April 3 (Bloomberg) -- The U.K. government plans to outlaw branded tobacco packaging as early as next year, following a report that showed it could lead to a modest reduction in smoking uptake among children.
There’s no reason that legislation cannot be introduced before the next General Election, due to be held by May 2015, Health Minister Jane Ellison said when introducing the findings of a plain packaging review by pediatrician Cyril Chantler.
Such a move would bring the U.K. into line with Australia, where cigarettes have been sold in uniform packages since Dec. 1, 2012. The governments of Ireland, Scotland and New Zealand are also proposing to ban branded packs, while European authorities are taking a tougher stance. On Feb. 26, the European Parliament voted to require that cigarette packs feature a combined pictorial and text warning covering 65 percent of the front and back, and banned cigarettes and roll-your-own tobacco with distinguishing flavors including menthol.
Standardized packaging is likely to lead to “a modest but important reduction” in the uptake and prevalence of smoking in the U.K., Chantler said at a press conference in London today. The government will undertake a final consultation with the tobacco industry before making a decision, Ellison said.
Shares of Imperial Tobacco Group Plc, the maker of Gauloises and Davidoff, rose 0.3 percent to 2,428 pence at the close of trading in London. British American Tobacco Plc, which makes Dunhill and Lucky Strike, gained 0.5 percent to 3,323.5 pence.
“The market has pretty much accepted this as the likely outcome,” said Erik Bloomquist, an analyst at Berenberg Bank.
Imperial, the U.K. market leader and Europe’s second-biggest maker of cigarettes, said today that there’s “no robust evidence” to support the use of plain packaging.
Since Australia introduced legislation, “there has been no impact on the level of tobacco consumption, but illicit trade has increased,” the company said in an e-mailed statement.
In his review, Chantler said there’s no evidence that standardized packaging is easier to counterfeit.
A recent Australian packet of 20 Philip Morris International Inc.’s Marlboro Red is dominated by pictures of a 34-year-old man named Bryan on his deathbed, with a snap of a healthier version of him 10 weeks earlier. The photos appear under a banner that says “Smoking Causes Lung Cancer.” A bold yellow sticker on the side warns that 10 drags on 20 cigarettes a day equal “73,000 toxic drags per year.”
The back of the dark green pack has another picture of Bryan and writing that explains he started smoking as a teenager and died 47 days after being diagnosed with lung cancer.
Imperial Tobacco gets 20 percent of profit from Britain, while larger competitor BAT makes “a modest amount” of money in the region, according to estimates by Oriel Securities.
BAT said the conclusion that plain packaging is an effective measure for public health “defies logic.”
“We hope the U.K. government continues its logical and pragmatic approach by dismissing plain packaging and looking at alternative tobacco control measures,” BAT said in a statement.
Tobacco firms can’t take legal steps against the law until legislation is in place to challenge, according to Damian McNeela, a tobacco company analyst at Panmure Gordon. Measures may take longer to enact than currently foreseen, he said.
“Even though the government is finding it harder and harder not to introduce standardized packs, it’s by no means a done deal,” McNeela said. “It may get deferred again in the run-up to the general election.”
A study by the Universities of Zurich and Saarland, funded by Philip Morris and released last week, found no evidence that plain packaging affected youth smoking prevalence. The academics surveyed 41,438 youths aged 14 to 17 between January 2001 and December 2013.
Speaking at the U.K. Department of Health today, Chantler said it’s too soon to say whether plain packaging in Australia has affected the prevalence of smoking.
Tobacco kills as many as 695,000 people a year in the European Union, or one every 45 seconds, according to the European Commission, which says a third of people in the region smoke. In the U.K. that rate has fallen below 20 percent, the lowest in 80 years, scientists at University College London said Feb. 12.
Anti-smoking campaign group ASH welcomed Chantler’s review.
“The Smokefree Action Coalition understands why the government is having to proceed with caution, because the tobacco industry is highly litigious, but is delighted that a consultation on standardized packaging regulations will be launched in the very near future,” ASH said in a statement.
To contact the editors responsible for this story: Celeste Perri at email@example.com Paul Jarvis