On 26 June the UK Department of Health released draft regulations for plain packaging on tobacco products which it proposes introducing in 2016.
The government has not made a final decision on whether to introduce standard plain packaging yet, but if the draft regulations are adopted in their current form it will be credit negative for tobacco manufacturers including Philip Morris International Inc, or PMI (A2 stable), British American Tobacco plc, or BAT (A3 stable), Imperial Tobacco Group plc (Baa3 stable) and Japan Tobacco Inc (Aa3 stable) because we expect sales volumes to decline.
The draft regulations propose the same plain packaging rules that have been law in Australia since December 2012. All cigarettes and rolling tobacco would be sold in drab brown matt packaging, with limits on the size, colour, typeface and position of brand and variant names. Even if plain packaging rules are not introduced, sales could be adversely affected by the European Tobacco Products Directive which will be enforced in the UK from 20 May, 2016. When this happens, tobacco companies will have to add large picture health warnings covering 65% of the front and back of packets.
The introduction of plain packaging will add further downward pressure on sales volumes in the UK, which are already declining as the result of ongoing measures by the government to reduce smoking. It has already banned tobacco sales from vending machines and the open public display of tobacco in shops, among other measures.
This posting came from Moody’s Investors Services.
Australia already has a similar law in place, and the product photo below reflect what they require. All boxes are Cool Grey 2c, all fonts are lucida sans size 10, the image has to be rotated throughout the year of different images.