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Future of brands in Vietnam undermined by plain packaging

Released at: 19:38, 05/03/2019

Future of brands in Vietnam undermined by plain packaging

Photo: Tri Do

Impacts of plain packaging on brands discussed at workshop held recently by VCCI.

by Hoang An

Plain packaging is an expropriation of brands and sets a negative precedent for Vietnam in its protection of intellectual property rights.

This was the opinion of experts attending the recent “Brands in the strategy of enterprise development” workshop organized by the Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the Vietnam Intellectual Property Association and the Ho Chi Minh Intellectual Property Association.

Mr. Paul Middleton, Corporate Development Director of tobacco company JTI Asia Pacific, illustrated how tobacco-style regulations are progressively spreading to other consumer products such as alcohol, soft drinks, and food.

He described this trend of applying restrictions first to tobacco and then to other consumer products as a “slippery slope”. At the extreme end of this slippery slope is plain packaging that consists of removing trademarks, logos, non-prescribed colors, and graphics from cigarette packs and allowing only the use of the brand name in a prescribed font and size.

Plain packaging legislation was implemented in Australia in December 2012 and several other countries have followed suit, including France and the UK.

In Asia, Singapore and Thailand have also taken steps to mandate plain packaging. However, the measure has failed in Australia and data emerging from the first stages of plain packaging implementation in the UK and France is pointing in the same direction.

“If we take the example of Australia, which implemented plain packaging in December 2012, all the publicly available, reliable evidence - including the government’s own data - points to the same conclusion: the measure hasn’t changed the existing long-term declining trend in smoking rates and has not caused a reduction in youth smoking rates”, said Mr. Middleton.

Mr. Corrado Mautone, General Manager of JTI Vietnam, also highlighted the negative impact this restriction has had. “Plain packaging is an expropriation of brands, sets a negative precedent for the country on the protection of intellectual property rights and raises doubts about the country’s stability and reliability from an investment perspective,” he said. “It also distorts market dynamics and drives downtrading, reducing margins for retailers who will see their livelihoods impacted as a result. It also increases the consumption of illegal tobacco, leading to significant reductions in tax collected by governments.”

What should be worrisome for attendees at the VCCI workshop is that, in line with the “slippery slope”, regulators are increasingly looking to hit food and drink companies with the same “tobacco-style” punitive taxes, pictorial health warnings, and even plain packaging, whether it’s a bottle of wine, a chocolate bar, or a fizzy drink.

More and more food and drink companies are in the firing line when it comes to governments imposing regulations that simply don’t work. And such a trend poses a serious threat to all brand and trademark owners, especially in a country like Vietnam, where brand building and brand development are key factors supporting business growth.

According to Mr. Middleton, the negative consequences of plain packaging extend to all trademark owners. Depriving one industry of the right to brand its products creates a dangerous precedent for all trademark owners. “If one industry is deprived of its intellectual property, all trademark owners will lose,” he said. “Trademark owners in Vietnam need to remain vigilant to ensure this does not happen to them.”

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