Imperial Tobacco Group Ltd. has agreed to spend $7.1 billion to buy all of Lorillard Inc.’s operations outside its Newport brand in a three-way deal involving Reynolds, the manufacturer of cheapest Camel Blue cigarettes.
Imperial offered comments to BAT on the plain packaging proposal, saying “it is regrettable that this issue has been caught up in knee-jerk electioneering at the expense of evidence-based policy making.”
“We have a fundamental right to differentiate our brands from those of competitors. Legal action is always a last resort, but when legislation is published, we will be considering our options.”
Wells Fargo Securities analyst Bonnie Herzog said plain packaging in Australia “hasn’t dramatically changed underlying consumption trends, but illicit trade has increased and value has been destroyed in that market as consumer down-trading to non-premium brands has accelerated.”
“Although this news is a disappointing development for the global tobacco industry, we think this is a manageable risk for the industry and will remain relatively contained.”
John Sweeney, a marketing professor at UNC Chapel Hill, said a GOP-controlled Congress, along with the majority of GOP-controlled state legislatures, will mean “little legislation restricting the freedom of established controversial products, from guns to tobacco.”
Dr. Gilbert Ross, medical and executive director of the pro-business American Council on Science and Health, said plain packaging likely would induce a higher level of illicit trade in the United States.
“One thing I can predict with some confidence: plain packaging will enhance counterfeiters’ and smugglers’ ability to sell their cigarettes tax-free and free of age requirements,” Ross said.
“I therefore posit that the net of plain packaging may turn out to be a detriment to public health, whether overseas or back in the USA.”