Plain packaging for tobacco is in the news today. The idea behind it is that requiring tobacco manufacturers to sell cigarettes in unbranded packages, where all the branding has been replaced by prominent health warnings, will reduce the number of people who smoke, and thereby benefit public health.
But will it work?
That’s an interesting question. There’s a lot of research that’s been done, though it’s fair to say none of it is conclusive. For example, there has been research on how it affects young people’s perceptions of cigarettes and on what happened to the number of people looking for help with quitting smoking after plain packaging was introduced in Australia.
But for me, those are not the most interesting pieces of evidence.
What tells me that plain packaging is overwhelmingly likely to be an extremely effective public health measure is that the tobacco industry are strongly opposed to it. They probably know far more about the likely effects than the rest of us: after all, for me, it’s just a matter of idle curiosity, but for them, millions of pounds of their income depends on it. So the fact they are against it tells us plenty.
Let’s look in a little more detail at exactly what it tells us. Advertising and branding generally has 2 related but distinguishable aims for a company that sells something. One aim is to increase their share of the market, in other words to sell more of their stuff than their competitors in the same market. The other is to increase the overall size of the market, so that they sell more, and their competitors sell more as well. Both those things can be perfectly good reasons for a company to spend their money on advertising and branding.
But the difference between those 2 aims is crucial here.
If the point of cigarette branding were just to increase market share without affecting the overall size of the market, then the tobacco industry should be thoroughly in favour of a ban. Advertising and branding budgets, when the overall size of the market is constant, are a classic prisoner’s dilemma. If all tobacco companies spend money on branding, they will all have pretty much the same share as if no-one did, so they will gain nothing, but they will spend money on branding, so they’re worse off than if they didn’t. However, they can’t afford not to spend money on branding, as then they would lose market share to their competitors, who are still spending money on it.
The ideal situation for the tobacco industry in that case would be that no-one would spend any money on branding. But how can you achieve that? For all the companies to agree not to spend money on branding might be an illegal cartel, and there’s always a risk that someone would break the agreement to increase their market share.
A government-mandated ban solves that problem nicely. If all your competitors are forced not to spend money on branding, then you don’t have to either. All the tobacco companies win.
So if that were really the situation, then you would expect the tobacco companies to be thoroughly in favour of it. But they’re not. So that tells me that we are not in the situation where the total market size is constant.
The tobacco companies must believe, and I’m going to assume here that they know what they’re doing, that cigarette branding affects the overall size of the market. If branding could increase the overall size of the market (or more realistically when smoking rates in the UK are on a long-term decline, stop it shrinking quite as fast), then it would be entirely rational for the tobacco companies to oppose mandatory plain packaging.
I don’t know about you, but that’s all the evidence I need to convince me that plain packaging is overwhelmingly likely to be an effective public health measure.