This week, the High Court upheld the Federal government’s plain packaging legislation, following a challenge from Big Tobacco.
It paves the way for cigarette packets – traditionally relatively high-value, highly embellished printed products – to be replaced by drab, olive-brown boxes.
The legislation will have the greatest impact on Sydney-based Anzpac, which prints cartons for British American Tobacco (BAT) and Imperial Tobacco.
The packaging company, which was established in 1900, has a long history in supplying the tobacco industry. It was bought by Rothmans in 1986, then become the regional print site for BAT following its merger with Rothmans in 1999, before being sold to Singapore-based New Toyo International Holdings for $60 million in 2008.
Cigarette packets that roll off the presses at Anzpac’s Smithfield site include BAT brands Dunhill, Winfield, Benson & Hedges and Stradbroke and Imperial brands Horizon, Escort and JPS.
Printed board for Imperial brands is shipped to Imperial’s factory in Petone, New Zealand, which completed a NZ$45 million overhaul this month.
Factory manager Mike McInnarney told ProPrint that Imperial had upgraded its New Zealand manufacturing after the end of a deal in which BAT’s Sydney plant produced Imperial cigarettes for the Australian market.
Printed board for BAT brands is sent to either Singapore or Sydney for converting.
No one from Anzpac or New Toyo would comment directly. While it is clear that the plain packaging legislation will not immediately affect Anzpac’s volumes, it is likely to hit margins.
One industry source told ProPrint: “The actual number of units should not change. So from a revenue perspective, the revenue will go down because the packs are simpler to produce and it removes a lot of complexity.
“Cigarette packs are highly embellished, and that embellishment comes at a cost, so there is an impact on revenue and profitability, not from volume initially but from simplification.”
However, the source agreed that if the legislation works as intended, the total number would also drop as more people are turned off smoking. “If you listen to government, the volume will decrease.”
Other suppliers throughout the print and packaging supply chain are also expected to take a hit, such as suppliers of foil and inks.
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