Indian study calls for “review” of graphic health warnings on tobacco packaging as illicit trade soars 08 Feb 17
The Federation of Indian Chambers of Commerce and Industry (FICCI) has called for a review of current policy regarding cigarette packaging graphic health warnings (GHWs) after research suggested that it may be a contributory factor in the country’s growing illicit trade in tobacco products.
FICCI defines the illicit tobacco trade as falling broadly into three categories: counterfeiting, smuggling (ie, ‘grey market’ genuine goods intended for sale in other jurisdictions) and tax-evasive manufacturing (ie, genuine products sold without appropriate taxes being paid). The organisation estimates that illicit cigarettes alone account for around a fifth of India’s total cigarette industry. According to the study, consumption of illicit cigarettes in India grew from 11.1 billion cigarettes per year in 2004 to 23.9 billion in 2015. On the other hand, the use of tobacco in legal cigarettes is on a gradual downward trend; from 86 million kilograms in 1982 to 62 million kilograms in 2015.
The study’s authors go into quite some detail on a number of diverse factors that they suggest are driving the growth of the illicit tobacco trade in India. However, one section that will be of particular interest to trademark counsel and others following the global ‘plain packaging’ debate is that on the purported impact of GHWs on consumer behaviour.
The FICCI report asked survey respondents – who were made up of smokers from several major cities and rural areas, and for the most part prefer to smoke legal tobacco products – about the ‘attractiveness’ of packaging for legal and smuggled packs. It found that 31% to 46% of those who smoke smuggled packs find them ‘more attractive’ than legal packs. Moreover, 56% to 73% said they ‘prefer to carry’ illicit packs than legal packs. The report’s authors conclude that this is likely due to the fact that grey market packs will typically carry far smaller GHWs, or omit them altogether (in each case, the range in percentages is accounted for by the survey’s differentiation between ‘popular’ and ‘cheap’ commonly smuggled brands).
Regulations that came into force in India in April last year demand that 85% of the surface area of the front and rear sides of cigarette packaging is given over to GHWs, though proposals to reduce this to 50% are currently under discussion in the Indian parliament. The FICCI report notes that the existing Indian regulation calls for significantly more prominent GHWs than in other major tobacco-producing and consuming territories, such as China, where GHWs are in text only and are required to cover 30% of the packaging, and the United States, where just side panels must carry text-only GHWs.
Notably, the FICCI study was carried out before the 85% regulation had been widely implemented, so most smokers were making their responses in the context of earlier guidelines which had required 40% coverage. As such, the authors write that “85% of graphic warning is likely to provide further incentive for smuggled cigarettes”. FICCI recommends that the “existing policy of 85% pictorial warning must be reviewed in view of parliamentary committee suggestion of limiting it to 50% of the surface area,” describing this as an “excessive regulation” in the face of illicit cigarettes that “come without or with softer warnings implying that these are risk-free”.
This particular section of the FICCI report only compares legal and grey market cigarettes, and not counterfeits. However, it does go on to state: “New technology has helped in making the counterfeit cigarettes the fastest-growing category of illicit tobacco trade. It is simple to produce look-alike packaging, with sophisticated and less expensive computer scanners and printers.”
While fakes were not factored in, their lower price points and the fact that they imitate popular brands means that they also offer many of the ‘attractive’ features of smuggled cigarettes.
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