Generic Packaging

Some tobacco control activists and a few regulators have recommended that governments require tobacco products to be sold in plain or generic packaging. All forms of branding—trademarks, logos, colors, and graphics—would be removed, except for the brand name, which would be presented in a uniform typeface for all brands on the market. All packs would be in a plain white, burlap brown, olive green, or other drab color, except for the mandatory health warnings. The goal, according to proponents of generic packaging, is to make all packs look unattractive in order to reduce youth smoking and overall consumption, and also to make health warnings more prominent.

The guidelines External reference for implementation of article 11 of the Framework Convention on Tobacco Control issued by the Conference of Parties in late 2008 recommend that Parties “consider” adopting generic packaging. To date, only Australia has passed such legislation, which will come into effect in December 2012.

Our View

The scientific studies of generic packaging conducted in the last decade and a half have failed to produce credible evidence supporting its efficacy. These studies have not even attempted to establish a meaningful link between youth smoking uptake and cigarette packaging. Indeed, in many studies the underlying data confirm that pack design—or “brand appeal”—does not play a role in uptake of smoking or continued smoking. For example, one of the first studies that investigated generic packaging states, “Most kids receive their first cigarette from friends. There is no brand choice—the choice is simply to smoke or not to smoke. Therefore, in the uptake process brand and package are very minor components. This means that changing the package will not have any major effect on the decision(s) to smoke or not to smoke." [1]

Those who have seriously studied the topic of generic packaging have consistently conceded that the evidence of its effectiveness is, at best, speculative.

Experience shows that overall tobacco consumption is not likely to be affected by generic packaging. Smokers are more likely to keep purchasing generic packs at retail or even choose other sources for purchasing branded packaging, such as illicit trade, than they are to quit following the implementation of generic packaging. One example of consumer behavior regarding the sale of cigarettes in generic packaging is Canada, where more than 30 percent of the cigarette market is estimated to consist of illicit cigarettes. Between 70 and 80 percent of the illicit trade consists of cigarettes sold in clear plastic bags with no branding. In those Western markets with a tradition of purchasing branded packaged goods, packaging without branding does not deter sales.

Also, in other consumer goods industries, many commodities are often sold without branding, such as staple foods, frozen meat, and gasoline, to name but a few. There is no suggestion that consumers purchase fewer of these commodities when they are unbranded, but they are, of course, more sensitive to price.

Like those consumer goods, generic packaging for cigarettes will effectively eliminate product differentiation at retail, other than through pricing. This will inevitably lead to increased price competition, which in turn will lead to an increase in low-priced cigarettes and other low-priced tobacco products. These consequences could actually lead to an increased consumption of tobacco products.

These are not just abstract predictions of economic theory. Independent analysts following the tobacco industry have commented that “a U.K. tobacco market of plain boxes is likely to become very price-driven, maybe even wiping out the premium sector,” [2]  and “if consumers cannot rely on a brand as a warranty of quality and reputation, they will not be willing to pay a premium for those products. Concretely, plain packaging would reduce the brand premium and therefore the price of brand cigarettes ” [3]  In a 2009 report about the pharmaceutical sector, the European Commission found that new market entrants supplying generic products typically price them 25 percent lower than the branded equivalent and that this reduction in price leads to higher consumption [4]. 

In addition, by creating significant incentives to counterfeiters and smugglers, the introduction of generic packaging will stimulate both the demand and supply of illicit trade, already a significant issue in many countries. First, it will make counterfeit cigarettes easier to produce, given that all domestic brands will be virtually identical. Second, there is no doubt that a black market will develop for branded packaging. While the evidence does not suggest that consumers will reduce smoking because of generic packaging, it is likely that when presented with a choice between a branded product and a generic pack, a smoker will choose a branded pack because it conveys the impression of a higher-quality tobacco product. This will provide more incentive for counterfeiters of branded packs, as well as of contraband sales.

The negative consequences of generic packaging—cheaper cigarettes and a bigger illicit market—will affect young smokers the most. It is well recognized that young smokers are more price-sensitive than other consumers of tobacco products. Furthermore, cheap illicit cigarettes fall disproportionately into the hands of young smokers because criminals who sell them do not check identification. Accordingly, young people will be most affected by the overall price decrease of tobacco products, the proliferation of cheap generic cigarettes, and the increased illicit trade that will follow the introduction of the generic packaging measure.

Generic packaging also raises serious legal concerns. Trademarks are a form of intellectual property recognized and protected by national laws and international trade agreements. Generic packaging would unjustifiably violate these legal protections. Intellectual property protection extends not only to the brand name but also to other elements such as logos, a distinctive combination of colors, fonts, trade dress, and other design features. Tobacco trademarks are among some of the most valuable in the world, estimated to be worth many billions of dollars. Generic packaging regulation expressly designed to abolish the use of these elements amounts to the expropriation of these intellectual properties and will expose governments to compensation claims by tobacco manufacturers.

In lieu of implementing generic packaging—an untested, speculative measure likely to backfire—governments can implement and enforce proven, effective measures to reduce youth smoking and address concerns about the harm caused by tobacco. These include strictly enforcing laws preventing sales of tobacco products to minors, requiring licenses for retailers to sell cigarettes, and supporting educational programs and communications campaigns.

[1]  Expert Panel Report for Health Canada, When Packages Can’t Speak: Possible Impacts of Plain and Generic Packaging of Tobacco Products National Survey of Teens: Knowledge, Attitudes, Beliefs and Smoking Behaviours at 184 (March 1995).

[2]  Reuters (June 2, 2008)

[3] Montreal Economic Institute, August 2011

[4]  Pharmaceutical sector inquiry, p.83, July 2009

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