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August,
2004

Banning
Tobacco
Displays


The prospect of relegating all tobacco products to behind-the-counter status flies in direct opposition to the trend of "tobacco-only" retail outlets. Advertising and promotional bans have made in-store merchandising a final, crucial frontier that must be protected.

By Luc Martial

In their quest to leave no stone unturned, the anti-tobacco lobby in Canada has been hard at work these last few years ensuring that retail displays of tobacco products will one day soon be a thing of the past. Should they succeed in their efforts, the impact of such a victory would likely resonate well beyond our less-than-guarded border. As with smoking bans in pubs and bars, fire-safe cigarettes and aggressive tobacco tax policy, the (lack of) public dialogue on display bans at retail will eventually find its way to your doorstep. So be careful where you step.

Canadian governments for their part have been actively exploring this uncharted territory for quite some time now and will eventually have it all mapped out for the extremists in the U.S. Subsequently, American retailers would do well to monitor the Canadian experience, learn from the mistakes, and brace themselves for the advent of yet another ill-conceived, socially reprehensible, and economically devastating public policy on tobacco.

In Canada, the issue of banning displays at retail publicly surfaced a few years ago when the government considered amending the federal Tobacco Act. Proposed promotion regulations at that time, largely instigated and guided by the anti-tobacco lobby, called for several policy options to specifically include banning tobacco displays at retail outlets throughout Canada. Should the government face insurmountable legal or social roadblocks, the anti-tobacco lobby was quick to suggest that banning display "payments" to retailers would be an acceptable compromise - for the time being.

In terms of their arguments in support of a ban, the anti-tobacco lobby suggested that displays proved a dangerous promotional and marketing tool. They incited ex-smokers to impulse-buy, desensitized children, and gave the industry unacceptable social acceptability. Iceland and Ireland had bans, as well, so why not Canada? In the end, the anti-tobacco lobby's main argument was that tobacco displays undermined government health objectives. They had to go - plain and simple.

For tobacco retailers in Canada, the issue had wider implications. Among these, display payments amounted to anywhere between $1,000 - $10,000 per store, annually. While many independent "mom and pop" businesses greatly relied on this revenue stream to offset general expenditures, larger chains were faced with potentially losing tens of millions of dollars from current agreements with manufacturers. Thankfully, retailers would not have to suffer the consequences of their or the government's actions. For several procedural reasons, the proposed regulations would never see light of day, as Canada would eventually decide to focus its efforts on securing and safeguarding its world precedent-setting labeling - graphic health warnings and information - and reporting regulations.

Undaunted by this setback, the anti-tobacco lobby would bring their show on the road and attempt to win their private agenda one province at a time. Strategically, this was standard operating practice for them.

No type of retailer would be more unhappy about a complete self-service ban than the premium cigar shop where shopping is a hands-on experience.
The first province to fall would be Saskatchewan. Despite some initiative on the part of the trade, in March of 2002, the provincial government succeeded in forcing retailers to essentially hide tobacco products from general view. Having bought into the anti-tobacco lobby arguments that retail displays had significant detrimental effects on kids and ex-smokers, the province, as expected, set into motion a series of events which continue to this day to threaten the industry. Canada's second largest tobacco company, Rothmans, Benson & Hedges Inc., would launch a constitutional challenge to this legislation in May of that year. Despite an initial loss, the Saskatchewan Court of Appeal would eventually find favor with the industry. The court invalidated the legislation on the technical ground that the provincial legislation was in conflict with the Federal Tobacco Act allowing displays. Interestingly enough, the federal government itself had appeared in court as an intervener and argued its support for the provincial regulations.

As things were brewing in Saskatch­ewan, the anti-tobacco lobby was hard at work convincing other governments to take the plunge. By August 2002, it was the province of Manitoba which would hold hearings on a proposed ban on displays at retail. After no meaningful consultation with stakeholders, the province approved the legislative initiative - which was scheduled to come into force January 1, 2004. Of course, the events in Saskatchewan would place on hold the Manitoba initiative indefinitely.

While the would-be elected Liberals in the province of Ontario actually identified banning tobacco displays at retail within their electoral platform, their agenda remains largely impacted by the deliberations in Saskatchewan. Despite this holding pattern, the Minister of Health in Ontario recently announced that their aggressive tobacco control agenda would indeed materialize over the next three years. True to their word, Ontario has moved steadfastly ahead in introducing contraband-market-inducing tobacco taxes and is well on its way to banning smoking in all public places across the province.

Prince Edward Island has also begun discussion on this issue, while New Brunswick and Nova Scotia have since banned counter-top displays as a first-off.

As for Quebec, a recently announced regulatory initiative in May of 2004 would take retailers completely off-guard. Without fanfare or rationale, the province proposed a series of large, obstructive new warnings (signage) to be placed on all tobacco displays and near cash registers in retail outlets. Tantamount to placing a warning on a warning, the impact of such an initiative would significantly compromise retailers without any proven health benefit to the province. To this day, I have no idea why the government feels the need to move ahead with this initiative, what they expect to achieve, or how they've justified its legal/economic impact on retailers. I've inquired of course, but was told that while this rationale existed and was publicly available, it remained largely inaccessible. Once again, the government expected retailers to provide meaningful comment on an initiative for which the research and policy foundation was made unclear. Once again, retailers were being set-up to fail.

What is clear, however, is the anti-tobacco lobby's creative ability to get what they want. At the time of my writing this article, the outcome of this government initiative remains uncertain (June).

Always the mother hen, the Federal government has been quietly monitoring the issue from a distance. When the time is right, the Canadian government will re-introduce promotion regulations under the federal Act. When this occurs, it can be expected that the government will either ban displays and display payments at retail outlets across the country or amend the Federal Act to remove the legislative speed bump for provinces.

As the Canadian retail industry braces itself for continued attacks on this front, only time will tell if their planned efforts and responses will have secured and protected their rights. Still struggling to understand how to effectively manage the tobacco file, retailers will hopefully further realize the significant impact which their actions (or inactions) will have on future emerging health-based issues of relevance to their industry (e.g. trans-fat, sugars, salt). As importantly, perhaps American retailers will heed the danger sign ahead and help themselves by helping their Canadian counterparts. Now is the time to take notice and take action.

For more information or comment, please forward your correspondence to Luc Martial, c/o editor@smokeshopmag.com


SMOKESHOP - August, 2004