THE IMPACTS OF PLAIN PACKAGING: AN UNBIASED VIEW FROM ACTUAL RETAILERS

MEDIA RELEASE
August 29 2014

With Cancer Council Victoria today releasing research claiming that illicit tobacco isn’t any more prevalent since plain packaging, and that small retailers aren’t suffering as a result of the legislation, the Australasian Association of Convenience Stores (AACS) reinforces the negative impacts being experienced by small retailers every day.
AACS CEO Jeff Rogut said the growing claims by health lobbyists that plain packaging is working, and that it is not negatively impacting retailers, is both damaging and insulting to those in the industry.
“We have every respect for the work Cancer Council Victoria does in improving health outcomes. However problems arise when bodies such as this presume to be experts in the retail sector and present their findings as truth,” Mr Rogut said.
“For a clear understanding of the actual impacts of plain packaging, in terms of the illicit trade of tobacco and the imposts on small business, you need to go to the source: retailers themselves. Anything less can be dismissed as political posturing, and regrettably this is all Cancer Council Victoria’s flawed research amounts to.
“When the health lobby begins to present empty and biased research on the retail industry it undermines the good work the various organisations out there do in the health sector. Today’s research could be viewed as an attempt to cover over the fact that smoking has not declined any further since plain packaging was introduced,” he said.
The AACS is not an arm of, nor does it lobby on behalf of, the tobacco industry. It is the peak body for the convenience industry in Australia, representing the interests of some 6,000 stores.
Mr Rogut said it was important that actual impacts and feedback from retailers be considered when evaluating the success or otherwise of this legislation.
“The additional costs that small retailers in Australia have been forced to absorb as a direct result of plain packaging have seriously impacted their bottom line,” Mr Rogut said.
“The cost burdens associated with additional staff training, labour, product handling errors, increased inventory management procedures and customer frustration have been substantial.
“These impacts were always obvious to retailers – those at the front line. This is why it was so disappointing for the previous Australian Government to introduce such a destructive measure without consultation with industry and with no evidential basis.
“Unsurprisingly the policy, to date, has backfired. The volumes of legal tobacco sold remain constant and in some cases, as reported in the recently released AACS 2013 State of the Industry Report, actually continued to increase, while the black market trade of tobacco in Australia has escalated to unprecedented levels,” he said.
Another serious impact of plain packaging has been the shift in consumer purchasing habits to cheaper brands and products. According to Aztec, the total value of tobacco sales in the convenience sector in Australia for the 12 months ending June 2014 showed strong growth at 7.3%. Driving this growth in tobacco consumption was the sub-value or “cheaper” segment, which grew in total sales by 61.7% over the course of the year. Total sales in the Roll Your Own segment grew 29.1% in the same period.
“As tobacco branding has been eroded, price has emerged as the main driver behind tobacco purchases. This is another unintended consequence of plain packaging and another example of what happens when legislation is introduced with no foundation in fact,” Mr Rogut said.
Here is a selection of recent direct quotes from retailers outlining some of the actual experiences of tobacco plain packaging in Australia:
“When placing orders more time is spent as all packets look the same. Mistakes are made if a staff member places stock in the wrong spot. Previous to plain packs, it never happened.”
“Deliveries are much harder to check off, extra time is taken.”
“The biggest impact is at point of sale, in the filling of cabinets and locating product(s) for the customer.”
“When stock is filled out in the shop, wrong stock is being placed in wrong spots by staff.“
“New staff find it hard to learn where stock is. It is difficult with products at the bottom of the shelf, as they are hard to read. It takes extra time to serve customers as well, with new staff needing time to find (cigarettes).”
“Customers can ask for the wrong product as well, normally they don’t realise until they have taken a (cigarette) out and lit it. Then they try to return and abuse staff when this is declined.”
“The sales in my store have moved away from the big name (brands), moving to the cheap labels. I admit that this is because of price, but also the fact that they all look the same.”
“The single biggest issue is the tailor made chop chop as it is now available packaged and branded, it has moved way past the perceived bag of loose tobacco that chop chop implies.”
“Chop chop has increased in my area as a result as well. Once again I admit price has something to do with it, but also a large part is played by plain packaging. It all looks the same, the chop chop people don’t have to do much to make it look better than plain packaging, a white box is all they need, in fact. There is a disconnection from perceived quality when the stock comes in the same colour and not the branded pack.”
Further information:
Jeff Rogut
Chief Executive Officer
Australasian Association of Convenience Stores
Ph: +61 467 873 789
Media enquiries:
Stephen Naylor
Wise McBaron Communication
Ph: +61 (2) 9279 4770