Plain and standardized tobacco packaging are set to come to Canada this fall. New federal regulations standardize all tobacco packaging with “matte, dark, drab brown” as the base colour for all brands, as mandated by Health Canada.
The new regulation ban all logos, and the name of each brand will only be printed in a standard font along the bottom of the package. Instead of flip-top sealed packages that are now commonly used, manufacturers will be required to revert to a “slide and shell” wider packaging format where cigarettes slide out of the pack at the top.
“If we have to move standardized packaging, it will be truly a company-wide effort and will involve every member of our team from engineering and R & D to our sales reps across the country,” says Caroline Evans, head of corporate affairs and communications, JTI-Macdonald.“We are engaging with the regulator to seek some necessary changes and working with retailers and wholesalers to anticipate particular challenges and identify solutions.
Different tobacco products have different packaging issues to address, notes Jeremy Adams, director of government and corporate affairs for National Smokeless Tobacco Company. “Once we have new packaging designed and ready for manufacturing, we will make sure our sales force and key accounts management has materials for the trade which outline our old packaging compared to the new. We want to educate retailers about transition periods to sell through old inventory and make sure they understand the differences between our smokeless SKUs in order to provide the adult consumer with their requested product.”
Making way for the transition
Tobacco manufacturers are getting ready for the arrival of standardized packaging and preparing to support retailers with a range of measures. “We are committed to providing clear communication to our retailers so they know what to do, and when to do it,”says Sylvain Laporte, president, Scandinavian Tobacco Group Canada.
Reorganizing storage, training staff and selling through inventory all takes time. Plain packaging will be implemented November 9 at the manufacturer level, and February 7, 2020 at the retail level.
Learnings from Australia
Around the world, several countries have implemented or announced their intention to require plain packaging, and a dozen more are studying the issue. Australia was the first in 2012, and lessons learned by c-store retailers there are helpful to understand challenges and opportunities for Canadian operators.
Plain packaging in Australia has impacted what smokers purchase and retailers have seen a shift towards sub-value, cheaper brands, soprice has emerged as the key driver. “Plain packaging has devalued brands and changed the sales mix sothat the key focus from consumers is on the cheapest price when there is no ‘image’ attached to a particular pack,” says Jeff Rogut, chief executive officer of the Australasian Association of Convenience Stores (AACS). “That affects sales and profit dollars.”
Without colour, pack shape or branding to differentiate between products, providing quick and efficient service is even more of a challenge. That can mean more time waiting in line for customers, and it increases the chances of choosing the wrong tobacco product.
Security measures have had to be strengthened – at retailers’ expense – as the cost of legal tobacco has risen. “Transaction times have increased as store staff must spend a considerably longer time with their backs to customers, sorting through similarly packaged products, increasing the risk of robbery,” Rogut says.
Research commissioned by Philip Morris and supported by the AACS and other retail associations reveals two-thirds of Australian retailers say it takes more time to train staff as a result of the changeover. More than three out of four retailers report an increase in the time taken to serve adult smoker customers.
A version of this article originally appeared in the January/February issue of Convenience Store News Canada magazine.