Official says country following new Australian rules keenly.
The government is said to be considering a plan to make the packaging for all cigarettes absolutely plain, following the lead of Australia, which banned all logos and brand descriptions, a news agency quoted a top health official in New Delhi as saying.
“It is a good idea and can be pursued,” Amal Pushp, director of tobacco control at the health ministry, told AFP.
“We are watching the developments in Australia with interest.”
His comments came after Australian and Indian health experts presented a report by the University of Melbourne that found 275 million Indians use tobacco, leading to nearly one million deaths a year. India’s health ministry welcomed the report and said that plain packaging as adopted by Australia could be taken up.
The approach, industry experts said, though aimed at curtailing consumption of cigarettes, will not really serve the purpose.
Says Anand Halve, co-founder, Chlorophyll, a brand and communications consultancy: “As packaging becomes more and more uninviting, the brand image premium will collapse. However, the human beast wants to smoke, drink, have sex and gamble and, these businesses are not at all going away.”
Santosh Desai, MD and CEO, Futurebrands, feels a legislation (similar to those proposed in Australia) if implemented will certainly impact the desirability of smoking as an overall category in the long run.
“However, will it really change the competitive landscape by acting more strongly against the dominant brands and whether that is what the regulation should be all about is an open question,” said Desai.
But Avi Mehta, analyst with IIFL Institutional Equities, while noting the concerns / impact of plain packaging norms on cigarette volumes and in turn on valuations of Indian companies, feels volume growth is unlikely to be impacted.
“With around 70% of sales in India made through loose cigarettes, we believe volume growth is unlikely to be impacted materially by any such potential changes. Further, multiple tailwinds (reducing price elasticity of cigarette volumes, launch of sub-65mm cigarette) would aid volume growth. This was seen in first quarter when cigarette volumes were flat year on year despite a sharp 12-15% increase in prices,” Mehta said in his recent note on ITC Ltd.
Starting December 2012, tobacco products in Australia will be sold in drab, uniform packaging with graphic health warnings in a ground-breaking move that has attracted worldwide interest. In plain packaging, graphic warnings are retained but all colour, imagery and corporate logos are taken off to reduce the appeal of smoking, especially among youngsters. Manufacturers, however, will be allowed to print only the brand name on the pack in a limited font size.
“The tobacco industry uses attractive packaging and aggressive marketing to lure people,” K Srinath Reddy, president of independent research group, the Public Health Foundation of India , told AFP, adding that, “India must initiate legislation on plain packaging, which would have tremendous public health impact.”
In 2009, India began printing graphic health warnings on cigarette packets and other tobacco products. One image attracted widespread publicity as it used an apparent picture of England footballer John Terry with a superimposed set of blackened lungs.
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