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Tobacco companies face packaging dispute in Australia

Tue, May 31, 2011

Oral Cancer News

Author: Caitlin Bronson

The Australian tobacco industry is fighting to retain their rights to advertise on their own packaging in response to legislation slated to be introduced in Parliament in July.

The new law would allow the Australian government to replace the currently bright packaging of cigarette packs with a uniform olive green color, along with health warnings and full-color images of the consequences of smoking. The brand name of the cigarette would appear in small print underneath the depictions of things like mouth cancer or gangrenous toes.

The logic behind the dull and disturbing packaging is simple—if smoking is presented in an unattractive light, more Australians will quit smoking and less young people will pick up the habit. However, the country does not have a precedent to look to in this matter, as none other has tried it.

And the tobacco industry is warning against it.

The Associated Press reports that the uniform packaging required by the hypothetical law would be easy to counterfeit, allowing for illegal Asian tobacco, on which tax is not paid, to enter the Australian market. To compete against the illegal product, companies like British American Tobacco Australia Ltd. (BATA) have said they would cut prices for cigarettes. This could backfire on the government, causing more Australians to take up the habit.

“If they keep pushing us down this path with this experimental piece of legislation, unfortunately it’s going to end up in court, and it’s likely to cost millions of dollars, and if they lose, that’s potentially billions of dollars paid by Australian taxpayers,” BATA spokesman Scott McIntyre said in a Sunday statement.

Other companies with interests in the Australian tobacco market agree, saying they will pursue expensive litigation for compensation if the legislation is passed, the AP reports.

However, Australian National University marketing expert Andrew Hughes told the AP that tobacco industry may be bluffing, and that the proposed law would have more effect in driving tobacco from Australian shores than increasing the demand for the product.

“It’s removing a very important part of modern marketing, which is the brand itself, and these days, that’s worth billions of dollars,” Hughes told AP. “It’s like taking the Golden Arches away from McDonald’s—it removes equity from a company’s balance sheet overnight.”

According to BATA, which obtained confidential documents under a Freedom of Information request, the government has budgeted $4.8 million to implement the legislation. However, the figure does not include legal costs, which are estimated to be more than $10 million, Australia’s Sky News reports.

Australia currently has a smoking population of 17 percent, compared with the 20 percent of American adults who smoke.

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