back to article Why a plain packaging U-turn from UK.gov could cost £3bn a year

According to friendly "leaks" passed to newspapers overnight, the government may force cigarette manufacturers to sell their wares in plain packaging after yet another review, despite rejecting the policy earlier this year. But the gambit is unlikely to withstand the scrutiny of the Chancellor. Why? Plain packaging legislation …

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" according to a report commissioned by cigarette-makers by KPMG (PDF)"

And the result is a surprise?

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Anonymous Coward

So what

Ok so Australians can be a bit over zealous sometimes.

But

I don't see the Aussies going back on the policy do you?

Even if it costs them money.

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Anonymous Coward

The Aussies have stated that plain packaging is not to STOP existing smokers or get them to give up, it is to make cigarettes less inviting and appealing to the younger generations and to stop them taking up the habit.

And the facts show, it is working.

So they are not losing money they already get, they are reducing future income.

It is the cigarette companies that are lobbying furiously because they know that their future is based entirely in getting young people into the habit.

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Anonymous Coward

Bring on the black market ciggies!

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Holmes

Hmmm

So changing the packaging that an addictive drug comes in doesn't make people any less addicted to it?

Blimey, never saw that one coming.

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Re: Hmmm

I don't think that the prime aim of plain packaging is to effect a change to addicts (they are killing themselves off anyway), but to remove the "designer label" contribution from the promotion of a harmful, addictive substance to upcoming generations.

This "study" is meaningless. To see if there was any meaningful change the comparison should be between the proportion of smokers under the age of e.g. 25 before plain packaging, with the proportion after 5-10 years. If the measurement is to be in fiscal terms then the cost of tobacco related disease and currency export has to be balanced with the value of tobacco tax to the treasury.

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Re: Hmmm

No it doesn't. That isn't the intention of it. The intention is that it makes them less attractive to young people so they won't take up the habit. The ban hasn't been in place long enough to see if that will work or not. However the tobacco companies think it is a bad idea, so that almost certainly means it is a good idea.

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Re: Hmmm

Whether it makes them less attractive or not to young people, it certainly makes them less accessible. Imagine you try to buy a pack:

- I'd like a packet of cigarettes please

- Which ones?

- (staring at huge cabinet with no markings and all packets hidden behind panels). Hmmmmmm...

At least when you bought your first beer you could point and say 'that one'

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Re: Hmmm

I smoke 2+ packs a day of the same brand of cigarette as the first cigarette I ever smoked. Over all the decades since I've given exactly zero shits about the package they came in. If there was a way to care less than zero that's how much I would care.

When I lived in Canada I used to collect all the graphic warnings and stick them to the refrigerator because I wanted the whole set. The only time the packaging has had any relevance at all is if I'm in a foreign country where I don't speak the language. I just show the clerk what the pack looks like.

I didn't start smoking because of the packaging. That's always been the biggest load of shit I've ever heard. Does any significant portion of the population buy their regular consumables based on packaging? No. I buy the brand of toilet paper that my ass likes and I buy the brand of toothpaste my mouth likes and I buy the brand of bourbon my wife hates.

Cigarettes fall into the same category as any commodity consumable which is widely available and nobody knows anything about nor is any information provided about. From tampons to cologne to toothpaste to gasoline to crayons to dish soap and cigarettes the overwhelming majority of people buy the same brand as their parents (my parents didn't smoke. I started smoking the same brand the girl I wanted to sleep with smoked) and if that's not available it's a crap shoot. You buy a random product based on some wildely illogical premise you created on the fly and if it doesn't work as desired you buy something else.

Its been pretty well established that smokers will be smokers if parents don't step in and put a stop to it. Smoking decline has stopped in most countries and is on the upswing in some demographics. Like so very many other things, smoking falls under the parenting heading, nothing else. Nobody really likes that though. It's got to be someone else's fault, parents are as bad as banks at assuming responsibility.

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Re: Hmmm

The price hikes are aimed at stopping people starting too. Addicts will keep paying no matter how much it hurts.

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Re: Hmmm

" If the measurement is to be in fiscal terms then the cost of tobacco related disease and currency export has to be balanced with the value of tobacco tax to the treasury."

In which case, there's a few more things to take into account. My starting point is that in the UK we have insufficient housing that leads to high prices and speculative booms, we have overstretched public services that can't cope with demand, inadequate infrastructure & transport for the current rising population level, old buzzards who are living longer and longer putting increasing demands on the NHS despite no longer being part of the productive economy, and a welfare state struggling to cope with said old buzzards who (in aggregate) didn't save to provide for their old age and expect the state (that also didn't accrue) to pay for them. And even for the working age, there's insufficient jobs to go round.

Put that lot into the equation, and fags are a miracle cure for the economy, because their general impact is modest during most of the smoker's working life, the diseases tend to come on suddenly, have a very high mortality rate and often low treatability. So fewer unfunded pensions to pay, fewer winter fuel payments, fewer geriatric healthcare bills, a few more jobs for the younger people, reduced demand on services, infrastructure and housing. What's not to like?

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Re: Hmmm

Yup, so much simpler for the youngsters to go for one of the nice branded duty free packs available from every street corner, via a black market created by the perfect and unintended co-operation of existing smokers and HM Gov!

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"Plain packaging legislation is reckoned to have lost the Australian Treasury A$1bn ($946m, £578m) in tax revenue in its first six months, according to a report commissioned by cigarette-makers by KPMG (PDF), as smokers turn to fake, untaxed brands."

So how is this about plain packaging and not about people buying untaxed cheaper cigarettes?

If they still had the fancy gold foil packages people would still buy the taxed ones?

"a report commissioned by cigarette-makers oh, never mind that explains it.

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"So how is this about plain packaging and not about people buying untaxed cheaper cigarettes?"

It's about spotting untaxed cigarettes - if all the packs look the same do you think the corner shop is going to sell the taxed cigarettes and make10%-20% of the revenue or do you think they will stock the cheap imports and make 70% of the revenue.

- The cigarette companies still make their money.

- The retailer makes more money.

- The customer pays the same or less.

- The government misses out.

IMHO stopping people smoking is now down to time - it has become an undesirable social activity by being forced outside and changing packaging is unlikely to make a smoker quit if large health warnings and graphic pictures has not altered their behaviour. Not that it will stop silly political point scoring....

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Re: all the packs look the same

>> It's about spotting untaxed cigarettes - if all the packs look the same

According to the article the packs do not look the same. The untaxed packs have no health warning and/or are branded. So this should make them easier to spot.

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Re: all the packs look the same

In the UK, I gather that fake label rolling tobacco exists but the untaxed cigarettes are usually the legitimate manufacturer's product, shipped overseas (at least the paperwork says so) to a market where it isn't taxed, then falling instead into the hands of British smokers who can't believe their good luck.

Maybe not every legitimate manufacturer - I think there are several, not as many as there are brands. It is kind of Left Twix, Right Twix.

So, anyway, Australian cigarette pirates are ripping off the customer, in comparison.

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> it has become an undesirable social activity by being forced outside

But by standing around outside you have gone back to the bike sheds / cool approach. It is almost impossible to walk down a street in any commercial district here without incurring second hand cigarette smoke. This of course also applies to school kids trying to walk to and from school. The stupidity of the standing around outside laws rather than internal air quality rules ensures that the next generation of smokers is still reachable by the cigarette companies - and we see this in smoking statistics for young people. The cigarette companies now need to focus on the attractiveness of the cancer stick rather than the packet it came in knowing that their undead customers are their greatest asset in reaching their future customers.

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"If they still had the fancy gold foil packages people would still buy the taxed ones?"

Yes they would. There was a lot of opposition from smokers when plain packaging was introduced. People liked their old packets. Some companies sprang up, selling slipover covers for standard ciggie packs with logos, pretty girls, cute kittens, etc printed on them. These were very quickly deemed illegal (Hell, I even got hassled by a ranger because my ciggies are in an old style silver cigarette case!).

Smokers would hang on to the packets they'd bought overseas and keep refilling them till they fell apart.

Then there'd be the conversation with the 'bloke in the pub' and suddenly people who would never have considered buying black market ciggies were instant criminals. Add the fact that dodgy ciggies are both dead easy to get hold of, once you start looking, and that they are way cheaper than the $20 a packet you pay in the shop, and the few 'early adopters' start telling their mates how they can save loads of dosh buying from that bloke in Newtown.

Seriously, left to themselves, most of those people wouldn't have considered the black market otherwise, or at least not until the price was up in the 30s.

It's a bit like the pirate music world. Make it hard for people to get what they want, and more of them will find another way to get it.

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Flame

Advertising in the air

The tobacco companies have already made use of "standing around is advertising". They add compounds that keep the smoke lower to help remind other smokers they need to light up.

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Big Brother

It's about new smokers

It is not so much about stopping the existing smokers, it much more about stopping new smokers.

Who cares if the current smokers kill themselves, they are a lost cause, they already have the emphysema and the cancer and even if they stop in most cases it is probably too late!

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"If all the packs look the same do you think the corner shop is going to sell the taxed cigarettes and make10%-20% of the revenue or do you think they will stock the cheap imports and make 70% of the revenue."

Some years ago in New Zealand a corner shop owner ("dairy" in NZ parlance) was caught selling individual cigarettes to schoolkids. The resulting fines shut the shop down. I'd heard of similar cases in Australia in the sae period.

I'd imagine those caught selling untaxed cigarettes would face similar penalties. A containerload of smuggled cigarettes can result in seriously _long_ jail terms in both countries (and has!). They do have borders which are easier to police than the UK's though.

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"But by standing around outside you have gone back to the bike sheds / cool approach. It is almost impossible to walk down a street in any commercial district here without incurring second hand cigarette smoke."

This is one of the reasons California made it illegal to smoke within X yards of a doorway.

Technically it's illegal in the UK to smoke outside where the smoke can reenter a building, but I've yet to see it enforced. People who live near pubs and restaurants would be pretty happy if they were.

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Re: Advertising in the air

They add compounds to keep the smoke lower to remind others to smoke? What??? That's dumbest fucking thing I've heard in months. Obviously you aren't a smoker and know nothing about the subject or addiction in general.

A smoker is reminded they need to smoke by the fact they are awake. I've been 60' underwater in full dive gear trying to figure out how to smoke while submerged. You sure as hell don't need 'smoke engineers' on staff, that's a ridiculously stupid waste of money. The smoke hangs like it does because it's heavy in particulate content. Set a rolled up newspaper on fire, it'll do the same thing.

You're obviously anti-smoking, that's cool and I respect that. But you're driving your cause backwards when you say incredibly dumb things like that. Your statement is easy to falsify and you lose all credibility on the subject if you fail the basics that hard.

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Being a smoker, albeit a conscientious one (i.e ban smoking in restaurants, cinema's, etc. yes, I agree, but working man pubs? [if any are left]) all the Government do by the huge tax is send people into debt.

Changing the packaging will not make a difference to smokers.

Of course, the easy way is to ban smoking all together, but that will lead to millions of lost tax revenue and, of course, an underground market whereby smokers get the fags anyway ~ even if it's a wonga type mark-up.

So, the Government is stuffed. They need people to smoke to get the tax, yet they also need to show that they are effectively trying to stop it.

Doesn't work, and never will do.

P.S. In my youth as an appreciate in Pompey Dockyard, the matelots used to be issued 200 'blue liners' a week, and often these 200 fags were used as 'payment' if you could do them a favour (like let them off fire watch duty early, or repair a cracked motorbike frame etc.)

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Happy

" In my youth as an appreciate ..."

I'm sure you appreciated the experience.

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"So, the Government is stuffed. They need people to smoke to get the tax, yet they also need to show that they are effectively trying to stop it."

They don't need to show they are trying to stop it.

Politicians mostly make up what they think the need to do hoping their lies and bullshit can convince enough voters to allow them to keep on doing it.

I sure as hell never asked the government to tell me what to do.

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Navy Cut

"P.S. In my youth as an appreciate in Pompey Dockyard, the matelots used to be issued 200 'blue liners' a week, "

I was, for a short time (discharge by purchase (no, not THAT)) employed by her Maj too be a trainee matelot.

At the age of 17 I was bringing home orders for cigs and baccy -- I was too young for the 'tot' ration so I got sweets instead.

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I thought the Australian change in packaging also coincided with a massive increase in tax on cigarettes.

with that in mind it may be worth remembering that other factors than a change in packaging could be leading to an increase in imported cigarettes

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> I thought the Australian change in packaging also coincided with a massive increase in tax on cigarettes.

No, it didn't, see page 20 of the KPMG report.

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re: @Jess--

Good critical thinking but not actually correct in the instance. The massive hike (25%) was in 2010. Since then, it has been pretty much in step with CPI.

Going into the election, Kevin Rudd planned to increase the tax by 12.5% each year for the next your years (i.e. the government term). I have a feeling that was to be 12.5% on top of CPI increases but can't recall. That was slated to start towards the end of this year but I don't know if the LNP are going ahead with it.

What was done at that time was to sharply limit the duty-free allowance to 50 cigarettes (down from 250). Whether that had a noticeable impact I can't say.

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Anonymous Coward

I won't purposely buy fake or black market cigarettes

because I once had a pack of 10 B&H from my local garage that I can only conclude were fakes, where smoking one cig hit my lungs so harshly it was like smoking 10 at once. I'm occasional smoker, average one or two a day, eg. some days none, others up to 4.

When I got round to smoking a second from the aforementioned pack I got halfway through and threw it and the pack away because the smoke was so acrid, what else could I have really done, going back and saying "Excuse me, these fine cigarettes what I purchased from you not half a day ago appear to be killing me..." didn't seem appropriate.

E-cigs look interesting though, I'll be trying one of those out one day.

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Anonymous Coward

Re: I won't purposely buy fake or black market cigarettes

You should have sent the pack to the manufacturer and told them where you bought it if my Marlboro experience is anything to go by. They sent me 4x20 for the 1x19 I had sent them. And an apology. Not sure if they assumed it was actually their fault, I did tell them I thought they were counterfeit.

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Re: I won't purposely buy fake or black market cigarettes

because I once had a pack of 10 B&H from my local garage that I can only conclude were fakes, where smoking one cig hit my lungs so harshly it was like smoking 10 at once. I'm occasional smoker, average one or two a day, eg. some days none, others up to 4.

When I got round to smoking a second from the aforementioned pack I got halfway through and threw it and the pack away because the smoke was so acrid, what else could I have really done, going back and saying "Excuse me, these fine cigarettes what I purchased from you not half a day ago appear to be killing me..." didn't seem appropriate.

If you think the chemicals they put in regular cigarettes are bad wait until you see what nasties would've been in those fake ones you smoked. Your essentially smoking a bin liner....

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Re: I won't purposely buy fake or black market cigarettes

"If you think the chemicals they put in regular cigarettes are bad wait until you see what nasties would've been in those fake ones you smoked. Your essentially smoking a bin liner...."

That's precicely why I binned em, legitimate cigarette manufacturers don't want to kill off their customers (too quickly) whereas counterfeitters will use any (cheap) means necessary to produce a visual copy and don't care what goes into the fakes.

Also I occasionally worry about fake vodka on the market, I don't buy from corner shops that are likely to buy from a random white van man, but buying from a supermarket is not always a guarantee it's genuine.

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Could try harder

Strange that the fag firms, with their touching concern for the taxpayer's pocket, don't offer some solution - perhaps the "plain packets" could contain a rifd or security strip like a bank note? And of course a new levy on their profits linked to the increased shortfall might stimulate their ingenuity.

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Re: Could try harder

I'm sure they would if governments would lower the minimum sales prices accordingly. It's insane to expect any company to pay more to deal with arbitrary laws, no matter what industry it is.

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Anonymous Coward

Of course if safer Japanese-style filters and production methods were allowed in the west - rather than being outright banned because they "promote smoking" - none of this would be necessary.

Google the japanese smoking paradox. Enlightening stuff.

And no, I don't smoke.

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Anonymous Coward

Now now, that would deprive a large section of the population the enjoyment they get from self-righteously insisting others live as they do - 'for their own good'.

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So make it in a plain box

Then just design and sell a steel cigarette case in company logo that takes a 20 pack

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Re: So make it in a plain box

They're not legal either.

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Re: So make it in a plain box

@Adam 1

So are cigarette cases illegal in Oz? Or they're proposing this also as part of the measures?

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Re: So make it in a plain box

"So are cigarette cases illegal in Oz?"

No - just ones that contain or mimic any tobacco product branding or advertisements. Oh, and you can't give away a 'free gift' with a cigarette purchase, or sell cigarettes with the plain packaging covered up.

(an Australian smoker who's only problem with the legislation is the government's hypocrisy in continuing to pocket the sweet, sweet tax money. Ban or ban not, there is no try...)

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I wouldn't be surprised...

If there wasn't a resurgence in fancy cigarette cases being sold.

SD

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Re: I wouldn't be surprised...

Most of the women I know in Oz who smoke have bought ciggy cases, either plain or fancy.

Funnily enough, out of all the of the various horrendous pics they have on our ciggy packs, its just "Kevin the lung cancer guy" that they want to avoid looking at. Mangled feet, dodgy mouths, tumouts and clogged arteries are all fine.

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Re: I wouldn't be surprised...

Hmm, how about using an old baccy tin?

(along with some papers, card, bag etc.)

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Quite fittingly, as Manchester has produced many iconic smokers over the years: Bet Lynch, Mark E Smith and Anthony Burgess.

Oh, FFS as if everyone in Manchester smokes… In the 19th booze was too expensive so Saturdays we all queued up for us laudanum. Good fer kids as well, kept 'em quiet and out of danger under them looms.

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Thumb Down

Lies, damned lies . . . and what was the other one again?

Where to start?

First - the primary aim of plain packaging is not to directly cut down on current usage, it is to prevent new smokers starting up. Whether or not that will be effective is another question but the benefits of this measure, like those before, will be long term and can only be assessed long term.

Second - 154% is just one figure from the report, dealing with one form of illicit tobacco, and represents an increase from 0.5% to 2%. I would suggest the author actually READ the report next time. The actual increase in total illicit tobacco use is 13%. In 2012, illicit tobacco (in all forms) accounted for 12.8% of the market. In 2013, it was 13.3% - an increase of 0.5 percentage points.

Third - $1bn? No. No, no, no. The ENTIRE illicit cigarette market in 2013 would have, if purchased legally instead, generated $1bn in excise. In 2012, that number was ~$900m. So, between 2012 and 2013, the change meant an ESTIMATED loss of ~$100m*.

Finally, as the author notes, the study was commissioned by cigarette companies. If, as the author says, opinion polls are not the finest source of information, I would suggest that studies funded by cigarette companies should be treated just as sceptically. Further, it is interesting (to me) to note that several key bits of evidence for the conclusion that illicit sales have jumped are . . . surveys! One of those had a sample size of just 2100 people.

* - Excise increased 2.4% between these two periods but that's not enough to make too much difference and is reflected in the $100m. Actual difference is $120m, but $20m of that is accounted for by the excise increase - i.e. if 2012 volumes were matched with 2013 excise prices.

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Re: Lies, damned lies . . . and what was the other one again?

It's always really easy to tell when laws are passed with absolutely no knowledge of the people they are aimed at. Nobody goes up to a retailer and selects their first cigarettes after a review of packaging: "I really like the traditional look that the narrow serif fonts create on this package. Combined with the use of flat colors and creative framing of white space with simple linear shapes makes this the brand for me ".

The fact some people think that's how smoking works is hilarious to me. Every smoker has a 'getting started' story and you won't find any who just strolled into a store with the intention of trying a cigarette then deciding which cigarette to choose based on the package. Once you're at the purchasing your own stage you've already been smoking and you're going to buy what you've already been smoking.

When little Timmy gets busted smoking and rats out the 7-11 clerk it's just because he didn't want to rat out his buddies or your nutty sister/brother, etc... Timmy's been smoking for a while before you ever catch him and he's smoking what someone you know is giving/getting for him. It has exactly nothing to do with the package. The fact you think it does means you've just been out maneuvered by a kid and the kid knows it. The kid is still smoking too. He's just more careful.

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Re: Lies, damned lies . . . and what was the other one again?

@Don Jefe . . .

Yes and no. Well, that's my belief anyway.

This is going to be a long one. I respect you and don't disagree lightly . . .

I think you might be misconstruing the idea. I don't think people are suggesting that young people walking into the corner store, perusing the packets and selecting a brand they feel represents them is how smoking starts.

I believe the idea is that cigarettes were once seen as glamorous and the plain-packaging laws are the latest step in a long effort to reduce that attractiveness - one that started way back in the early 70s, when the US Surgeon General released extensive reports on the health hazards of smoking.

Since that time, there has been a gradual process going on with the aim of reducing smoking in Australia. It has combined information, in the form of health warnings, campaigns, etc...; restricting smoking advertising; funding 'quit' programs, subsidising medical treatments; restricting smoking in public areas and, of course, raising fat wads of cash through excise and duty increases.

Over the course of this process, the number of smokers has steadily declined. It's certainly possible that the numbers would have declined anyway, though I feel that to be a bit of a stretch. It would be easier to argue that any given regulation/restriction/law was ineffective but each new measure has most certainly been consistent with the stated aim of the Australian Federal Government, which is to reduce smoking levels in Australia.

Back to the core argument, on the effectiveness of plain packaging, it has to been seen as part of the larger process to remove the visibility of smoking, reducing the 'passive' advertising.

It may be down to an ignorance of Australian laws (and I freely confess an equal, if not greater, ignorance of US, Canadian and UK laws) but the scenario you are ridiculing is a straw-man. Why? because two years prior to the plain-packaging legislation being passed, laws were enacted requiring all cigarettes and tobacco to be placed out of site at the point-of-sale - usually implemented with large, plain cabinets behind the register.

Plain-packaging laws are just a logical extension of the progressive banning of all cigarette advertising, and the effect is not expected to be drastic but cumulative with previous efforts. The aim is to stop smoking being 'around' so that it is not seen as normal or socially acceptable*.

Mate, I pretty much agree with you on everything before even reading your posts - you are older, wiser and more worldly** than I am - but I can tell you without the slightest bit of exaggeration that the packaging most definitely made a difference to me.

When I started smoking, my first cigarettes were Winfield 'Reds'^, shared with friends. Once I started buying my own, I bought B&H. Why? Because I thought they were classier. Note that I said "were", not "looked". Later, as a 'matured' into a young adult, I moved to Stuyvesants. Why? Because I felt they were a bit more mature, a bit cooler. More understated - no need for flashy gold 'look: I'm smoking B&H here' - instead a utilitarian soft-pack with simple style.

You might think I am making this up but I am not. I wince a bit at the memory of my younger-self but that is the naiveté of youth.

The point is not that I smoked because of the packaging, the point is that that packaging is advertising and advertising is effective. Not on everyone, but certainly more so on younger people. The Australian government has a policy of banning cigarette advertising and the move to plain-packaging is wholly consistent with that long-running, bipartisan, publicly-supported policy.

Anti-smoking measures have increased over the years, while at the same time smoking rates have decreased. They are not simply coincidental, so the question becomes: which is the cause and which is the outcome? It could be plausibly argued that since the detrimental nature of cigarettes became known, smoking has decreased and therefore public support for anti-smoking measures has increased, leading to more and stricter anti-smoking measures. The Australian government largely takes the opposite stance, that the anti-smoking measures caused the decrease in smoking.

There are studies and survey and reports and graphs and endless opinions supporting both sides of that. I would note that I have not seen a study claiming the measures are ineffective that has not been commissioned and funded by a smoking body. (Not to say they don't exist.) As the title of my original post implied - you can make such a report support either position depending on the data you use and how you present and weight it.

For my part, I believe it is both together. I believe anti-smoking measures, overall, have been effective in reducing smoking. That reduction in the smoking population then means there is more public support for further action to be taken. That may lead to some actions that don't produce a statistically significant effect and are implemented based more on that public support than on hard numbers.

I better leave it at that : )

* - I am not saying the aim is a noble one or even a practical one, but that is the aim and, when viewed in that light, the plain-packaging laws are consistent with that aim.

** - Though not more wordy.

^ - 16mg - we were men.

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Re: Lies, damned lies . . . and what was the other one again?

"once seen as glamorous and the plain-packaging laws are the latest step "

Or seen as rebellious and grown up in which case plain packaging and being told not to will make it all the more attractive particularly for the young.

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