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Australia's tobacco marketing laws give retailers a headache

By Jane Wardell

SYDNEY (Reuters) - James Yu, who runs the King of the Pack tobacconist in central Sydney, is indignant about Australia's stringent anti-tobacco laws making manufacturers package cigarettes in drab olive green packs with pictures of ill babies and diseased body parts.

The packages, mandatory from Saturday when the laws take effect, make it hard to tell brands apart, complicating deliveries and adding to costs in his cramped, dark booth.

The legislation, the most Draconian in the world, strips packs of all branding, bright colors and logos, leaving only the name printed in identical small font.

"It used to take me an hour to unload a delivery, now it takes me four hours," Yu said, demonstrating how difficult it is to find the brand names.

"The government should have just banned them altogether and then we'd go ok, fine, we're done, we'll shut up shop," he said, throwing his hands up in the air.

Australia's plain packaging laws are a potential watershed for the global industry, which serves 1 billion regular smokers, according to World Health Organization statistics.

While Australia has one of the world's lowest smoking rates and the changes will have little impact on multinationals' profits, other countries are considering similar steps.

The government says the aim is to deter young people from smoking by stripping the habit of glamour. It is relying on studies showing that if people have not started smoking by age 26, there is a 99 percent chance they will never take it up.

"Even from a very early age, you can see that kids understand the message that the tobacco company is trying to sell through their branding," Federal Health Minister Tanya Plibersek told Reuters, citing studies that showed children made linkages such as crown logos and princesses.

The potential hitch, experts say, is the popularity of social media with the very demographic the plan is targeting.

After a series of Australian laws banning TV advertising and sports sponsorship and requiring most sellers to hide cigarettes from view, online is the final frontier for tobacco marketing.

Australia has banned online advertising by local companies and sites, but the door cannot be slammed at the border.

"If you are a tobacco marketer and you've only got this small window left to promote your products, online is the compelling place for you to be in," said Becky Freeman, a public health researcher at Sydney University.

Freeman noted an increase in "average Joe" reviews of brands on social media sites such as Youtube, Twitter and Facebook.

"We have to ask, is that just a private citizen who really loves Marlboro cigarettes and they've gone to the trouble of making a video, or is there a marketing company involved?"

Scott McIntyre of British American Tobacco Australia, maker of Winfield cigarettes, made popular by ads featuring "Crocodile Dundee" actor Paul Hogan in the 1970s, said the industry was focused on dealing with the new rules rather than marketing.

WINNERS AND LOSERS

The industry lobbied hard against the laws. Tobacco firms said they would boost black market trade, leading to cheaper, more accessible cigarettes.

"There will be serious unintended consequences from the legislation," said McIntyre. "Counterfeiters from China and Indonesia will bring lots more of these products down to sell on the streets of Australia."

Others say the laws have boosted their business.

Sandra Ha of Zico Import Pty Ltd, a small family business, said demand for cigarette cases, silicon covers to mask the unpalatable packages, had shot up from almost nothing two months ago since British American Tobacco, Britain's Imperial Tobacco, Philip Morris and Japan Tobacco lost a challenge to the laws in Australia's High Court.

Ha said Zico had sold up to 6,000 to wholesale outlets and was awaiting new stock. "This is good business for us."

COPYCATS

The industry has shifted its focus to potential copycat legislation elsewhere. Ukraine, Honduras and the Dominican Republic have filed complaints with the World Trade Organization, funded by the tobacco industry, claiming the laws unfairly restrict trade, although their trade with Australia is minimal.

A WTO ruling is likely in mid-2013.

Plibersek said the government has held discussions with other countries considering similar laws.

Canada was the first country to make photograph warnings mandatory in 2001. They now extend to more than 40 countries, including Brazil, Turkey and Ukraine. Tougher laws are being considered in Britain, New Zealand, South Africa and India.

Many smokers in Australia remain defiant.

"The pictures don't affect me. I just ignore them. You just grab a smoke and put it away," said Victor El Hage as he purchased a pack with a photograph of a mouth tumor. "Honestly, there's only one reason I'd stop, and that's my little girl."

(Additional reporting by Tom Miles in GENEVA; Editing by Ron Popeski)

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