Changing times

16.5% of all cigarettes consumed in 2015 were illiegal
16.5% of all cigarettes consumed in 2015 were illiegal

Fionnuala Carolan outlines how major changes in the law look set to affect the retail industry

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Blog - Fionnuala Carolan

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12 March 2015 | 0

Two pretty significant things happened in the grocery trade this month. Firstly, the government passed the law on plain packaging of cigarettes meaning that there will be a ban on all forms of branding such as trademarks and logos on packs of cigarettes; tobacco and cigars and individual packs will have to display a 65% health warning.

The second noteworthy development was the closing of submissions for the implementation of grocery goods regulations and the government’s assurances that the regulations for the industry will be put in force before the year is out.

These two events will have huge implications for opposite ends of the market. The plain packaging legislation will mostly affect the convenience and newsagency trade, due to the fact that tobacco sales can account for as much as 50% of their turnover in some cases.

On the other hand, the proposed grocery regulations will only affect the multiples (or retail businesses with an annual turnover of €50million) as they are being put in place to police the type of commercial relationships that occur between large retailers and their suppliers. They are both game changers in their own right and will transform the retailing landscape irrevocably should they come into existence.

While the plain packaging legislation has already been passed, the tobacco industry fully intends to fight this legislation and bring the government to the High Court in order to quash it. While these legal proceedings take place, the law will most likely be stalled so it is probably going to be quite a while before the new rules on the restrictions of advertising on cigarette packages actually come into force.

The government is adamant that plain packaging will come into force as it is part of its plan to make Ireland Tobacco Free by 2025. However the tobacco industry will be trying to hold on to the last vestiges of advertising space that it has in order to differentiate their brand from their competitors. Reports from Australia on how plain packaging is working there, make for uncomfortable reading. On page 30, Irish retailer Joe Sweeney outlines his findings from a trip to Australia over the past month to examine the effect of plain packaging on small retailers there. Aside from confirming that it has had the effect of ramping up the black market trade, it has also caused other issues for retailers. According to Sweeney, retailers have told him that handling the new plain packaged product is doubling the time it takes to place and receive tobacco orders and complete sales. This will surely be a concern for Irish retailers.

With regard to the grocery regulations, Gillian Hamill writes on page 20 about the opinions surrounding these new laws and how the implementation of a grocery adjudicator in the UK last year may have given the powers that be here the nudge that they needed to pursue regulations for the Irish market.

The recently formed Competition and Consumer Protection Commission (CCPC) is to be the watchdog for the grocery sector. Minister Richard Bruton claims that measures contained in the draft regulations will ensure that relationships between suppliers and retailers are fair and sustainable.Most of the retailers contacted by ShelfLife said they had made submissions to the government and were satisfied with bringing in regulation as long as it did not add huge costs to their businesses. They may change their minds when they are forced to deal with extra training, compliance reports and responding to enforcement audits.

Watching the plain packaging legal battle get underway will be fascinating as we observe who will win the war between big business and government. And it will be extremely interesting to see if the long-promised grocery goods regulations actually come into being this year. One thing’s for sure, there is never a dull moment in the grocery trade.

Fionnuala Carolan

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