A paper by the Centre for Economics and Business Research (CEBR), commissioned by tobacco giant Philip Morris, declares that the plan, backed by SNP ministers, would deal a “body blow” to high streets.
Ministers say they intend to introduce legislation so that cigarettes can no longer be branded. Removing the allure of glamorous packaging, such as Morris’s Marlboro logo, will deter young people from taking up the habit, they argue.
The CEBR paper cites research from Australia which, it claims, has shown how smokers avoid small stores because of the extra time it takes to find their brand among identical packets.
The CEBR claims that, instead, smokers end up going to the black market, or abroad, or buy from supermarkets.
Oliver Hogan, CEBR head of microeconomics, said: “Our findings show that the potential impact of this plain packaging policy could be traumatic for the high street.”
“In Scotland alone, CEBR would expect the loss of some £30 million in tobacco and non-tobacco revenues to small independent retailers and the loss of over 3,200 jobs and up to 700 shops.”
“The evidence supports our conclusion that tobacco customers will flock to illegal street vendors, buy bulk from abroad and make purchases from larger stores. Thousands will lack the patience to queue for the till in a local shop as a small staff tries to find the right cigarettes among the plain packaging,” he said.
The publication of the CEBR paper comes with the battle over the policy now concentrating on Scotland, after UK ministers announced last month they were shelving their proposal to introduce plain packaging in England until similar measures introduced in Australia were properly evaluated.
By contrast, SNP ministers now intend to propose a timetable for introducing legislation. Scotland was also the first part of the UK to ban smoking in public, while the Government has also banned displays of tobacco products in large stores.
The latter led to a legal battle and analysts say they would expect a similar lengthy court case to take place if the plain packaging plan goes ahead.
If it is enforced, the City analysts also claim it would be “near certain” that firms would use European Union law to claim compensation for any losses caused by plain packaging. One valuation has put the loss of “brand design” in the UK at between £3 billion and £5bn.
However, a spokeswoman for the Scottish Government said last night: “The Government remains committed to introducing standardised packaging, given the strong evidence to support the impact it will have on preventing young people from starting to smoke.”
She added: “The aim of this policy, alongside our other tobacco control initiatives, is to improve public health by reducing smoking levels. Of course businesses will need to adjust to reduced demand, but standardised packaging will affect all retailers at the same time and its impact will take place over a period of time. As smoking rates in the population continue to fall, this is something they would need to do anyway.”
The CEBR paper accepts that the move would reduce sales of high street cigarettes, by between 4 and 8 per cent.
However, it argues that consumption of illicit tobacco could, under “plausible assumptions”, increase by 30 per cent, so that more than one in ten packs of cigarettes bought would be black market.
It goes on to note that profits from tobacco sales are of higher importance to small retailers than to supermarkets. The impact on their business would, therefore, be disproportionately large, it claims.
John Drummond of the Scottish Grocers’ Federation said there was “clear momentum” to abandon the plan in Scotland. He said government should tackle “the real issues such as the illicit counterfeit trade, which costs every honest retailer up to £30,000 in lost sales each year”.
However, Dr Charles Saunders, deputy chairman of the British Medical Association Scotland, said doctors backed the effort in an attempt to reduce the numbers of young people taking up the habit.
“Packaging is a key marketing tool and can influence young people to start smoking so it is vital that this final source of advertising is removed,” he said.