Tobacco stocks suffer on plain packaging fear

TOBACCO stocks fell yesterday on fears the UK is moving closer to introducing regulation banning logos and colours on cigarette packaging.

The FTSE 100’s two tobacco giants, Imperial Tobacco and British American Tobacco (BAT), both saw their share prices decline after reports that the measure would be announced in May’s Queen’s speech.

Although the Department of Health denied that a decision had been reached, Imperial Tobacco’s stock fell 2.37 per cent and BAT’s shares – which counts on the UK for less of its revenues – fell 1.04 per cent.

Tobacco giants have led a campaign against the introduction of plain packaging, arguing that the law would have no effect on consumption but would increase the trade in illicit cigarettes, funding crime and resulting in lower tax revenues.

Plain packaging has already been introduced in Australia and looks set to be introduced in several other countries, although Imperial and BAT have said there has not been a noticeable effect on sales. The Department of Health is currently reviewing responses to a consultation.