PRESENTATION – HOUSES OF THE OIREACHTAS
Thursday 6th February – Dublin
Good Morning !!
Mr Chairman-Thank you for inviting me today to address the Joint Committee on Health and Children.
I am a guest in the Dail and I appreciate the opportunity you have afforded to me to represent the views of the packaging industry in the debate about packaging regulation within the tobacco sector.
I was employed in the U.K. packaging manufacturing industry for over 40 years and retired as the Managing Director of my company some 3 years ago. Since that time I have been acting as a spokesman for seven major U.K. packaging companies who are all heavily involved in the design, development, innovation and manufacturing of packaging solutions for a wide range of consumer products including tobacco products .
I fully appreciate that there is not a sizeable packaging manufacturing industry operating within the tobacco sector in Ireland. However the companies that I represent have a serious concern that policy proposals introduced in this jurisdiction may well have detrimental knock on effects on their sustainability into the future and endanger the thousands of jobs they provide across other European countries.
As professionals working with packaging materials, we have first-hand experience and expertise of the complex role packaging plays within the fast moving consumer goods (FMCG) sector and how it protects the consumer and the legitimate industry from the dangers of counterfeiting.
The companies that I represent have commercial interests with the tobacco industry. The industries have traded together for decades producing and using a wide range of products including metal tins, rigid boxes and composite cans, plastic pouches and laminates, printed labels and folding cartons. With this in mind we have the interests of our employees, investments and innovative workplace skills to consider.
What is the role of packaging?
Tobacco packaging is a high precision manufactured ‘engineering component or product’ manufactured in large volume to exacting standards and subsequently used on high speed packaging lines of hundreds of carton blanks per minute. To print and produce these highly complex products, capital equipment costing many millions of €’s is needed together with an experienced, well-trained and skilled workforce.
What does packaging do?
Essentially‘Packaging acts as a Barrier to Trade in Counterfeit/Illicit Goods’ .
How Does It Do This? Sophisticated packaging is a defence against counterfeit products as it makes it extremely difficult and costly for criminals to copy them. These fake products are typically sold on the black market. The illicit trade is both a problem in Ireland and the U.K. The figures in Ireland you will be familiar with ...but in the U.K. some £8 million per day is lost to HMG by illegal activities. (HMRC – Figures).
Packaging introduces variations – not only in colour, designs and graphical content but in enhanced features including embossing, de-bossing, hot-foil stamping, matt/gloss varnish combinations, vignettes.
Not only that but special materials have been developed using techniques developed over periods of time including special raw material board, formulated low retained solvent inks, tear tapes and tipping paper produced by world class manufacturing companies. In addition the construction of the cigarette carton has gone through many changes – seephoto.
Once simplicity is introduced via a standardised design all complexity is eliminated. This will result in the printing process being ‘opened up’ and the counterfeiter and copier can move with ease to print with lithographic and digital printing techniques which are readily available.
Tax Stamps – It has been stated that tax stamps and other security systems help police the problem of the illicit trade. I am not in a position to comment on the stated position of the Irish law enforcement on this issue but in other jurisdictions with similar illegal tobacco problems there is a belief that tax stamps have little impact. Criminals can also easily copy tax stamps and it is difficult for consumers and retailers and sometimes even law enforcement to tell the difference between a genuine and fake product.
External Experiences
Let us now examine the information from the only country that has introduced standardised packaging – Australia.
According to the a KPMG Report, there has been an increase in the illicit trade; an increase in the existence of ‘ illicit whites ‘ ; with other retail surveys seeing purchasing of cigarettes becoming a commodity item and a ‘price driven’ purchase. However most significantly of all – a ‘consistent’ level of smoking with no apparent reduction has taken place.
Now let us also consider – ‘How Branded Packaging in the Legitimate and Controlled Retail Environment Contributes to the Delivery of Tobacco Control Objectives?’
-It minimises the sale through illegitimate channels such as the black market and on streets.
-Restricts the availability of product to young people.
-Supports duty-paid pricing levels.
-Minimises the market share of counterfeit products and bootleg brands (illicit whites).
Show photograph of ‘Spoonfil‘ Product – Manchester -- Australia
-Supports premium pricing with higher prices seen to reduce consumption.
Assists in the Delivery of Health Regulation
-Legal product with packaging and ingredients regulations.
-Counterfeit and illicit brands have no control.
Summary of the Impact of Plain Packaging
-Removal of technical barriers.
-Huge economies of scale for counterfeit production.
-Ease of deceiving consumers undermines trust in genuine merchandise.
-Collapse in product value due to commoditisation.
-Higher consumption due to cheaper commodity products and affordability.
-Greater availability to young people through the illicit trade.
-Potentially increased harm from unregulated products.
Finally - thank you for listening to me! – I am a packaging expert who does not want to see sections of his industry damaged through the introduction of excessive regulation upon which there is no evidence that it works.
The U.K. packaging industry fully supports the regulation of tobacco products but believes that there are far more effective alternatives to plain packaging such as education and information campaigns.
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APPENDIX ONE
APPENDIX TWO
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Mike Ridgway
M.R. Business Services
19 Ghyll Wood
Ilkley LS29 9NR
West Yorkshire
Monday 3rd February 2014