Plain packaging for tobacco: wine branding down the gurgler?

The Australian community is becoming increasingly aware – through government-funded education, mass media and social media – of how the over-consumption of alcohol and fast food impacts on human health. These industries should be wary of government lobbying from the health industry to propagate legislation similar to the Tobacco Plain Packaging Act, with a warning shot across the bows being draft legislation introduced into the New South Wales State Parliament late in 2012 intended to minimise the advertising of alcohol products.

As the draft legislation has been proposed by an independent as a private members bill, it seems unlikely it will obtain support from one of the major parties. But as this legislation would have an acute impact on the wine sector, as well as the increasingly strong ‘craft beer’ sector, these industries will be well served by proactively mitigating the likelihood of potential legislative battles occurring.

Attractive wine labels, going beyond information about the variety or the producer, are used to entice unsophisticated or new consumers. This is one of the primary methods by which the wine sector sells its products in a highly-competitive domestic and export market.

Research suggests many consumers believe wine label art is reflective of the quality of the wine inside the bottle and, as a consequence, marketing and merchandising play a role equal in importance to the manufacturing process.

By reason of the community’s understanding of the dangers of smoking, media coverage of the 2012 challenge to the Constitutional validity of the Tobacco Plain Packaging Act in the High Court of Australia was largely sympathetic to the Federal Government and commentators tended to agree with the Court’s decision. The most high profile of all of the observers, the World Health Organisation, openly welcomed the decision and called on the rest of the world to follow Australia’s tough stance on tobacco marketing.
The Court found in a six-to-one decision this was ‘no acquisition of intellectual property rights’ – specifically, trademark rights – by the Government. Registered trademarks protect the value of brands. By highly regulating their use to the point of non-use, the collective value of those brands is decimated within Australia.
The High Court decision is a precedent which would permit similar regulation to the Act in other industry sectors. Information about wines is already subject to regulation in Australia, and severe sales regulation in countries such as Canada and Sweden, but all of this existing regulation does not significantly affect the creative expression of the brand.

Simply put, wine companies would not sell as much product if it was compelled to be sold in olive labels with plain font describing the makers’ name, the brand name, wine variety and other details.

The enormous problems faced by the tobacco industry in coping with plain packaging would be a very significant burden upon the much more fragmented alcohol industry, which has many small participants unable to afford neither a legal challenge nor a strict compliance program. Wine, beer and spirits makers need to be prepared to address this potential regulatory risk to their marketing strategies.

However, while there is some concern in the food manufacturing and alcohol industries about the implications for consumer products which have adverse health-related side effects, potential government intervention in the marketing of other products where there are health-related concerns is a slippery slope argument: there is no logical inevitability alcohol and food will be impacted on by the plain packaging legislation.

Additionally, because of the obvious health issues associated with tobacco, there was a notable absence of assistance to the tobacco industry by the alcohol and food industries to fight the case against plain packaging. This was possibly because of fear of consumers’ reactions to any alignment of interest with the tobacco industry over a health-driven law. Equally, politicians will be well aware of the non-alignment positioning with tobacco the fast food and alcohol industries have taken.

Finally, the Federal Attorney General has issued a statement the Federal Government will not be pursuing plain packaging legislation for the alcohol or snack food industries. The longevity of this policy remains to be seen.

 

David Stewart
BY David Stewart ON 8 May 2013
David Stewart is director of Wrays Lawyers. He appears before the Federal Court of Australia as counsel in trademark, confidentiality, domain name and copyright disputes and before the Trade Mark Registrar as counsel in trade mark oppositions.