Tobacco giant warns of plain packet 'black market'

New Zealand adopting plain packaging on cigarettes will fail to deter smokers, a global tobacco company has said.

A bill which will mean cigarettes can only be sold in bland brown or green packaging passed its final reading in Parliament this week.

The bill means mandatory health warnings will cover at least three quarters of the packet and tobacco company logos will be removed.

It's taken three years for the legislation to pass after tobacco companies tried to sue the Australian government.

That legal battle failed last year, and even though the law was still facing challenges, such as by the World Trade Organisation, with other countries also introducing plain packing, legal action was less likely.

But British American Tobacco's New Zealand spokesman Saul Derber said plain packaging in Australia had been a failure - and it would fail here too.

"Not only is the Australian tobacco plain packaging experiment failing to meet its objectives, the policy is having serious unintended consequences," he said.

"The tobacco black market has grown by over 20 percent in Australia since the introduction of plain packs, costing the Australian government about $NZ1.5 billion in lost revenue in 2015, Mr Derber said.

He said with no graphic health warnings, no controls preventing sales to youth and no tax it was likely the introduction of plain packaging would grow the black market here as well.

"Plain packaging is an attack on companies' intellectual property rights and undermines the principles on which international trade is founded," he said.

Associate Health Minister Sam Lotu-Iiga said yesterday the government was confident it could win any legal action taken by tobacco companies.

"We can't determine what will happen in the courts, but we feel like we've seen the evidence from overseas, we're pretty comfortable with that, and we're going to move forward," Mr Lotu-liga said.

Plain cigarette packaging is expected to hit New Zealand shelves from next year.