Tobacco is one of the most widely used addictive substance in the world. It is still a great time to be a tobacco company with the overall global market valued at US$740 billion. (SpendEdge Report – Global Tobacco Market – Procurement Market Intelligence Report) However, increasing pressure from the government regarding tobacco laws are threatening the growth of this market. Such regulations especially have hit the cigarette companies hard with some countries rolling out tobacco laws and regulations requiring manufacturers to cover about 90% of cigarette packs with health warnings. For instance, the Australian government has taken a more serious approach to this as they require cigarette packs to be wrapped in drab, plain paper.
Impact of Regulatory Frameworks on the Tobacco Market
Marketing and Advertising Restrictions
Marketing and advertising is the best way to reach the customers and persuade them to make purchases. However, a large majority of the countries all over the world have executed policies that ensure complete restriction on marketing and advertising of tobacco-based products. For instance, in the US the FDA has imposed strict tobacco regulations that prohibit the use of tobacco product sponsorship, entertainment, and other cultural events under the name of tobacco-product brands. Tobacco companies are still finding ways to promote the brand through sports sponsorships and movie endorsements.
Plain Packaging of Tobacco-Based Products
Numerous countries worldwide have adopted the guidelines of the WHO Framework Convention on Tobacco Control regarding packaging of such products. Australia, Ireland, France, and the UK have begun to adopt plain-packaging measures that excludes brand imagery, corporate logos, and trademarks. The tobacco manufacturers are only allowed to print their brand name on the pack. Such tobacco laws cause serious problems to the suppliers as their product could be easily counterfeited. Additionally, cigarette companies will struggle to promote their products, as the packaging was considered their only means of promotion.
Manufacturing, Presentation, and Sale of Tobacco Products
The manufacturing, presentation, and sale of tobacco products are heavily controlled by various federal tobacco laws that require a certain percentage of packaging to be covered by large pictorial health warnings. Such regulations deter smokers from consuming tobacco products and warn them of the health hazards.
Read more about the tobacco laws and legislation in the tobacco industry along with market trends, sourcing strategy, procurement best practices, and sustainability practices in SpendEdge’s upcoming report on the global tobacco market.