TOBACCO: OVERVIEW
Related Products Regulations 2016. The adoption of ‘plain packaging’
[as it is coined] in the UK followed a high profile High Court ruling that dismissed a legal challenge brought by major tobacco companies who questioned the lawfulness of the move. In conversation with TRBusiness,
Imperial Tobacco International’s Director of Corporate Affairs and Compliance Global Duty Free & Export Dr. Jennifer Cords says: “There is no brand communication,
no embossing or specific brand identity on the pack, which unfortunately makes it very easy to ‘fake’ the brand. We have this experience from Australia.” Despite the challenges, Cords
point to the UK duty free business as being ‘quite stable’. “Some brands were suffering from
out of stock. We were not affected that much.” Cords clarifies that in the UK, the
naming convention is ‘standardised packaging’ and in the rest of the world it is called ‘plain packaging’. “The wording does not describe it
correctly: It is neither standardised, nor plain. Instead, ironically it is a 100% health campaign that the tobacco companies pay for.” In the case of France, French Health
Minister Agnès Buzyn admitted in December that plain packaging had not contributed towards a decrease in ‘official tobacco sales’, one year since its implementation. According to data from non-profit French Monitoring Centre for Drugs
and Drug Addition (OFDT) seen by TRBusiness, cigarettes sales in France decreased by 0.7% on a constant basis in 2017.
Correctly defining DF A JTI survey conducted among 1,019 people representative of the French population aged 18 and above on plain packaging revealed that 79% believed the measure would have ‘no or limited impact’, months after its implementation. JTi reports that in the case of
duty free in France – and the UK – duty free store staff have said that potential buyers, particularly Chinese, struggled to recognise their brand, sometimes leading to them either abandoning their purchase or spending less time shopping the rest of the store. “For France and the UK, we
don’t believe that plain packaging has achieved its objectives,” states Bateson. “We look at it as a branding ban.” Bateson points out that, invariably,
regulations of this nature are particularly detrimental to the unique marketplace of duty free, which serves multiple nationalities and sells products on an export-basis only. “The damage these regulations
have on duty free retail is disproportionate,” she adds. “In a highly controlled environment
with allowances and age verification in place - wth the added factors of time pressure, different nationalities, and languages, it is a mix that damages retail revenues.”
“For France and the UK, we don’t believe that plain packaging has achieved its objectives.”
Gemma Bateson, Director of Corporate Affairs and Communications, JTI WWDF
Recognising travel retail’s unique
trading environment is a point currently being hammered home by manufacturers and regional trade associations, as duty free tobacco faces its latest challenge from the World Health Organization’s (WHO) Illicit Trade Protocol (see pg48 for the full story). “There is a lot of misunderstanding
on what duty free is and what it is not – it is not cross-border duty paid sales and has nothing to do with our trade,” states Bateson in response to the WHO’s claims that duty free tobacco is complicit with illicit trade. Bateson says there is an ‘issue’ of
reputational damage as a result of ‘illicit whites’ cigarettes sold illegally in Europe and branded for ‘duty free sales only’, yet these have never been sold in a duty free store. “They have never been in duty free,
but are listed in one or two stores around the world,” she says. “It sort of legitimises their status.” Imperial and JTI make very clear
that as companies, they are not ‘anti- regulation’, evidenced by the wave of rules they have – and continue – to comply with. «
Five Minute Interview: Dr. Jennifer Cords, Director of Corporate Affairs and Compliance Global Duty Free & Export, Imperial Tobacco International.
How did the tobacco category in travel retail perform in 2017? Europe has performed nicely – according to our internal data we are seeing growth in Asia
as well as the Middle East. We still have potential in the Americas and are looking into how we can set up our brands while thinking outside the box. We think IAADFS and ASUTIL merging this year [on the Summit of the Americas show] is an important and strong signal. Is it one-
FEBRUARY 2018
size fits all in the Americas or do we need to tailor it?”
Tobacco remains a key cross-category footfall driver for duty free. How committed are Imperial Tobacco in helping to sustain this position? We contribute significantly. The commitment is there, from top management to our headquarters. Duty free is the future as we see future trends starting here. It’s really interesting to anticipate these trends. Yes – it was a challenging
year. When I joined imperial, we were preaching that what happens next to tobacco will happen to alcohol. That is not true. What is happening in tobacco is happening in parallel with alcohol and it is happening now.
What are your expectations for 2018? Last year was a good year, but our expectations for this year are even higher. Predictions in duty free are difficult to make due to the volatility of the business.
TRBUSINESS 45
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