Market Overview

Plain Packaging Regulation to have Devastating Impact, Small Business Retailers Seeking Exemption

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TORONTO, Aug. 30, 2018 (GLOBE NEWSWIRE) -- Today, a coalition of small businesses in Canada's cigar and specialty tobacco market, known as Small Guys Cigar Group, are drawing attention to the dire impact that a pending regulation will have on their niche industry.  Tabled on June 25th by the Federal Government, Plain Packaging would require the standardization of all tobacco products sold in Canada. A move that could see more than 180 local tobacconist stores shut down country-wide.

The coalition is made up of small businesses in the cigar and speciality tobacco space including importers, manufactures, distributors and retailers. The coalition hopes that Health Canada will grant them an exemption under the proposed Plain and Standardized Packaging regulations.

The regulation currently sits inside a 75-day consultation period which comes to an end September 6, 2018.

At its core, the regulation is intended to reduce the appeal of tobacco products to consumers, particularly among young people.  Although cigarettes are the perceived primary target of the regulation, cigars and pipe tobacco were rolled into the sweeping changes with no distinction made between cigarettes and other specialty tobacco products.  

"We are completely distinct from cigarettes in nearly every aspect from our production and packaging to our customer base," said Colm O'Shea, Executive Vice President, House of Horvath Inc. "Our products are 98% consumed by adult smokers and do not appeal to youth by appearance, taste or price.  Our typical customer is more than 30 years of age and consumes cigars for special occasions only."

Since the proposed regulations were announced in June, the coalition has been tirelessly seeking an exemption to plain packaging through their campaign, ‘Better Cigar Plan', which asks supporters, retailers and customers to submit their feedback during the consultation period and formally request the exemption.

The ask is not without precedent.

In 2016, the United Kingdom formally exempted cigars and pipe tobacco from their legislation citing a myriad of evidence that overall smoking rates for cigars were significantly lower than cigarettes and particularly lower for younger age groups. Shortly thereafter, France and Belgium followed suit and also exempted cigars from plain packaging regulation.

"The UK, France and Belgium should be sourced as international best practices to help guide this process for Canada or we will see an irreversible impact to small business retailers, manufacturers, importers and distributors," said O'Shea. "In what could become one of the most ambitious overhauls of the Tobacco Act in generations, it is prudent that we look at other countries and jurisdictions for best practices and key learnings."

Precedent aside, the industry also cites a magnitude of other relevant factors to exempt cigars and pipe tobacco including packaging complexities, product safety and quality implications. 

The data is in favour of their argument.

The cigar and pipe tobacco industry account for less than 1% of all tobacco use in Canada. Furthermore, cigars are also well below Health Canada's 2035 incidence goal of 5%-- and are already at an incidence rate of 2%i.

Today, there are more than 180 small, family-owned tobacconists across Canada. Many of which have been staples in their respective communities and neighbourhoods for generations.

"We are small businesses and responsible retailers who have already been compliant with more regulation than nearly any product in Canada," said O'Shea. "Without this exemption, many of our businesses will close as we simply cannot comply with standardization due to the nuances and uniqueness of each product that we produce. We ask health Canada to consider the serious impacts of this regulation and spare the industry the devastating consequences that will surely follow."

For more information, please visit bettercigarplan.ca

Media Contact
laura@hofhcanada.com

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i Reference to the information contained in The National Cancer Institute of the United States, Monograph 9

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