Own-lalbel fags go up in smoke

Brand manufacturers frustrated by the delphic utterances of the judge in the Penguin v Puffin case will be edified that they are winning the battle against supermarket own-brands hands down in at least one sector. A 700m one, too.

That handsome figure represents the supermarkets’ own-label share of the 12bn UK tobacco market. Not so long ago, the grocers couldn’t get in there fast enough. Since the early Eighties, private-label cigarette brands have proliferated. Now there has been a subtle, but nonetheless significant, mood change.

Tesco, for example, which launched its benington cigarettes only two years ago, is surreptitiously assigning the brand trade mark to its manufacturer, RJ Reynolds. At least one other retailer is known to have done the same and more seem certain to follow.

The reasons for this legal sleight of hand are not hard to guess at, and seem only prudent in the circumstances. Something approaching panic is sweeping across the tobacco industry after a series of high-profile court cases (including one against RJ Reynolds) which could leave it with huge financial liabilities. Though most of this litigation is focused in the US, anti-tobacco feeling is hardening in the UK. Gallaher and Imperial Tobacco both face legal action from a group of cancer sufferers over here.

Then there’s the political factor. Labour has been making noises about banning tobacco advertising in its entirety for some time. Many, including the Tobacco Manufacturers’ Association, are sceptical about that commitment. But the Labour manifesto is surprisingly explicit on the subject. It says: ‘Smoking is the greatest single cause of preventable illness and premature death in the UK. We will therefore ban tobacco advertising.’ That statement will be difficult to wriggle out of.

Understandably, therefore, retailers – rarely shy of litigation when they think they have the upper hand – are circumspect about the future of own-label tobacco products. They will carefully balance profit – in what is likely to become an increasingly price-led, commoditised market – against any attendant bad publicity. Tesco, for one, got a bit of a mauling from the British Medical Association when it launched benington. That kind of pressure can only increase.

It will be interesting to see how many own-label launches make their appearance from now on (even if their trade marks are assigned to the manufacturers). However few, their paucity will come as little comfort to the hard-pressed brand manufacturers.

Analysis, page 7

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