Imperial Tobacco has lost its fight to continue displaying cigarettes in shops in Scotland.
The Supreme Court ruled against the tobacco giant's appeal, which was trying to overturn the Scottish government's ban on the open display of cigarettes in corner stores, supermarkets and petrol stations, and other retailers.
The ban on tobacco product displays is already in force in England and Wales and therefore the wider markets will not be surprised by the judgment.
Lawyers representing Bristol-based Imperial asked a panel of five Supreme Court justices to analyse the issues after twice failing to persuade Scottish judges to set aside legislative provisions. Imperial believes the legislative provisions dealing with display bans fall outside the scope of the Scottish Government and are matters reserved for the UK Parliament in London.
Imperial, which owns a number of cigarette brands including Lambert & Butler and Richmond, argues there is no credible evidence that display bans have cut tobacco consumption and wants vending machines to remain, but many ministers have campaigned to ban display in order to protect future generations from the effects of smoking.
Despite losing the appeal, the company's civil court challenge has delayed the implementation of measures aimed at stopping people smoking. Ministers intended to introduce the display ban in large shops in Scotland - the first part of the UK to adopt a ban on smoking in public places - in April.
Imperial initially sought a judicial review of ministers' plans for display bans in 2010, but was ruled against by a Scottish judge, and lost a subsequent appeal in February 2011.
That decision was welcomed by Scotland's public health minister Michael Matheson, according to Press Association, who said the proposals would play a "crucial role" in preventing youngsters from starting to smoke.
Tina Cook, equity analyst for Charles Stanley, told the Huffington Post UK the court result was consistent with the trend towards higher regulation for the tobacco industry, but will be seen as another hurdle for attracting the next generation of smokers.
"The current generation of smokers in England and Wales are getting used to a display ban, but it's unknown what impact there will be. There's an argument that we could see market share consolidation of the big players as smokers may cut back on switching between brands (if they can't see them on the shelves)," she said.
Cook said there was also concern that we could see a spike in illicit trade of tobacco products as a result of hiding the packets behind plain packaging (as they want to do in Australia) or behind a blank display case - the theory is if we aren't used to seeing the 'real' packets regularly it'll be difficult to identify the fake ones.
"Tobacco brands may also be feeling that it's rather unfair treatment - if you're going to penalise smoking for being unhealthy, why not ban the display of junk food and alcohol, or anything else which is considered dangerous for our health?" she added.
Redmayne-Bentley's stockbroker, Lauren Charnley, added: “With the Supreme Court unanimously upholding Scotland's ban on advertising tobacco, it certainly appears that Imperial Tobacco's objections have gone up in smoke. However, despite the ban being in place in England and Wales, the tobacco sector has proved resilient; posting strong gains regardless of the bans being introduced suggesting that out of sight, out of mind isn't always the case."
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