Smoking laws to hurt small cigar retailers
Legend has it that the night US president John F Kennedy announced his fateful embargo on Cuba his aide bought up every box in Washington of his favourite brand of cigar, the H. Upmann Petit Coronas.
Now locals warn that Australian lovers of the high-class smoke, made by Cuba's state-owned cigar maker company Habanos SA, may soon have to do the same as government reforms of tobacco laws are set to squeeze premium retailers out of the business.
Under new legislation put forward by Canberra, all tobacco products sold in Australia from December this year will have to come in drab packaging and have clear health warnings about the dangers of smoking.
The idea has gained traction from many quarters as a means of preventing the 15,000 deaths from smoking-related diseases each year and cutting the $31.5 billion in social costs incurred by the habit.
But cigar advocates argue that the average smoker - males aged 45 or above, earning more than $100,000 and smoking only occasionally - is hardly the target of the government's push and it will be small family-run businesses that suffer.
"The legislation will see the bankruptcy of my business, the loss of our family home and immense hardships on my staff," Brisbane cigar retailer Rob Ayal said in his submission on the draft laws.
Based on a poll of 153 of his customers, he said that 58 per cent of them would find ways to circumvent the laws by buying cigars online and exclusively from overseas.
Only 1.3 per cent - two out of those surveyed - said they would cut back on smoking.
"No one who purchases premium cigars at $15-$50 ($300-$1,250 a box), will purchase plain-packaged, plain-banded cigars when they have so many options internationally," Mr Ayal said.
Government sources say they have responded to the concerns of small retailers by amending packaging on regulations to include additional specifications for non-cigarette tobacco products.
Experts estimate there are a handful of specialist cigar retailers in Australia's cities and only a few diversified vendors that might also stock cigars with other tobacco products.
Originally, the government proposed that retailers should apply labels to cover branding on the outside of imported cigar boxes and the band around the cigar.
Under the amendments, retailers will have to make their own unbranded boxes in addition to sticking on plain bands.
One vendor, who asked to remain nameless, estimated that this would add $50 to the cost of each box of cigars.
"We must challenge perceptions that cigars are in any way more glamorous, or a less harmful alternative, to cigarettes," Health Minister Tanya Plibersek said.
"Cigars are at least as harmful as cigarettes when smoked at the same intensity and dosage and there is no reason they should be treated differently in the plain packaging regime."
Retailers argue that such a move would not only make it far easier for criminals to counterfeit the lucrative products, which can sell for up to $150 a stick, but could also infringe international intellectual property rules.
"It is internationally recognised that these cigar brands go beyond simple trademark regulation," local Habanos SA retailer, Pacific Cigars, said in its submission on the laws.
At a meeting of the World Trade Organisation (WTO) last year, cigar manufacturers Cuba, the Dominican Republic and a host of other countries opposed the proposed laws on the basis that they could violate Australia's commitment under the WTO's intellectual property agreements.
A WTO official said the status in Australia of Cuban cigars as a trademark was up to the Australian government.
He declined to comment on the legality of the move as no formal complaint had been lodged.
"Without a ruling, the WTO cannot speculate on the legal situation," he said.
Friday, January 20, 2012