The government has announced that it will move forward on plain packaging for cigarettes with legislation introduced by the end of the year, and hopefully passed by the end of next year. Good. Cigarette packaging has been used as a marketing mechanism to circumvent advertising bans. Requiring plain packaging will prevent that. While its a prima facie restriction on freedom of speech, like the advertising ban itself it serves an important public purpose and is necessary and proportionate to that purpose and is therefore a justified limitation.
As for Big Tobacco's threats of domestic legal action, they're largely empty. The courts cannot overturn legislation in New Zealand. The real worry is action under the investment clauses of the various FTAs the government has signed. In the Americas, such clauses have been used to overturn basic health and environmental standards for the benefit of polluting corporations, and there's no guarantee that we won't face a similar veto on our efforts to protect public health. If so, I think it would provide a strong argument for repudiating those agreements.