Tobacco brands set for further value decline after MP vote on plain packaging

With the value of tobacco brands already in decline, sales are set to slump even further after MPs voted for plain packaging of cigarettes, removing the last method companies have to develop and push their cigarette branding.

MPs yesterday (11 March) voted in favour of introducing plain packaging for cigarettes in the UK, following a long and widespread battle to make cigarettes less appealing to consumers.

The move, which would mean that from 2016 onwards all packets would be standardised other than the company and brand name, would take away the last opportunity brands have to advertise on cigarette products, having already been stripped of their ability to advertise via other media or look to sponsorship in order to promote their brands.

The packs could also feature graphic photos accompanied by health warnings.

Research from valuation and strategy agency Brand Finance suggests that the move would wipe out millions off the value of tobacco brands.

Marlboro is the world’s most valuable tobacco brand according to the agency’s 2015 ranking of the world’s most valuable tobacco brands, valued at $13.1bn USD. This makes it more valuable than other iconic brands such as Starbucks ($11.1bn) and L’Oreal ($12.5bn).

However, the data shows that the brand is already in decline, seeing a -3% fall in value since last year’s rankings.

The world’s second most valuable tobacco brand, Winston, also saw a drop of -21% year on year.

The drops are likely due to the gradual decline of smoking in western markets, as well as the implementation of plain packaging in countries such as Australia and Ireland.

A move to standardised packaging in the UK could push other countries to follow suit, further accelerating the decline in tobacco brand value.

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