Irish retailers face ruination over tobacco display ban

Irish retailers face a similar tobacco display to those in Canada (pictured)

Irish convenience retailers will close if the proposed ban on tobacco display and tobacco advertising comes into force on 1 July 2009, according to Vincent Jennings, chief executive of the Convenience Stores & Newsagents Association.

Speaking at the Insight/NACS Global Convenience Benchmarks event in Dublin last month (March), Jennings said the pending legislation was “draconian”.

L to r: Jennings: draconian penalties; Barry: illicit trade will rise

The Public Health Tobacco Acts include a ban on the display of tobacco products in-store, a ban on advertising for tobacco products and a requirement for retailers to register with the Office of Tobacco Control (OTC) to sell tobacco products. And they face automatic removal from the register for a minimum of 90 days if they breach the Acts.

Jennings, whose association represents 1,500 retailers, said that was a considerable penalty for what could be a “minor aberration”.

“The psychology of the shopper is such that you can’t expect them to return if you do not have your product for that length of time. The industry cannot do without tobacco, it would face ruination – these are what we consider to be draconian penalties.”

Jennings said lobbying to remove the provision for tobacco to be displayed under the counter and out of sight has been successful on health and safety grounds.

“You can’t expect staff to bend repeatedly during business to retrieve cigarettes from a gravity dispenser,” he said. “Our concern was not related to advertising but practical benefits relating to the position of the cabinets and claims for RSI.”

Jennings warned delegates that the change in the retail environment on 1 July would create a two-tier system with one group of retailers supported by tobacco manufacturers with new display and marketing materials but another group left to their own devices.

“There are a substantial number of retailers that previously have been making use of tobacco gantries free of charge that are now being cut loose,” he said. “They will have to have plan B in operation to make sure there is not a whirlwind against them.”

He also forecast there would be brand casualties as a result of the display ban and there would be some unique display arrangements since the wording of the Acts was open to interpretation.

“By 1 July retailers are expected to show an ‘intent’ to deny visual access to the product,” he said.

Jennings said the Irish tobacco market was already disadvantaged because it has the second highest price in the EU and minimum and maximum price controls, which have caused a recent squeeze on margins.

Ireland also has a predisposition to smuggling, Jennings said, and he urged the sector to “join together to ensure product is sold to finance shops not misfits”.

Ronan Barry, head of legal and corporate affairs at BAT UK & Ireland, told delegates what they would need to do to remain compliant and gave advice to limit the negative impact on their businesses.

Like Jennings, Barry warned of the impact a display ban would have on smuggling. New figures from the Department of Public Prosecutions show one in four cigarettes consumed in Ireland is purchased on the black market, equating to E500m a year or E35m in tobacco margins to the retail sector. The illicit trade is costing every retailer E45,000 a year, Barry added, “and it’s going to get worse because it will be easier for the illegitimate trade to blend in with regular traders”.

Barry said there was still a lot of uncertainty surrounding the practicalities of the display ban and the penalties associated with them. Health officers are also stricter in some areas than others, he said.

Barry said menu boards featuring the cigarette brands retailers stock will be in high demand by tourists and shoppers whose first brand may not be available in store.

“I believe they will be needed a lot more frequently than expected,” he said.

The timing of the ban was also bad, he added.

“There could not be a worse time for the Government to press ahead with these plans when retail sales are down by 20% and there has been a mass exodus of business to Northern Ireland and HM Treasury from our own exchequer.”

Barry concluded by advising retailers to keep in stock because, in the new environment, shoppers will not be able to identify if their brand is available until they are at the checkout and it will avoid migration to larger shops.