With Brexit, cigarettes traders are expecting some ground breaking changes in the market. Still, there are some uncertainties about how Brexit is going to affect the UK tobacco market. The UK has already adopted a restrictive approach to tobacco. When the Health Secretary Jeremy Hunt already said in 2014 that Britain should aspire to be a smoking free nation, is it going to be a tough time for the industry? How it is going to change the tobacco industry operating environment.
Apart from this, in the month of May, the European Court Of Justice has already dismissed objections by Romania, Poland, PMI, and an e-cigarettes maker. The court has also ruled that TPD’s (Tobacco Products Directive) future regulations for electronic cigarettes, standardization of packaging and banning menthol cigarettes EU wide were lawful. If we summarize, this is what the TPD wants:
- 65% graphic pack warnings
- Minimum pack sizes
- Ban on misleading labels
- Delayed ban on menthol flavoring
- Ingredient control
- Cigarette regulated as tobacco
After Brexit, there is a significant possibility that the UK will not implement TPD’s regulations. This might be good news for wholesale cigarette suppliers, sellers, consumers and anyone associated with the tobacco industry and the e-cigarette industry. However, it depends on up to what extent the TPD is transitioned into the UK law. Here it is important to note that in recent times, the UK has gone beyond minimums of EU law especially in respect of tobacco regulation such as public smoking ban, plain packaging and smoking in cars with children. However, the restrictive approach of the UK also relies on the new political consensus.
Brexit can also mark the return of duty free sale. Back in 1999, the EU banned duty free for flights within the EU members. The citizens of UK lost their right of duty free. However, they could bring back as much as they wished and that too without paying extra. However, these items were questioned. Travelers returning to the UK from EU members had to face questions for carrying more than 1kg of tobacco, 800 cigarettes and 200 cigars. What’s next? No one knows but it is likely that a small duty free allowance will be imposed.
Cigarette Prices and Brexit
We might see hikes on pack prices. According to OECD (Organization for Economic Cooperation Development), as an effect of leaving EU, tariffs of at least 70 would be imposed on tobacco. This might result in average cigarette packet price rising from £9.60 to £12.74. However, the picture might be different after opening and reopening of cigarette factories to meet the demand indigenously.