“We want to be part of the debate,” Martin Southgate, managing director of the UK arm of tobacco manufacturer JTI said last week as he introduced the start of a £2m campaign against plans for standardised packaging of tobacco in the UK.
Removing the ability of tobacco companies to promote their brands on their packets is a serious threat to the tobacco companies. The winners, Mr Southgate said, will be the criminals.
“We are taking a stand because we are fighting for the legitimate part of our industry; the part that is now being put under threat by the other part: the criminal part,” he said.
High taxes create the profit opportunity. Display bans make the boot of a car an attractive sales outlet. Plain packaging makes counterfeit goods easy.
JTI’s campaign started by pointing out two things. Firstly, that there was no evidence to suggest that plain packs would reduce tobacco consumption. Secondly, that Better Regulation rules adopted by the UK government insist that evidence in support of the impact of a measure should be available before it is adopted. That means, legislation should not be introduced in the hope that it will work.
While Mr Southgate and others discuss the criminal element in terms of vertically integrated smuggling gangs who sell direct to consumers, gangs that have “no interest in complying with regulations”, there is another issue for local retailers.
There is a big risk that legitimate traders faced with profit pressure will be tempted to stock counterfeit goods, tempted by the ability to offer lower selling prices and to gain better margins. This is already a factor in many parts of England. I have seen two retail occasions when packs have been produced from under a counter.
The government would be better served by working with the trade to implement its latest measures.
By way of contrast consider the world of soft drugs as reported by the Financial Times in June.
Under the strap line “high profits” it said “Police fear growing trend of undercover cannabis”. Helen Warrell, its reporter, said that hydroponics shops were fuelling a grow-your-own culture. One retailer was pictured and quoted as saying: “I don’t need to know any details of what you’re growing.” A drugs expert said: “People who are otherwise law-abiding citizens are finding that there’s a profit to be made.”
Earlier this year, the UK’s power companies reported that illegal cannabis farms were stealing around £200 million worth of electricity each year to grow their crops.
The comparison may seem extreme but the threat is very real.