use price notices at more than one point of sale and use product catalogues.

Analysis Finds Toxic Substances in Electronic Cigarettes

Electronic cigarettes contain traces of toxic substances and carcinogens, according to a preliminary analysis of the products by the Food and Drug Administration.

The findings, which were announced on Wednesday, contradict claims by electronic cigarette manufacturers that their products are safe alternatives to tobacco and contain little more than water vapor, nicotine and propylene glycol, which is used to create artificial smoke in theatrical productions. When heated, the liquid produces a vapor that users inhale through the battery-powered device.

“We’re concerned about them because of what we know is in them and what we don’t know about how they affect the human body,” said Joshua Sharfstein, the F.D.A.’s principal commissioner.

The agency analyzed 19 varieties of cartridges, which hold the liquid, and two cigarettes, one manufactured by NJoy and another by Smoking Everywhere.

The analysis found that several of the cartridges contained detectable levels of nitrosamines, tobacco-specific compounds known to cause cancer. One Smoking Everywhere cartridge was found to contain diethlyene glycol, a common ingredient in antifreeze that counterfeiters have substituted for glycerin in toothpaste, killing hundreds worldwide.

Dr. Sharfstein said the agency was “not sure” what type of effect the diethlyene glycol and other carcinogens have on the human body when inhaled through electronic cigarettes.

The Electronic Cigarette Association, an industry trade group, said in a statement that the F.D.A.’s testing was too “narrow to reach any valid and reliable conclusions” and that its members sell and market their products only to adults.

A statement from the chief executive officer of NJoy, Jack Ledbetter, said a third party had tested its products and found them to be “appropriate alternatives” for cigarettes, but he did not release the findings. The company said its experts would review its tests and the F.D.A.’s.

Electronic cigarettes, which are manufactured in China, are subject to little quality control, Dr. Sharfstein said. The study found the levels of nicotine to vary even in cartridges whose labels claim to have the same amount of nicotine. Some of the cartridges that claimed not to contain nicotine actually did, the analysis found.

The F.D.A. has called electronic cigarettes drug delivery devices and said they should not be allowed in the country. It has turned away about 50 shipments of the devices at the border, but they still continue to be sold in malls nationwide and online. The agency would not comment on whether it planned to ban or seize the devices. In April, Smoking Everywhere sued the F.D.A., claiming that it did not have jurisdiction to bar the electronic devices from entering the United States.

The agency and public health officials are especially worried that electronic cigarettes, which are offered in flavors including cherry and bubblegum, are enticing to children and may be easy for those under 18 to obtain online or in malls.

Electronic cigarette smokers warned of chemical dangers

Smokers using battery-powered electronic cigarettes to beat the smoking ban were warned yesterday that they are being exposed to poisonous and carcinogenic chemicals.


The e-cigarettes, which provide a smoke-free "high" by vaporising a liquid mix of nicotine, flavourings and other chemicals, were found by a scientific study to contain carcinogens and toxic chemicals such as diethylene glycol, which is found in anti-freeze.

While UK companies selling the cigarettes claim that they "contain none of the dangerous, carcinogenic toxins and chemicals that are found in standard cigarettes", the US Food and Drug Administration (FDA), which tested 19 varieties of electronic cigarette, warned that it was "concerned about the safety of these products and how they are marketed to the public". Despite the health fears surrounding e-cigarettes, their sale is not regulated by the Health Protection Agency or any other health body in the UK. A trading standards spokesperson said: "There is no specific regulation for electronic cigarettes, as they are not tobacco products. They are just subject to regular trading and safety laws as electrical products."

Concerns were first raised about the possible dangers of electronic cigarettes in the UK after a boom in sales linked to the introduction of the smoking ban in 2007. The FDA expressed concerns that e-cigarettes have not been submitted for evaluation or approval. While they are banned in some countries, such as Canada, e-cigarettes are available from a range of UK websites, with prices starting at about £39.99 for the cigarette, and nicotine cartridge refills available for less than £1 each. Some contain flavourings such as strawberry and caramel, which health campaigners fear may appeal to children.

"Electronic cigarettes are allowed on the marketplace without being subjected to the comprehensive testing required of medicinal products," said Deborah Arnott, director of Action on Smoking and Health (ASH). "We would recommend that anyone trying to quit should use medicinal nicotine products such as patches, gum or the inhalator, which have been tested and found to be both safe and effective, rather than electronic cigarettes."

However, anti-smoking campaigners argue that the risks posed by electronic cigarettes are still lower than those of ordinary cigarettes. "Cigarettes contain thousands of different chemicals, many of which are carcinogenic and are particularly dangerous when burnt, and kill half all long-term smokers," Ms Arnott said.