Document(s) 20 of 37

The importance of packaging

Packaging is an integral part of a tobacco product. As a form of advertising, it is essential to a brand’s image. When Donald Brown was Vice-President of Marketing at Imperial Tobacco, he was asked in court whether as much time, energy, and expense went into designing a package as went into creating advertisements. He replied that packaging is “as important, more and more so.”^[56] RJR – Macdonald’s Peter Hoult maintained that some young adults smoke a particular brand to influence what their friends think of them. “They buy it with their friends in mind,” he said.^[252] “Clearly, the package does communicate the cigarette they’re smoking and we believe that people choose their cigarettes according to what those cigarettes are, and that includes imagery.”^[251]

In a 1982 publication celebrating the 25th anniversary of Rothmans, the company commented on the importance of packaging:

The Company is very aware that every customer carries the Rothmans logo, on the package, with him or her all the time. That package comes out many times a day, and every time it is seen makes a personal comment about the person who carries and shows it. Trust in its quality must never be compromised through any lapse of attention to the smallest detail.^{[525, p. 7]}

Similarly, Christian Hemain, President of Crealise Packaging Inc., which produced a special container for roll-your-own tobacco for RJR – Macdonald, said, “The user must be hurled into a situation where he wants to buy the container for itself because it is attractive. The ultimate target was to make the container as appealing [as], not to say more so [than], . . . the content.”^{[243, p. 201]}

The TPCA did not prevent manufacturers from using the package for advertising or for conveying a brand’s image. Indeed, with the TPCA in place, manufacturers introduced modified packages for many of the major brands.

Some packages bear advertising slogans. “Traditional Taste • Reduced Irritation” is on Player’s Light Smooth. “Made with naturally mellowed, premium tobacco for a smooth, full flavour” is on Export “A” Smooth. These slogans help the tobacco companies get around advertising constraints. With other forms of communication restricted, the package is a critical marketing tool. Kevin Sheridan of Lawson Mardon Packaging, an international firm supplying Canadian tobacco companies, said, “The answer to the question whether pack design can beat restrictions on cigarette advertising must be a very positive ‘yes’.”^{[543, p. 99]}

The potential impact of plain packaging

Health groups have argued that the alluring aspects of cigarette packages could be eliminated if cigarettes came in plain packaging, sometimes referred to as generic packaging or standard packaging. Perhaps the best descriptor is dissuasive packaging, a term coined by Dr Fred Bass of the BC Medical Association.^[29]

With plain packaging, the only distinguishing feature would be the brand name, printed in small, standard script in black ink. The main colour of all packages — on the outside and on the inside — would be dull brown or gray or some other specified unattractive colour. In every other respect — size, texture, material, method of opening — packages would be identical. This would eliminate tin containers, glossy finishes, and embossed letters (except possibly for the health warning). The health warning and list of toxic contents would be given more prominence. The packaging requirements would also apply to carton wrappings and any other form of packaging seen by consumers.

Plain packs could significantly decrease the effectiveness of sponsorship promotions and make it much more difficult for consumers to make the association between the sponsorship and the brand. The standard colour required for plain packaging would also reduce the influence of any foreign advertising entering Canada and of any advertising people may have seen in the past.

Plain packaging would remove the imagery from cigarette trademarks. Said Rothmans in its 1994 annual report,

plain packaging . . . would have the impact of confiscating the Company’s trademark values, leading to a changed competitive environment in which the Company’s most important competitive assets would be diluted or nullified.^{[516, p. 9]}

Indeed, plain packaging would create negative imagery. Instead of being a badge product to be proudly displayed, the ugly pack would be a source of embarrassment.

As Rothmans indicated, trademarks are a tobacco company’s most important assets. As far back as 1971, BAT had 38 000 trademark registrations worldwide.^[300] Marlboro, the world’s top cigarette brand, has a trademark with an estimated global value of US $39 billion.^[575] Without trademarks, a company can be reduced to nothing. Without a brand name, a cigarette is nothing special. Here is what Imperial Tobacco’s Brown has to say:

The product itself . . . is very interesting, because in the cigarette business there is very little to distinguish, particularly in Canada, because we all use the same kind of tobacco, we do not flavour our tobaccos. So the discrimination in product terms, pure blind product terms, without any packaging or name around it is very limited. You can tell if it’s very mild or very strong, and you might get some case characteristics that are different. But it’s very difficult for people to discriminate, blind tested. Put it in a package and put a name on it, and then it has a lot of product characteristics.^[53]

Tobacco companies use package colour to influence consumers’ perceptions of cigarette strength. So-called light and mild cigarettes are typically put in packages with lighter colours or with more white space than stronger cigarettes in the same brand family. White suggests purity and cleanliness. As Hoult says, “the packaging is a most important means of communication and consumers have an expectation that the lighter the pack . . . or the total pack get-up, the lighter the cigarette.”^[253] This packaging technique is commonly used with many consumer products: the Diet Coke can is a lighter colour than a regular Coke can, for example. Plain packaging would prevent this marketing technique.

Plain packaging would help reduce smoking in a number of other ways:

• It would decrease the impact of shelf displays, which are an extremely important promotional tool.
• It would improve the effectiveness of health warnings by removing the competing prosmoking messages (trademarks, colours, slogans).
• It would adversely affect some consumers’ perception of the quality and taste of the product inside.
• It would send a strong educational message to the public that tobacco is different from other products and that unique consideration should be given before a purchase decision is made.

Best of all, the implementation of plain packaging would cost the government next to nothing. The industry would bear the implementation cost, a one-time expense that could be passed on to consumers at less than 1 cent a pack. Once implemented, the industry would save millions of dollars with the reduced expenses for package design, market research, and sponsorship and other promotions connected with brand colours.

A number of research studies provide evidence that plain packaging would be effective. In 1993, with the funding of CCS, the University of Toronto’s Centre for Health Promotion examined the potential impact of plain packaging. The study involved 129 Ontario youths 12–17 years old. The study found that plain packaging made the package — and thus the product — less interesting and that packaging had a greater influence on those who were thinking about starting to smoke than on those who were already smoking regularly. Teens used “wimpy,” “boring,” and “loser” to describe buyers of plain packages; “smart,” “fun,” and “popular,” to describe buyers of brand packages. More than 86% of the smokers preferred being seen with brand packages. Most important, the study found that 40% of the teens thought that fewer teenagers would smoke if cigarettes were sold only in plain packages; 59% thought that there would be no effect; and 1% thought that more teens would smoke.^[96]

A follow-up study, funded by the Robert Woods Johnson Foundation, was conducted in 1994 and 1995. This study involved more than 2 000 youths 12–17 years old youth in Ontario and in Chicago, Illinois. Of the Ontario students, 86% said the plain package was “more boring” and 78% said it was “uglier.” Sixty-four percent said “cool kids” would smoke cigarettes from the brand package; only 5% said “cool kids” would smoke cigarettes from the plain package.^[506]

Similarly, in Australia, a 1992 study of 66 youths 12–20 years old found that plain packaging “would detract from the image of cigarettes.”^{[95, p. 125]} Some of the comments of participants included “it’s saying: don’t buy me,” “people would feel like rejects if they carried these,” and “the warning is the first thing that strikes you, not the brand.”^{[95, p. 123]} In New Zealand, a study of 568 youths 12–14 years old concluded that “plain-packs would serve as a substantial deterrent to the initiation of smoking behaviour.”^{[34, p. 17]} The adolescents found plain packs “dull and boring.” A study of 1546 regular Marlboro smokers, reported in Forbes magazine in 1987, showed that they, too, found plain packs unappealing:

The proof is that when we offered them Marlboros at half price — in generic brown boxes — only 21% were interested, even though we assured them that each package was fresh, had been sealed at the factory and was identical (except for the different packaging) to what they normally bought at their local tobacconist or cigarette machine.[594, p. 109]

In Canada, the Loblaws grocery store chain tried marketing unbranded, “no-name” cigarettes. Despite a lower cost for consumers and despite the wild success of many other no-name products, these cigarettes failed in the marketplace.

Health committee studies plain packaging

Despite the potential benefits of plain packaging, the idea is relatively new in the field of tobacco control. No country yet requires the measure. In Canada, the CMA first recommended plain packaging in 1986. In 1988, NSRA and others tried unsuccessfully to get the government to amend Bill C-51 to authorize plain-packaging regulations. In subsequent years, health groups again called for plain packaging, but the measure was not high up on the policy agenda.

Thus, in April 1994, the House of Commons Standing Committee on Health was breaking new ground when it began hearings on plain packaging. The hearings were part of the package of measures promised by Prime Minister Chrétien on 8 February 1994, when he announced the tobacco-tax rollback.

Before the hearings began, eight provincial governments expressed support for plain packaging. As well, a legislative committee in Ontario amended Bill 119, the Tobacco Control Act, to enhance the provincial government’s authority to require plain packaging. Federal Health Minister Marleau, describing cigarettes as “poison,” also came out strongly in support, saying “We feel it would do a lot to discourage young people especially from taking up smoking.”^[48] She said she was ready to take on the tobacco industry. No other national health minister in the world had taken such a forceful position on plain packaging.

The first day of hearings was 12 April 1994, when officials from Health Canada opened the testimony. The Committee room was packed with media, representatives of both tobacco and health interests, and mysterious individuals who refused to identify themselves. It was then that health groups realized how seriously the industry was going to take the Committee’s proceedings. Various industry lawyers, lobbyists, and consultants were present on the first and subsequent days. Some even shielded their faces when candid photographs were taken of those in attendance.

No doubt the Minister’s strong public support of the measure mobilized the tobacco companies. The industry knew that the stakes were high and had moved rapidly to organize. If the Committee recommended plain packaging and the measure was adopted, there could be a tremendous effect on tobacco sales. An international precedent could be established, leading to a domino effect on other countries.

CTMC increased its staff. David Small, a key player in Jean Charest’s campaign for leadership of the federal Progressive Conservatives, was the most prominent of the new people brought on board. Small was responsible for helping to organize the packaging-industry opposition to plain packaging. Throughout the hearings, CTMC published a daily Plain Packaging Bulletin. This bulletin, typically one page and available in both English and French, put the industry’s spin on the debate. It was sent by fax to the industry’s allies, as well as to Committee members.

Rob Parker, the CTMC President, put forward the theory that if cigarette packaging was controlled, liquor could be next. Alcohol interests, however, declined to join the fray.^[489] Nonetheless, tobacco companies had no shortage of allies. Companies that made cigarette packages, companies that made the plates used to print the packages, companies that made the paperboard used in the packages, and even companies that made the ink used in printing all testified before the Committee in support of the industry’s position. As usual, the main argument presented was jobs. If one-colour packaging was used, they said, then complex, multicolour printing processes would no longer be necessary. The companies would lose business and would have to lay off workers.

Health groups effectively undercut this argument. They suggested the warning could be in a variety of colours, possibly including a photograph. In this way, the complexity of packaging could be maintained or even enhanced. Jobs would be protected.

The tobacco industry and its allies also argued that plain packaging would mean a return to smuggling. The argument was that a simplified package would become easier to counterfeit and pass off as the real thing. Most Committee members rejected this argument. Existing coloured packages were already being counterfeited, albeit in relatively small quantities. Thus, plain packaging would not create a new risk. As well, it was suggested that a multicoloured warning or other package markings could make counterfeiting as complicated as it currently is.

Others supporting the industry included tobacco farmers, distributors, a tobacco workers union, and retailers. A long list of other companies and groups opposed plain packaging in written submissions to the committee.

To buttress the opposition to plain packaging, manufacturers brought in some American heavyweights. Philip Morris and R.J. Reynolds retained Carla Hills, US Trade Representative (USTR) from 1989 to 1993. She submitted to the Committee a signed legal opinion^[413] stating that plain packaging would infringe a trademark provision of the North American Free Trade Agreement (NAFTA), a deal she had negotiated while working for the Bush Administration. As well, she asserted that a different NAFTA provision would require the Canadian government to pay compensation for expropriating tobacco-company trademarks. Further, she stated that a General Agreement on Tariffs and Trade (GATT) agreement on intellectual property would be infringed. Her former government deputy, Julius Katz, appeared before the Committee to present the arguments in person (see Figure 15). Katz got a rough ride. Said Committee Chair Roger Simmons, “The net message that I hear is this: yes, smoking kills, but we’ve got a right to do it. That argument lacks integrity.”^{[545, p. 9:48]} Simmons called Katz a “hired gun.”^{[545, p. 9:47]} MP Andy Scott said that industry trademarks were “encumbering our warning”^{[540, p. 9:51]} and that the Committee was faced with two options: saving “Canadian lives or accommodating the principle you spoke of — trademarks.”^{[540, p. 9:52]}

Committee members had a right to be upset. The industry’s position was outrageous. The industry was saying that even if plain packaging would reduce the number of deaths from tobacco-caused lung cancer, NAFTA prevented Canada from implementing the initiative.

In anticipation of the international-trade arguments Katz would present, health groups retained Jean Castel, respected professor of international law at Osgoode Hall Law School, and lawyer Michael Robinson of the Toronto firm Fasken Campbell Godfrey. Castel and Robinson traveled to Ottawa to be present during Katz’s testimony and were able to blunt his effectiveness by releasing to the media legal opinions opposite to that of Hills and Katz.^[93,167] The industry may not have anticipated this countermove — it was quite something to see the jaw of one industry lawyer drop when Castel and Robinson entered the room.

Figure 15. Plain packaging hearings before the House of Commons Standing Committee on Health. Seated left to right: David Palmeter, law firm Mudge Rose Guthrie Alexander & Ferdon; Julius Katz, Hills & Company, International Consultants; Richard Dearden, law firm Gowling Strathy and Henderson. All three are representing R.J. Reynolds Tobacco Co. and Philip Morris International Inc. Standing immediately behind those seated is Progressive Conservative Senator William Kelly, Chairman of Rothmans Inc.

Castel told the media that “it’s simply preposterous if the Canadian government could not protect the health of its citizens without having to pay millions of dollars.”^[397] He pointed to health exceptions in both GATT and NAFTA that would justify government action.

Philip Morris threatened to pull jobs out of Canada. In a letter to the Committee, the President of Philip Morris International, William Webb, wrote that “if Canada adopts legislation in total disregard of internationally recognized trademark rights, this would be a significant consideration in any new investment decisions.”^{[626, p. 2]} He noted that Philip Morris owned Kraft General Foods Canada Inc. With 4 700 employees and 11 plants, Kraft was the largest packaged-food maker and distributor in Canada. Prominent brands of Kraft General Foods included Tang, Jell-O, Post and Nabisco cereals, and Nabob and Maxwell House coffees. Webb, a former head of Benson and Hedges (Canada) Inc., then a wholly owned Philip Morris subsidiary, was attempting to use economic pressure to influence the Committee’s deliberations. A spokesperson for Philip Morris reiterated the threat in an interview with the Globe and Mail.^[398]

The threat backfired. Health Minister Marleau asserted that “no US multinational tobacco manufacturer or its lobbyists are going to dictate health policy in this country.”^[597] Canadian nationalists were also outraged. Letters to the editor strongly criticized Philip Morris. The company’s tactic was called “arrogant,” giving “corporate thuggery a bad name,” putting “corporate profits and proprietary interests ahead of Canadian lives,” and an invitation to consumers to boycott Kraft General Foods brands.^[23,384] Even Marketing magazine, an organ of Canada’s marketing industry, criticized the “corporate blackmail” and “crass bullying tactics” in an editorial entitled “Get lost, Mr. Webb, get lost.”^[381] The overall reaction was so strong that Philip Morris later denied that it made a threat in the first place.³

The industry’s main argument throughout the hearings was a familiar one — there was no proof plain packaging would reduce smoking. Packaging only affected market share, not overall demand, the tobacco lobbyists claimed. The industry rejected the studies health groups put forward showing that plain packaging would work.

The industry tried another traditional tactic, asking for a delay. It urged the Committee to hold off on plain packages until a Health Canada study on the subject was complete, the impact of the new health warnings was measured, and the Supreme Court of Canada ruled on the constitutionality of the TPCA.

Some industry witnesses even argued that plain packages would be counterproductive and might increase smoking among youth. This argument implies that attractive packages decrease consumption, an absurdity.

Throughout the hearings, health groups were united in their support of plain packaging. Organization after organization testified in favour. As well, Ontario Ministry of Health representatives and University of British Columbia marketing professor Richard Pollay expressed support. Nova Scotia’s Health Minister, Dr Ron Stewart, presented an eloquent, persuasive endorsement of the measure.^[570]

Representatives of some health groups attended all hearings. CCS prepared a detailed response to each argument raised against plain packaging. CCS also obtained signed statements from 23 marketing professors stating that in their opinion it was more likely than not that plain packaging would reduce consumption. The Lung Association brought in Stephen Woodward of Britain’s Action on Smoking and Health to demonstrate international support for the proposed measure.

CTMC was the last witness to testify before the Committee. Parker appeared, accompanied by a team of consultants. No company executives appeared with Parker: they were not even in the room and thus not available to answer questions. Parker repeated the same arguments others had previously made. He emphasized the (false) argument that government interventions in the past had not decreased smoking in Canada and thus further regulation was unwarranted. Parker also submitted two further opinions that plain packaging violated international agreements. This last step was curious indeed. Canadian manufacturers were arguing against a proposed law that foreign companies said discriminated in favour of Canadian firms.

In the end, the Committee supported plain packaging in a carefully worded recommendation:

In the interest of the health of Canadians, as suggested by the evidence available to the Committee to date and in the absence of evidence to the contrary, the Committee affirms that plain or generic packaging could be a reasonable step in the overall strategy to reduce tobacco consumption.^{[268, p. 29]}

³E. Hayes, ABC journalist, personal communication, 1994.

The Committee recommended that the federal government establish a legislative framework to implement plain packaging but that regulations be introduced only if results of an ongoing Health Canada study “support the available evidence that such packaging will reduce consumption.”^{[268, p. 29]} The Committee criticized the industry for disparaging the studies supporting plain packaging and not providing any of its own studies.

All of the Liberals on the Committee supported the recommendation, as did Reform MP Margaret Bridgman. Reform MP Dr Keith Martin dissented,^[385] to the dismay of many health groups — given that he had been a vocal opponent of reduced tobacco taxes. However, at a news conference, Martin said he would change his view if the Health Canada study provided sufficient evidence. The separatist Bloc Québécois Committee members dissented in a highly political minority report.^[143] With a Quebec provincial election then on the horizon, it was not expedient to endorse an initiative proposed by the federal Liberals.

In March 1995, Health Canada released its study on plain packaging, 457 pages in length.^[201] This was by far the most comprehensive examination of plain packaging ever conducted in the world. The study concluded as follows:

Plain and generic packaging of tobacco products (all other things being equal), through its impact on image formation and retention, recall and recognition, knowledge, and consumer attitudes and perceived utilities, would likely depress the incidence of smoking uptake by non-smoking teens, and increase the incidence of smoking cessation by teen and adult smokers. This impact would vary across the population. The extent of change in incidence is impossible to assess except through field experiments conducted over time.[201, p. 15].

The study found that plain packages generated more negative images about smokers and smoking than did regular packages and that plain packages depicting a pair of lungs generated even more negative images. Plain packaging was found to reduce brand-name recall in respondents who had been shown a package earlier. According to teenage respondents, plain packaging would bother them a lot (24%); result in fewer teenagers starting to smoke (49%); result in teenagers smoking less (36%); and result in more teenagers quitting (38%).^[201]

The final chapter in the plain-packaging story has yet to be written. If plain packaging is implemented, the biggest beneficiaries will be Canada’s young people — and young people are the most strategically important segment of the market for the tobacco industry.

Document(s) 20 of 37