Smoking rises after plain packaging in Australia

June 9th, 2014 at 12:00 pm by David Farrar

My position on has it that it might be justified, if there is evidence it actually reduces smoking rates. If NZ is to proceed with it, I have advocated for a regional trial of it so smoking rates in that region can be compared to the rest of the country after a few years.

So far only one country has implemented plain packaging.  The Australian reports (paywall) on what has happened:

Labor’s nanny state push to kill off the country’s addiction to cigarettes with plain packaging has backfired, with new sales figures showing tobacco consumption growing during the first full year of the new laws.

Policies should be based on evidence, and the evidence is that sales have increased. But maybe they were on an increasing trend anyway, and the law meant they did not increase so much?

The 0.3 per cent increase, though modest, goes against a 15.6 per slide in tobacco sales over the previous four years — and undermines claims by then health minister Nicola Roxon that Australia would introduce the “world’s toughest anti-smoking laws”.

Well that’s a huge reversal.

Plain packaging laws, which came into force in December 2012, have instead boosted demand for cheaper cigarettes, with reports of a more than 50 per cent rise in the market for lower cost cigarettes.

Makes sense. You destroy brand differentiation, and people then just choose on price – and the cheaper prices lead to greater sales. A huge own goal.

Australasian Association of Convenience Stores chief executive Jeff Rogut said sales by his members grew by $120 million or 5.4 per cent last year. “Talking to members, one of the most common refrains they get from people coming into stores is, ‘What are your cheapest smokes?’,” he said.

The law of unintended consequences.

In the wake of the introduction of plain packaging, and the hike in the tobacco excise, 21-year-old Brisbane finance worker Dunja Zivkovic said she has switched to a cheaper brand and smokes more. She said none of her friends had quit in the wake of the policy change.

Both Ms Zivkovic and her friend and fellow smoker, 32-year-old Gertrude Sios, insist plain packaging does not work as a ­deterrent.

“If someone is addicted to smoking, they’ll spend their last $12 on smokes, not food,” Ms Zivkovic said. Geoffrey Smith, the general manager of consumer products at Roy Morgan Research, said plain packaging was “not having much impact”. “It’s causing a shift towards lower priced product rather than ‘I’m stopping smoking’,” he said.

I’ve always been sceptical that brands cause people to smoke, as opposed to cause people to pick a particular brand.

“Smoking kills 15,000 people annually with social and economic costs estimated (at) $31.5 billion each year,” she said. “The latest ABS data shows smoking rates have been continuing to decline.” But data released in recent weeks by the NSW and South Australian governments show smoking on the rise.

Last year’s NSW population health survey, released last month, showed 16.4 per cent of all adults in the state smoke, up from 14.7 per cent in 2011, while in South Australia rates were up from 16.7 per cent to 19.4 per cent over the past year.

Which backs up the sales data.

The signs of increased smoking echo another Labor intervention into health policy — the 70 per cent tax hike on ready-mixed spirits or alcopops announced in 2008.

Nielsen research found that while alcopop consumption dropped by 30 per cent, there was an overall net decline in alcohol consumption of just 0.2 per cent.

People substituted to other alcoholic drinks such as hard spirits.

Some may argue that one year’s data is not enough to judge the policy on. If so, then how long a period would they agree is long enough to then decide if the policy has succeeded or failed?

If three years, then fine. No one else should implement plain packaging until the three years are up, and we can see if smoking rates declined or not due to plain packaging in Australia. So far, after one year, the answer seems to be no.

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39 Responses to “Smoking rises after plain packaging in Australia”

  1. Graeme Edgeler (3,282 comments) says:

    Wrong test.

    You need to assess how many people are smoking, not how much those who already smoke are smoking, to assess its worth. Plain packaging is primarily about stopping new people from taking up smoking, not about changing the behaviour of people who already smoke. Which isn’t necessarily to say I support it, but this isn’t a great way of measuring its success or failure.

    [DPF: It's increased. That means more people have taken up smoking.]

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  2. Nigel Kearney (971 comments) says:
    Plain packaging laws, which came into force in December 2012, have instead boosted demand for cheaper cigarettes, with reports of a more than 50 per cent rise in the market for lower cost cigarettes.

    Makes sense. You destroy brand differentiation, and people then just choose on price – and the cheaper prices lead to greater sales. A huge own goal.

    This also explains why the major tobacco retailers are so against plain packaging. It’s not because they fear it will reduce smoking. It’s because they don’t want people buying their competitors’ cheaper product.

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  3. kowtow (8,208 comments) says:

    My position on plain packaging is; it is an attack on private property rights.

    Private property is one of the pillars of our western capitalist system and an attack on that is not something a responsible sensible government should engage in.

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  4. Manolo (13,518 comments) says:

    DPF: you are straddling the fence on this topic. Are you or are you not for property rights?
    After tobacco you will probably join the zealots in full and go after sugar, fast food, et al.

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  5. Manolo (13,518 comments) says:

    Mr Edgeler, what is the position of your Mana-Internet Party on smoking? What does your boss Kim DotCom have to say?

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  6. JMS (315 comments) says:

    Private property is one of the pillars of our western capitalist system

    Well it was, until the Progressives’ ban frenzy really picked up speed about a century ago. Banning prostitution and just about any drug they could think of.

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  7. Redbaiter (8,371 comments) says:

    “My position on plain packaging has it that it might be justified, if there is evidence it actually reduces smoking rates.”

    As a National Party member your position should be that you oppose it because its an infringement upon the property rights of someone making a legal product.

    I remind you again of the National Party’s founding principles-

    “To promote good citizenship and self-reliance; to combat communism and socialism; to maintain freedom of contract; to encourage private enterprise; to safeguard individual rights and the privilege of ownership; to oppose interference by the State in business, and State control of industry”.

    What is a principle Mr. Farrar?

    Its an idea you stand by, no matter what.

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  8. JMS (315 comments) says:

    I remind you again of the National Party’s founding principles-

    National never believed in all those principles, not even in 1936.

    And by 1949 themselves had become quite socialist.

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  9. G152 (280 comments) says:

    DPF: you are straddling the fence on this topic. Are you or are you not for property rights?
    After tobacco you will probably join the zealots in full and go after sugar, fast food, et al.

    Already happening.
    Lots of ‘scientists’ coming out of the woodwork and making all sorts of crazy claims about sugar that beggar belief

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  10. alloytoo (526 comments) says:

    Plain packaging erases brand value indicators that the manufacturers have created over considerable time. The brand value indicators allowed them to sell less product for a greater price.

    In their absence people will gravitate to the lowest price and buy more.

    While this means the manufacturers have to work a little harder in supply, it also makes a mockery of the objective, which is improved health outcomes.

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  11. Redbaiter (8,371 comments) says:

    “by 1949 themselves had become quite socialist.”

    So that’s a good thing or a bad thing?

    Don’t answer.

    Just FO.

    If you’ve got nothing to say on the issue don’t bother me.

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  12. mandk (958 comments) says:

    I don’t believe there is sufficient information here to make a proper evaluation.

    For example, given population growth, a 0.3% increase in sales is probably consistent with a reduction in sales per adult and a reduction in the proportion of adults smoking.

    And judging the experiment on the basis of 1 year’s worth of data is probably not valid, given that a switch to lower cost brands and a consequent short-term increase in consumption per smoker might be expected.

    I’m ambivalent about whether or not cigarettes should be sold in plain packaging, but I strongly suspect there is a lot of tobacco company spin behind this story.

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  13. jallen (2 comments) says:

    Using a tobacco industry paid and sponsored research study (InfoView’s study was paid by BATA, and they will not release the raw data!) to support an opinion that plain packaging doesn’t work? Yeah, no vested interest in that outcome. And lets not adjust for increases in population either !!

    Using supplier’s delivery data is the biggest bogus accounting ever, and one ripped apart after the music industry do the same. Deliver music media to a retail outlet (whether they order it or not) and claim it as sales. Tobacco has done the same here. Deliveries DO NOT equal sales.

    Go to the retail channels for the real results. Cigarette sales in supermarkets, which account for a large portion of the market, shrank 0.9 percent overall by volume in 2013. Specialised tobacconist retail stores are showing much larger drops in retail sales too – of both packaged and unpackaged tobacco

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  14. tvb (4,330 comments) says:

    The effect of plain packaging destroying brand differentiation and the effect on consumption is interesting. People must like the snob value of the dearer brands and will pay more for them providing they have brand differentiation. I guess that is marketing 101. Taking Away intellectual property is a serious step and the Government should proceed cautiously which it is.

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  15. JMS (315 comments) says:

    So that’s a good thing or a bad thing?

    If you can’t even figure that out, you must be even more of a socialist than I thought.

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  16. JMS (315 comments) says:

    People must like the snob value of the dearer brands

    I would have thought that disappeared when the govt forced tobacco companies to put images of gangrenous limbs on their packaging.

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  17. Manolo (13,518 comments) says:

    DPF’s silence is an indication on where he and his piss-weak National Party stand on this matter. :D

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  18. simpleton1 (189 comments) says:

    It is a real hoot for some I know, whether they got the photo of the “gangrenous rotten teeth mouth” or “abscess leg” or whichever gross pic, and which could be considered the most gory.

    I guess they figure the brands and cost in as well with the best pics, with the “snob” or “peer” or “cool” appeal, with their “addiction” and “money needs/life style” for other essentials and brands.

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  19. eszett (2,396 comments) says:

    “Talking to members, one of the most common refrains they get from people coming into stores is, ‘What are your cheapest smokes?’,” he said.

    Seems to me more anecdotal bullshit than anything. What stopped people before coming into a store and asking for the cheapest smokes before plain packaging came in? It seems to me unlikely that people who were buying a brand before now suddenly just become purely driven on price.

    But of course there is a way to prove that, by releasing market share data which the industry surely have. Also would be interesting to see if the industry reacted with reducing the price for certain brands and thereby contributing to such a result.

    I agree with David that evidence should drive whether the policy yields any results, 3 years should be adequate to make a judgement. The measures would be needed to be agreed upon, as Graeme pointed out uptake of smoking would be a better measure that total consumption. And all factors should be taken into consideration.

    It certainly would take a bit more than taking an article in the Australian at face value and for gospel.

    Also if plain package increases consumption then why is the tobacco industry so upset about it?

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  20. JamesBlake (62 comments) says:

    As an ex smoker I chose brand based uponthe flavour as opposed to the packaging. I will confess though that preference of flavour could well have been developed around what I initially bought due to packaging (and as I was young what my friends were smoking at the time).

    This policy always seemed a bit strange to me. I wasn’t standing in a dairy looking at lollies thinking how pretty smoke packets were when I decided to start smoking. I caved to peer pressure and a desire to not be different to those I was hanging around with. Plain packaging in no way effects that. If anything you get what we see here. Kids will no longer buy a few of the brand their friends buy, they will be happy to just buy any cheap smoke.

    Seems like a policy designed to look like something is being done about smoking rather than actually doing somethign and damn the consiquenses.

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  21. Kimble (4,427 comments) says:

    Good, sensible narrative around the impact of the change.

    The Brand premium effectively increased the price of cigarettes (much as a tax would).
    Removing the Brand removed the premium.
    Cheaper cigarettes are recognised as viable alternatives.
    The cheaper price means more are consumed.

    There is always an embarrassing lack of narrative from the prohibitionists. They are very much underpants gnomes.

    Removes the Brand.
    ???
    People smoke less.

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  22. mara (764 comments) says:

    The way to reduce smoking is to promote e.ciggies. They are, unlike the useless patches and gum, actually effective and infinitely safer. Plain packaging would not have caused me to stop smoking but the e.ciggies did. Overnight.

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  23. JamesBlake (62 comments) says:

    Exactly Mara. There are actual tangible ways to reduce smoking. None of those require the impinging of peoples right to choice. If someone (like myself) wants to be stupid enough to take up smoking then it is their choice and they can wear the effects. Be that early death, high cost or the cost of different methods of quiting (I used Nicobreven, cost a bunch but was very effective).

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  24. Ed Snack (1,839 comments) says:

    The Australian government is lucky though, decreased smoking increases long term health and related costs. Like obesity, the reduced lifespan of smokers, and also the actually significant tax on tobacco products, actually saves money for the government overall. Bad for the participants, sure, but not the government as a whole in economic terms.

    So this isn’t an economic crusade but a moral one.

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  25. JamesBlake (62 comments) says:

    Got any figures to back that up Ed? I was under the impression (and this is just an impression) that the cost of treating those who have smoking or obesity related diseases was incredibly high. They may die earlier but the cost a lot on the way out.

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  26. 103PapPap (131 comments) says:

    We’ve effectively already got plain packaging – because the current law prohibits the display of cigarette packets.

    You will see at the petrol station or supermarket that when someone asks for a packet of whatever smokes, the attendant goes to a plain, non-signed cupboard and gets the evil product. So plain packaging isn’t going to make one iota of difference because everything is out of sight!

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  27. mike tan (471 comments) says:

    It should always be noted that the leftist aspiration to raise taxes on tobacco products discriminate against (and disproportionately affect) the lower income groups which they purport to represent. The reasoning for this is that these groups have less funds available to them and therefore any money they spend is a greater portion of the total amount of money they have (in comparison to someone from the middle or upper class). The raising taxes strategy works on the supposition that chemical and psychological addiction are able to be overridden by financial responsibility (a very dubious supposition).

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  28. Ed Snack (1,839 comments) says:

    James, I’ll have to find the reference again, but here’s a quote from the NYT about it:

    “In a paper published online Monday in the Public Library of Science Medicine journal, Dutch researchers found that the health costs of thin and healthy people in adulthood are more expensive than those of either fat people or smokers.

    Van Baal and colleagues created a model to simulate lifetime health costs for three groups of 1,000 people: the “healthy-living” group (thin and nonsmoking), obese people, and smokers. The model relied on “cost of illness” data and disease prevalence in the Netherlands in 2003.

    The researchers found that from age 20 to 56, obese people racked up the most expensive health costs. But because both the smokers and the obese people died sooner than the healthy group, it cost less to treat them in the long run.

    On average, healthy people lived 84 years. Smokers lived about 77 years and obese people lived about 80 years. Smokers and obese people tended to have more heart disease than the healthy people.

    Cancer incidence, except for lung cancer, was the same in all three groups. Obese people had the most diabetes, and healthy people had the most strokes. Ultimately, the thin and healthy group cost the most, about $417,000, from age 20 on.

    The cost of care for obese people was $371,000, and for smokers, about $326,000.

    The results counter the common perception that preventing obesity will save health systems worldwide millions of dollars.

    “This throws a bucket of cold water onto the idea that obesity is going to cost trillions of dollars,” said Patrick Basham, a professor of health politics at Johns Hopkins University who was unconnected to the study. He said that government projections about obesity costs are frequently based on guesswork, political agendas and changing science.

    “If we’re going to worry about the future of obesity, we should stop worrying about its financial impact,” he said.”

    It’s back in 2008, but I haven’t seen anything to suggest that the conclusion has been overturned.

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  29. goldnkiwi (1,264 comments) says:

    My experience pre plain packaging was that there was a certain snob value around cigarettes. If you didn’t want to look cheap you wanted your packet to show it. lol Anecdotally a friend ‘bummed’ a roll your own smoke from someone they knew, but it didn’t taste like the packet said ie Park Drive, the other person had put Riverstone in a Park Drive pack.

    Even to cover up the pictures you can buy covers. I have also had requests for ‘preferred’ pictures.

    I also find it funny that if there is an article about a dairy or whatever being robbed of smokes, I have seen pictures of a full smoke cabinet in the paper, I would have thought that a form of ‘advertising’.

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  30. martin english (9 comments) says:

    Some more data available on catallaxy http://catallaxyfiles.com/2014/06/09/more-tobacco-data/

    To summarise, depending on who’s word you take, more tobacco is being sold at retail (Tobacco Industry), but at a lower average retail price (Australian Bureau of Statistics). There is no evidence that suggests whether the two are related,, or if they are related, whether this is caused by existing smokers consuming more, or an increase in the uptake of smoking or any particular combination of both.
    I do believe that the lower average retail price means that ” brand equity” has been lost. Given the proven dangers of smoking, you may say the tobacco companies deserve this. However, my response is that if the Government of the day want to ban smoking, they should make it illegal.

    hth

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  31. mara (764 comments) says:

    If smoking is made illegal and commercial supplies are stopped, we all know that hard core addicts will buy it blackmarket, grow their own or improvise by drying the leaves of other vegetation and smoking that. They will also be very angry. How does that situation make society better? Stopping smoking is too hard for most addicts; don’t turn them into criminals. They have enough problems already. They know that many people despise them, they cannot afford it and they generally know that it is causing their hacking cough. Instead, make available credible smoking substitutes that will allow them their nicotine fix in a much less dangerous form. Since we all know now that inhaling SMOKE is not healthy, let people inhale VAPOUR.

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  32. adze (2,093 comments) says:

    If smokers are suddenly buying cheaper brands, doesn’t that mean brand preferences are a placebo effect?

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  33. gump (1,621 comments) says:

    @kowtow

    “Private property is one of the pillars of our western capitalist system and an attack on that is not something a responsible sensible government should engage in.”

    ————————–

    Funnily enough, that’s what I told the judge when the Police arrested me for possession of Marijuana.

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  34. Redbaiter (8,371 comments) says:

    So you’ve been arrested for drug use. Not surprising. I thought there would have to be something more than low IQ behind the inanities you frequently post here.

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  35. Anthony (789 comments) says:

    Isn’t the latest thinking to change the colour of the ciggies themselves to an olive green colour – and that apparently discourages smoking. Personally, I think bright pink would be a good colour – can you imagine tough guys smoking pink ciggies?

    If the government was really serious about improving the health of smokers and those who have to breathe in the foul air they create, they would legalise e-cigarettes and make them exempt from smoking laws.

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  36. gump (1,621 comments) says:

    @Redbaiter

    “So you’ve been arrested for drug use.”

    ——————————-

    It’s called sarcasm, you numbskull.

    My point being that if private property is “one of the pillars of our western capitalist system” then it’s a pillar that gets toppled every time the government seizes drugs and other contraband.

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  37. mike tan (471 comments) says:

    Redbaiter is the hardcore lefty who supports big government totalitarian states (e.g. Singapore) right? What are you doing here? I think the strandard is more suited to your views.

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  38. Martin (8 comments) says:

    For the record, MediaWatch has this to say about the referenced article: “The Australian’s ‘exclusive’ story on plain packaging is just plain wrong”. You can read the full expose here: http://www.abc.net.au/mediawatch/transcripts/s4026465.htm

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  39. Martin (8 comments) says:

    Further, it would appear that there is some sort of relationship between The Australian and the tobacco industry: http://www.thesaturdaypaper.com.au/news/politics/2014/06/28/murdoch-and-the-ipa-work-together-big-tobacco/1403877600#.U7SYwqjyC96
    I’m starting to think that newspaper proprietors are actually the biggest threat to press freedom :(

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