Tobacco companies fear the 'olive revolution'

UK-listed tobacco stocks dropped on Wednesday on fears of the 'olive revolution' after Australia became the first nation to implement a law requiring all cigarette packets to have plain olive green-coloured packaging.

The ruling, hailed by the medical world as a massive victory for global health, is expected to encourage other governments to enforce plain-packaging laws after Australia threw out challenges by tobacco heavyweights across the world.

British American Tobacco (BATS) and Imperial Tobacco were heavy fallers in London in morning trade. The measures are also expected to hamper other cigarette majors Philip Morris and Japan Tobacco.

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Australian Attorney-General Nicola Roxon and Health Minister Tanya Plibersek said: "This is a victory for all those families who have lost someone to a tobacco related illness. No longer when a smoker pulls out a packet of cigarettes will that packet be a mobile billboard."

From December onwards, packets sold in Australia will have graphic health warnings and producers' brand names will be displayed in small generic font.

BATS released a statement on its website responding to the decision which said: "We are extremely disappointed by the decision of the Australian High Court and remain convinced that the Tobacco Plain Packaging Act is not only a bad piece of law, but that it is one that will have many unintended consequences for years to come.

"We fully support any form of evidence-based regulation but there is no proof to suggest plain packaging of tobacco products will be effective in discouraging youth initiation or encouraging cessation by existing smokers," the company said.

Imperial announced just last month that it was continuing to "vigorously challenge extreme regulatory proposals such as plain packaging which are not based on credible evidence and will only serve to fuel the illegal trade in tobacco."

Reasons for the High Court's decision were not released yet but will be given at a later date.

BATS shares also took a hit today after the stock was among the handful in London that went ex-dividend today; from today, investors will not have the right to each company's respective dividends.

BC