The ban would put a disproportionate financial burden on retailers, John Key said, citing a lack of evidence that it would deter children from smoking. "There is no international evidence that it actually works and it's hugely expensive to do it."
Supermarkets in the UK will have to remove tobacco displays by 2011 when the Health Bill is made law, and small shops will have to do the same by 2013. But Key's decision represents the second major boost to the industry in as many weeks, following the criticism of the Bill last week by Tory Shadow Health Minister Mike Penning.
New Zealand's decision would put pressure on the UK Government, said James Lowman, chief executive of the ACS. "It may be another nudge in the ribs for BERR, the Treasury and Number 10, who are talking a lot about being business-friendly . In terms of the evidence base, we have won the argument but lost the policy."
The industry will be hoping the Government pays as much attention to what is happening in New Zealand as it claims to have done with Canada and Iceland, where bans already exist. But Imperial Tobacco has claimed that even in those countries there is little evidence to suggest banning displays has reduced the rates of youth smoking.
"There are more effective alternatives open to the Government to reduce youth smoking. It is very important for retailers to remember this is still a set of proposals and we would urge them to contact their MP to highlight the effect it will have on their business," said Imperial UK trade communications manager Iain Watkins.
Speaking at The Grocer's annual lunch for leading independents and wholesalers, Imperial's UK general manager Amal Pramanik said: "Fifteen years of accelerated regulation against tobacco has had no impact on tobacco consumption. There has been a declining trend, but when you add roll-your-own and inflow to the equation, volume has not really declined."
He added that Imperial Tobacco data showed there had been only a small decline in smoking incidences between 1992 and 2002 (28% vs 26%). The largest falls, he said, had been between 1972 (46%) and 1982 (35%).
Richard Dodd of the BRC was also supportive of Key's decision. "This confirms our belief there is no evidence this will make a difference to stopping children taking up smoking," he said. "It would impose thousands of pounds of pointless refit costs on stores."