Click here for The Counter Arguments that can be used to defeat this industry argument. 

The tobacco industry relies heavily on its claim that plain packaging will increase the illicit trade in tobacco. The argument is one of the main issues raised in its media campaigns, in its submissions to government, and in its legal arguments before the courts. However, this claim lacks both logic and any supporting evidence.

The tobacco industry makes its claim in three ways:

1. Plain packs will be easier and cheaper to counterfeit than the existing complex branded packs;
   
    
2. Smokers prefer branded packs and are more like to purchase illicit tobacco that has branded packaging if legal tobacco is in plain packs; and
   
    
3. Illicit trade in tobacco has increased in Australia after the implementation of plain packaging.

The tobacco industry commissions statistical data on the illicit trade in tobacco for many countries, often using the flawed “empty pack” survey method. In each country that has considered plain packaging, the tobacco companies promote media articles raising fears about illicit tobacco. Leaked internal documents from Philip Morris show this was a central pillar of their strategy to oppose the policy.¹

Research shows that the tobacco industry regularly uses inflated estimates of illicit trade.²

For example, in the UK, research has shown that in the two years before plain packaging proposals were announced, there were no media articles about the illicit trade in tobacco. In the two years after plain packaging was first proposed, 52 stories appeared in the media about rising rates of illicit tobacco, all of which cited tobacco industry data rather than the official government statistics, which showed the rates were declining.³

A similar situation occurred in Slovenia with many news articles raising concerns about smuggled cigarettes appearing during the period when the government was considering plain packaging.⁴

The industry then links these concerns about the illicit trade to argue against plain packaging laws. In some countries, tobacco companies have even produced short promotional films⁵ that raise fears about crime and terrorism, which they say will result from plain packaging.⁶

These two very similar news articles are from Canada in 2016 and the UK in 2014. The myth that plain packaging of tobacco will increase illicit trade is promoted strongly by the tobacco industry, with no evidence to support the argument.

JTI’s response to the most recent consultation on plain packaging in Canada⁷ provides a typical example of the industry arguments. It stated:

In a plain pack environment, illegal producers will benefit at the expense of legitimate industry. They would be able to replicate easily plain packs and continue to supply the Canadian market with illegal branded packs and clear plastic baggies of cigarettes without health warnings. [p. 3]

JTI’s submission relied only on industry funded, discredited data about the extent of contraband tobacco in Canada. It ignored the independent research and official data that shows the illicit market has decreased in recent years.⁸

JTI also asserted that plain packs will be easier to counterfeit [paragraph 148]. The only research cited is a report from 2012, commissioned by JTI, by Zimmerman and Chaudhary,⁹ which has been the subject of academic criticism.¹⁰ There is no independent peer-reviewed research to back up JTI’s argument.

JTI also claims that:

The level of illegal tobacco consumption in Australia has grown more than 20% since plain packaging was introduced. [paragraph 149]

To support this assertion JTI relied solely on data from a report by KPMG. That study uses an “empty pack” survey, which has been shown to have significant flaws in its methodology.¹² Even that KPMG survey has found no counterfeit plain packs over four years. KPMG has written to the UK Public Health Minister to state that the report has been “misrepresented by others, without our consent, to suggest it supports the contention that plain paper packaging could lead of itself to an increase in tobacco smuggling and duty avoidance.”¹³ JTI ignored the official statistics and research that demonstrates the levels of illicit trade has remained constant (see below).

These two very similar news articles are from Canada in 2016 and the UK in 2014. The myth that plain packaging of tobacco will increase illicit trade is promoted strongly by the tobacco industry, with no evidence to support the argument.



 

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The Counter Arguments

Cancer Council Victoria has produced a detailed fact sheet on what has happened to the use of illicit tobacco since the introduction of plain packaging in Australia. Available here.

Cancer Research UK published a paper setting out the weakness of the tobacco industry's arguments that plain packaging will increase the amount of illicit tobacco. Available here.

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  Packaging features used to combat the illicit trade do not change under plain or generic packaging legislation. Enforcement procedures rely on covert (invisible) codes and tax stamps on genuine packs; neither of these is changed by plain packaging. In addition, the legislation requires colorful picture health warnings so plain packs are not literally “plain” and are no easier to counterfeit.
  
   

• The scale of the illicit tobacco market is related to price and availability which are not affected by plain packaging. The biggest impact on illicit trade is the extent of effective enforcement action.¹⁴
  
   
• Plain packs are no easier to counterfeit than branded packs. Even Philip Morris has stated that, “[Cigarette packs] are easily counterfeited, despite the inclusion of innovative holograms, special inks and elaborate design details. Evidence shows that counterfeiters can make copies of even the most sophisticated paper stamps in three weeks.”¹⁵ Because plain packs retain the picture health warning, tax stamps, and covert markings, there is little difference in how difficult they are to counterfeit.
  
   
• The tobacco industry has for years been complicit in the illicit market by oversupplying low tax regimes.¹⁶  The four major international tobacco companies have paid billions of dollars to settle cigarette smuggling litigation in Europe and Canada. Evidence of the direct and indirect involvement of the tobacco industry in this large-scale fraud is well documented, through the industry’s internal documents, their own admissions, and court judgments.¹⁷
• The industry cannot be trusted to provide reliable data on illicit trade. The industry regularly commissions reports around the world that exaggerate the level illicit trade in different countries. These reports conflict with official government figures and independent studies.² A recent study in Colombia provides a good example where the industry claimed a rate of 13% but independent research showed a rate of 3.5%.
  
   
• Illicit trade has not increased in Australia since implementation of plain packaging in 2012. Extensive national surveys have shown the use of illicit tobacco decreased following implementation of plain packaging. People who reported current use of unbranded loose illicit tobacco went from 6.1% in 2007 to 3.8% in 2016. People who reported smoking illicit branded cigarettes reduced from 9.6% in 2013 to 5.5% in 2016.¹⁸
  In the 2015-2016 period Australian Customs and Excise officers intercepted the lowest volume of illicit tobacco in 7 years. Total seizure volumes dropped from 324 tonnes in 2010-2011 to 146 tonnes in 2015-2016.
• The tobacco industry has produced no reliable evidence to support its claims. The tobacco industry has tried to rely on a report by KPMG, funded and commissioned by the tobacco companies, that the companies claim indicates illicit trade has increased. However, KPMG has written to governments to say that the report has been “misrepresented by others, without our consent, to suggest it supports the contention that plain paper packaging could lead of itself to an increase in tobacco smuggling and duty avoidance.” ¹⁹
• Counterfeit tobacco, which the industry continuously emphasized, comprises only 5-8% of the global illicit market. Whereas 60-70% of the illicit market is made up of products made by the transnational tobacco companies that are then oversupplied to low tax regimes. At best, the evidence indicates that tobacco companies are failing to control their supply chain. At worst, ex-employees insist that tobacco companies remain actively involved in the smuggling.²³
• No counterfeit “plain packs” were identified in Australia until 2015. Even then, very few examples were identified. Counterfeiters have not sought to copy the new unbranded packs. Even the industry-funded KPMG empty-pack survey found no counterfeit plain packs.
• Plain packaging of legitimate products can make illicit tobacco easier to identify. If illicit products all have branding but legal duty-paid tobacco is in plain packaging, identifying illicit tobacco becomes easier because virtually all illicit tobacco has attractive branding and logos.
  
   
• In the UK High Court Case, the tobacco companies submitted no expert evidence, data, or analysis. Despite trying to argue that plain packaging would increase illicit trade in the UK the tobacco companies merely asserted this claim but provided no evidence at all to support their arguments.²⁰
  
   
• A study by the UK Customs and Revenue stated there was “no evidence to suggest the introduction of standardised packaging will have a significant impact on the overall size of the illicit market.”²¹
  
   
• The tobacco industry has exaggerated the data and manipulated the press in relation to illicit trade as demonstrated by independent research.²²
  
   
• Highlighting the dangers of counterfeit cigarettes communicates a message that genuine cigarettes are normal and safe. Both genuine and counterfeit cigarettes are extremely toxic products. There are no safe cigarettes, and there is no safe level of smoking.