From the Lean Startup methodology point of view, this is a big win, because Big Tobacco panicking validates Uruguay's strategy against smoking. All it takes is for more countries to follow suit.
I don't smoke, and the warnings certainly scare me, but I always find myself in a foreign duty-free shop shoving myself through throngs of people carrying a tower of Malboro boxes - lung cancer seems to be the last thing on their mind.
BTW: We are 3.3 not 2.7 :S
The warnings on the packaging are mostly targeted at non-smokers who might become smokers. If they decide to buy some cigarettes, they can't avoid being reminded of the long-term effects. If they buy them regardless, every time they pull out a cigarette they're reminded of what might happen should they develop a full addiction.
After a decade or two of lowered rates of new smokers, the population achieves a sort of critical mass of non-smokers that change the public attitude toward smoking. At this point banning smoking in public places, or increasing tobacco taxes, become politically tolerable.
Whether packaging alone works, who knows. The combination of those policies is highly effective.
What kills smoking as a cultural norm and destroys the tobacco business isn't everyone stopping smoking overnight due to ugly packaging. That's an overly simplistic and unrealistic scenario. But if packaging changes can result in a persistent decline in the prevalence of smoking that sort of change is still enormous. Being able to cut the prevalence of smoking in half over, say, 50 years? Still a pretty big deal. But it looks like these programs are actually far more effective.