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Trouble ahead for tobacco sellers

  • News
  • June 13, 2016
  • Sarah Dunn
Trouble ahead for tobacco sellers

At the end of May, the Ministry of Health opened consultation on draft regulations to standardise tobacco products and their packaging. The government has announced its commitment towards making plain packaging a reality as part of the Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill, which is currently working its way through Parliament.

The Ministry of Health says the design and appearance of tobacco products and their packaging undermines the effectiveness of health warnings about smoking and lead smokers to underestimate the harm caused by their habit.

The main effects of the bill will be:

  • standardising the size and appearance of tobacco products and packages to make them less appealing, and to make the graphic warnings on the packs larger and more effective
  • allowing a brand name and certain other manufacturer information to be printed on the pack, but with tight controls (eg, over the typeface, font size, colour and position)
  • prohibiting the use of tobacco company branding imagery and all other marketing devices on tobacco product packaging and on tobacco products themselves

This year’s budget also saw a planned series of four 10 percent annual tax hikes implemented. These are expected to push the price of a 20-pack of cigarettes from around $20 to around $30 by 2020.

A recent Nielsen report ranked tobacco as the sixth most valuable category in supermarkets, with yearly unit sales of more than 19 million worth around $400 million. It’s also commonly sold in dairies and petrol stations.

Image: Nielsen

Retail NZ general manager public affairs Greg Harford warned that making tobacco harder to get hold of may push consumers towards black market sources.

“Tobacco’s a legal product, but its sale is highly regulated,” Harford says. “If the Government moves to introduce plain packaging will make it increasingly hard for small dairies at the heart of New Zealand communities to service customers.  

“Last week’s announcements about massive tax hikes on the price of tobacco creates real security risks for small retailers, and plain packaging will add even more complexity to stock management within dairies, and cause inconvenience for consumers.”

Harford also cited anecdotal reports of untaxed tobacco being sold in New Zealand.

Theft of tobacco is already a reality for many retailers – Z Energy announced earlier this year it was investing $10 million into a technology scheme aimed at preventing thieves from getting away with stolen items.

A 2014 study on the attitude of Kiwi retailers towards the sale of tobacco also highlighted concerns around theft, because of the high value and transportability of tobacco products. It also reported “little enthusiasm for and widespread ambivalence about selling tobacco” from the 18 retailers spoken to, reporting that some were enthusiastic about helping customers stop smoking.

"These positive views on customer support may be because retailers (especially small retailers) are closely linked to their communities and often know their customers on a personal level," the study says. "These retailers, therefore, have empathy for their customers’ and community’s wellbeing."

Harford says that for most retailers that stock tobacco, it’s a “declining business line” but for some, it’s important as it underpins many small community dairies and grocery stores. 

“I’ve heard of some dairies and convenience stores where up to 60 per cent of the total business relates to tobacco,” Harford says. “If that business disappeared – the store could too, which would see some communities left without a dairy or convenience store.”

Submissions on the plain packaging bill can be made via email to standardisedtobacco@moh.govt.nz. The closing date for submissions is July 29.

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