EUROPE: Smoke Out

The EU plans to stub out smoking by forcing tobacco companies to be more candid about their products. Warnings will take up more pack space and the terms ‘light’ and ‘ultra’ will be banned. But, given the strong brands in the sector, the indus

The tobacco industry is facing challenging times. Not only is it having to come to terms with a forthcoming ban on tobacco advertising, but also new legislation from the European Union on labelling and packaging.

The EU Directive on Tobacco Control was finalised last week during a conciliation meeting between European ambassadors and European parliament ministers. It will be left to the UK Government to ratify the directive, which includes fundamental changes to the formulation of some tobacco products as well as changes to packaging and branding.

Any name which in the directive’s terms implies a brand is less harmful to health, such as “light”, “ultra” or “ultra-light”, will not be allowed from September 2003. Also, 30 per cent of the area on the front of a cigarette pack and 40 per cent on the back will be taken up by a health warning. Individual member states will also be given the option to introduce a regulation – already used in Canada – forcing tobacco manufacturers to print on cigarette packets graphic pictures showing the ill-effects of smoking.

Companies may also have to make changes to their products, as no cigarette in the EU will be allowed to contain more than 10mg of tar. The present limit is 12mg. No cigarette over 10mg can be exported out of, or imported into the EU after 2007 under the directive.

Tobacco companies will find it hard to tell consumers about the changes when they happen. It is expected that Parliament will by then have passed the UK Tobacco Advertising and Promotion Bill banning tobacco advertising.

The speed with which the EU Directive on Tobacco Control has progressed has taken the industry by surprise. The conciliation procedure was supposed to go on for six weeks, giving the tobacco industry time to lobby ministers. In fact, the process was drawn to a conclusion after just one night.

One industry source says: “The scope has exceeded what everyone expected; it’s far more draconian, particularly the banning of terms such as ‘light’. It’s completely out of kilter with the speed of directives.”

Court action

The tobacco industry will have to decide how it wants to respond to the directive, with legal action an option.

One observer says that the directive could fall foul of the European Courts in the same way as the EU directive banning tobacco advertising, which was judged to be illegal by the European Court of Justice.

But he adds: “I don’t think this directive will be fatal. A court case will be brought on the grounds that there is no legal base for it. Under the EU’s constitution there has to be a free flow of goods. The EU Parliament’s Legal Affairs Committee warned this directive would be in contravention of that, as it did with the tobacco advertising directive, but it has been ignored.”

The Tobacco Manufacturers’ Association director of public affairs, John Carlisle, doesn’t rule out legal action, although no formal step has been taken as yet by the tobacco industry trade body. “We shall look at it carefully,” he says. “I can say it is an option.”

David Bowe, an MEP and member of the European Parliament’s Environment, Public Health and Consumer Affairs Committee, which presided over the directive, admits that the tobacco companies may challenge member states through the courts on the interpretation of the directive when it comes to implementation.

Loose interpretation

He says: “Member states will interpret the directive individually. If there is a discrepancy between member states’ interpretation of a descriptor [in the directive] it could be taken up in a court case.”

Tobacco manufacturers are being guarded as they consider their options. A spokeswoman for British American Tobacco says: “As far as brands go we haven’t really considered it yet, but we are very concerned.”

A spokeswoman for Imperial Tobacco says: “No redesign can begin until the directive is adopted in the UK.”

The TMA’s Carlisle adds: “People associate products with the names and if you remove those names it confuses customers. The names are based on the levels of tar – there is no health claim. It seems reasonable we should call them ‘light’ or ‘mild’. New names might not have the same appeal and our opportunities will be limited because our marketing will be restricted.”

By the time the directive comes into force the UK ban on tobacco advertising should be in place, making it difficult for companies to communicate the changes to customers. It’s an irony that isn’t lost on one industry analyst. “There are conflicting ideas. The tar levels are meant to be coming down but companies won’t be allowed to advertise this under the advertising bill, which will go further than the original EU legislation. It seems a bit silly.”

Under the Tobacco Advertising Bill, the only area where companies will be able to advertise their products will be at point of sale, and this is likely to be where the battle to educate customers about different products will be won and lost.

Fair balance

Philip Morris Europe group vice president of corporate affairs David Davies says: “If we have the ability to communicate to customers at the point where tobacco products are sold, that creates a certain balance between the need to avoid exposure [of advertisements] to children and the need to communicate with adult consumers.”

But one tobacco industry veteran questions the impact of removing the names of the brands. He says: “In terms of the big brands, they are so well established I don’t think it will affect them at all. There is such a variety of names for low-tar cigarettes. The punter tends to know them because they generally have a lighter colour. Maybe smaller brands which are not as clearly differentiated by colour will need rebranding.”

For its part, the Government-aided charity Action on Smoking & Health (ASH) is delighted with the directive. “It’s a bit of a quandary for them [the tobacco industry],” says Amanda Sandford, ASH’s research manager. She believes companies will use colours to differentiate products: “I imagine they will try to keep colour schemes, as most of the low-tar brands are in light colours. But the thing about Silk Cut [Ultra] or Marlboro [Lights] is they are important brand names. Given they won’t be able to market them in that way, they may consider a complete rebrand.”

Loopholes

But she adds: “Government will have to make the UK interpretation of the directive as clear as possible to avoid loopholes.”

Whether the directive will help reduce the number of smokers remains to be seen. Carlisle says it won’t make “one iota of difference” and even impartial observers are sceptical. Interestingly, one industry analyst notes that in Canada smokers are now buying cigarette pack sleeves which mask the graphic health warnings. Perhaps shocking people isn’t always enough to make them quit.

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