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Ensuring a sustainable and prosperous convenience industry in Scotland

Plain Packaging - Letter to the Chancellor

Dear Chancellor,

The Scottish Grocers’ Federation (SGF) is the trade association for the Scottish Convenience Store Sector. The sector in Scotland comprises over 5,500 stores – more per head of population than the rest of the UK – and employs of 40,000 people. Many of our key members such as the Co-operative Retail Trading Group, Booker Premier, SPAR and Costcutter supermarkets operate on a cross-border basis and are affected by both Scottish and UK government legislation.

As you may be aware the Independent Review of the Standardised packaging of Tobacco Products will make its recommendations by the end of this month. The Review considered whether or not the introduction of standardised packaging is likely to have an effect on public health.

Clearly the public health aspect of standardised packaging is of the utmost importance. However, we are concerned that this relatively narrow focus will mean that other substantive issues will not be addressed (and could be ignored). One of these key issues is the operational impact on retailers. In a typical convenience store, tobacco products are invariably a ‘high value order’ and deliveries have to be very carefully checked and accounted for before they can be ’worked’ and transferred to the point of sale. Plain packaging will make this extremely difficult. We have a concern that transactions times will be significantly delayed, that there will be increased customer dissatisfaction and more pressure placed on staff to locate specific products. We know from our colleagues at the Australasian Association of Convenience Stores that plain packaging is indeed having this negative operational impact, whereas there has been no overall reduction in levels of smoking but there has been a significant increase in the illicit trade.

Industry data from Australia now suggests that legal tobacco sales actually rose by 59 million cigarettes in the first year plain packaging was introduced. This increase reversed the long-term decline of legal sales volumes in the country since before 2009. In addition, official statistics from the Australian Customs and Border Protection Service (Annual Report 2012-2013) showed a similar rise in the amount of illegal tobacco seized by Australian law enforcement. It reported that between 2010/11 and 2012/13 seizures more than doubled from 82 million cigarettes to 200 million. The border officers also noted consumption of roll-your-own illegal tobacco is being replaced by fake branded cigarettes, so-called illicit whites. They said this was because of “changes in the nature of the tobacco market and the more immediate return on investment”.  Overall it seems clear that as policy intervention plain packaging in Australia has not led to a decrease in consumption and has simply boosted the illicit trade.

The issue of illicit trade is extremely concerning. HMRC estimates that some £2.9 billion in duty is already lost to the illicit trade in the UK – plain packaging will only exacerbate this situation and benefit the serious and organised crime networks which profit from it.

As a matter of urgency we would ask you to consider the serious impact of plain packaging on convenience stores throughout the UK: it is a policy which will negatively affect our members’ businesses, significantly reduce their capacity to invest in jobs and simply drive customers to the illicit trade.

I would welcome your response to the issues and concerns we have raised regarding plain packaging.

Yours faithfully

John Lee

Public Afffairs Manager