PLAIN PACKAGING: NEGATIVE IMPACTS ON RETAILERS PLAIN TO SEE

MEDIA RELEASE
11 February 2014
As the New Zealand Parliament debates the merits of plain packaging for tobacco products, the Australasian Association of Convenience Stores (AACS) has reinforced the negative ramifications the policy has had for retailers in Australia, where it was introduced despite no evidence it would have any impact on the incidence of smoking.
Unfortunately, after more than a year as law, plain packaging in Australia has had no impact on the volume of tobacco sold, but has seriously dented retailers’ bottom lines and encouraged the market for illicit tobacco to flourish.
According to AACS members in Australia, the actual volume of tobacco sold by convenience stores in Australia remains stable, with some reporting an increase in tobacco sales since plain packaging was introduced.
It is the additional costs that small retailers in Australia have been forced to absorb that has seriously impacted their bottom line, said AACS CEO Jeff Rogut.
“Plain packaging has triggered a variety of additional costs for retailers to bear, including costs associated with staff training, labour, product handling errors, increased inventory management procedures and customer frustration,” Mr Rogut said.
“All the while volumes of legal tobacco sold remain constant and the black market trade of tobacco in Australia escalates to unprecedented levels.
“We have seen numerous high profile busts in recent times in Australia which clearly indicate the illicit tobacco market is flourishing as a result of plain packaging. Responsible retailers selling legal tobacco are missing out on sales while criminals profit.
“It’s an unfortunate bi-product of flawed, short sighted policy introduced with no evidential basis.”
Research from leading international research company Roy Morgan entitled The Impact of Plain Packaging on Australian Small Retailers shows that awareness among small retailers of illicit tobacco is high and has dramatically increased since the introduction of plain packaging.
The research shows more than four in ten retailers perceive illicit trade to be having a negative impact on their business, and a third report having had customers enquire about purchasing illicit tobacco.
“The spike in illicit tobacco trade impacts responsible, honest retailers who sell tobacco legally as well as the Australian Government, which misses out on significant tax revenue,” Mr Rogut said.
Mr Rogut said the failure of plain packaging as policy reinforced the importance of education as the most important and effective way to reduce the incidence of smoking.
Key findings of the Roy Morgan research into the impact of plain packaging on small retailers in Australia are available include:
• 78% experienced an increase in the time taken to serve adult smoker customers and 62% report additional time is spent communicating with these customers about tobacco products.
• 33% of small retailers reported having had customers enquire about purchasing illicit tobacco since the introduction of plain packaging and 43% of retailers perceive illicit trade to have a moderate or major impact on their business.
• 65% do not perceive that the Australian Government considers the needs of small businesses at all in its tobacco legislation.
Further impacts are included in the full report, which is accessible via the link below:
https://aacs.org.au/wp-content/uploads/2014/02/plain-packaging-wave2.pdf