Big tobacco firms will have been busy consulting their lawyers in recent days after a landmark decision last week by the New Zealand government to stop the sale of their products in a push to make the country ‘smoke-free’ by the middle of this decade.

Remarkably, the legislation – the Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Bill – bans the sale of tobacco to anyone born on or after 1 January 2009.

The new law has received surprisingly little coverage in the financial or mainstream press, and the price of tobacco companies on the stock market barely flinched, yet Shares suspects it could signal the beginning of the end for traditional tobacco products, leaving manufacturers in this space to eventually have a sole focus on next generation products such as vaping.

Smoking rates are already in decline in New Zealand, having fallen from 9.4% of the population to 8% in the past 12 months, the lowest since records began, according to associate health minister Ayesha Verrall.

As well as limiting the sale of tobacco products, the new bill will slash the number of licensed retailers by 90% from 6,000 to just 600 by the end of next year making it more difficult for existing smokers to keep up the habit.

In addition, any retailers caught breaking the new law will face a fine of up to NZ$150,000 (around £79,000) which is likely to make many shops think twice about stocking tobacco products full stop.

The government aims to make New Zealand smoke-free by 2025 to increase life expectancy and reduce the cost to the healthcare system of treating smoking-related diseases.

‘Thousands of people will live longer, healthier lives, and the health system will be $5 billion better off from not needing to treat the illnesses caused by smoking, such as numerous types of cancer, heart attacks, strokes and amputations,’ said Verrall.

The tobacco industry has been increasingly curtailed in recent years with a blanket ban on advertising on health grounds and the introduction of packaging showing the dangers of smoking.

UK firm British American Tobacco (BATS) has invested heavily in new products such as vapes – which aren’t covered by the New Zealand regulations – but its ‘combustibles’ business, which still makes up nearly 90% of revenues, is suffering from ‘accelerated downtrading’ in the US where it sells well-known brands such as Camel, Kent and Lucky Strike.

Rival Imperial Brands (IMB) is a more recent convert to next-generation products, and while sales are growing at double digits, they represent less than 5% of total revenues.

Both companies clearly have a great deal at stake if ‘smoke-free’ legislation starts to spread as we think it might over the course of thisdecade.

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