Plain packages for cigarettes could snuff out big profits
British cigarette makers face a new and serious risk to their profits if the U.K. government rules that all brands should have plain packaging, analysts said yesterday.
The industry offset lower sales by raising prices when England imposed smoking bans in bars last year, but a move to plain packaging would sway smokers to switch to cheaper brands, they said.
The U.K. has begun a three-month public consultation on a number of measures to cut the number of smokers. The most serious for industry profits is the move to ban branding.
All U.K. packs would be white, with brand names printed in plain black type. The only colour on the packages would be graphic health warnings.
Plain packaging would require new legislation, and likely wouldn’t reach shelves until 2010.
U.K. market leader is Imperial Tobacco, with a 46.1 per cent share. An analyst said it nets 96 pence ($1.89) a pack for top-priced Embassy, but only 70p from mid-priced Lambert and Butler and much less for discounted brands.
Analysts say the premium brands may taste different, but the range in quality is barely perceptible.