Monday, 20 August 2012

More plain pack news

A little more plain packaging news...

According to the Tobacco Manufacturers Association, an estimated 500,000 people have told the Department of Health not to go ahead with the policy. This includes the 235,000 who have signed the Hands Off Our Packs petition.

This unprecedented response represents views from thousands of members of the public as well as retailers, packaging companies, marketing and design firms, manufacturers, wholesalers, politicians, employers, employees, business groups, trade unions, the Intellectual Property community, international business, trade associations and the law enforcement community.

Meanwhile, a survey for Marketing Week found that only 28% of Brits think that plain packaging will help deter young people from smoking.

Just a quarter of people in the UK (28 per cent) think that selling cigarettes in plain packaging would discourage younger people from taking up smoking, the stance that health organisations are currently taking to push the law in this territory. Only 25 per cent of smokers agree that plain packs would put children off trying cigarettes.

It's also interesting to see the effect that last week's Australian High Court decision had on Philip Morris's share price, ie. next-to-none.

While this is a negative headwind for Philip Morris, we don't believe that it is the end of the world for the company. For one thing, this litigation wasn't even discussed at the Q2 2012 Earnings Call between Philip Morris and its analysts. Secondly, the market did not make that big of a deal about it on August 15th (which was the first trading day after the news was announced), because Philip Morris's stock only closed down 17 cents (.18%) during the day's trading and PM's stock only saw slightly below average trading volume. And third, despite the fact that over 50 countries have mandated pictorial health warnings since 2001, Philip Morris's revenue has tripled since 2001.

Still, what do the markets know about business, eh?

And finally, Carl Phillips has a couple of posts up at Ep-ology about plain packs and the black market which are worth a read—see here and here.



4 comments:

GreenWorld said...

Of course it won't work. All the plain packaging does is create the aura of something illicit. Thinking back to my own days, something illicit was a sure way to give people a desire to revolt against whoever designated that way. I was 16 and figured that one out!
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Junican said...

Don't you get it? They don't care whether it works (in the sense of reducing youth smoking)or not. What they want is total control of the packets so that at some future date they can reduce the size of the packets and thus the contents. Another possibility is to forbid the import of cigarettes if they do not comply with UK packet rules. the whole object of the exercise is to take as much control as possible out of the hands of consumers and tobacco companies. Another step along the way to prohibition.

Wiel said...

PM shares went down 1.57% today. Trade of shares was exceptionally high with a peak of almost 300K transactions at the end of the day.

Interesting question: Who was dumping the shares?

Karl Fasbracke said...

Who sais that that tobacco control is about selling fewer cigarettes? Plain packaging is perfect as it creates a lot of noise and does not reduce tobacco related incomes. Virtually everything tobacco control does follows this pattern.

In that sense it works pretty well.