Health Warning

Legal and ethical pressure from global bodies such as the World Health Organisation and the European Union has damaged the tobacco industry’s reputation. Manufacturers are cleaning up their image in a desperate attempt to prove the legitimacy

The Government is expected to deliver a damning verdict this week on the marketing practices of the UK tobacco industry, following an eight-month investigation.

But for tobacco’s truly global players, British American Tobacco (BAT) and Philip Morris, the verdict of the Commons Health Select Committee will have little impact, even if – as expected – it leads to a trade department investigation into allegations that BAT encouraged international smuggling.

The two tobacco giants are engaged in a far bigger, more complex battle: to convince global power brokers such as the World Health Organisation (WHO) and the European Union that they are legitimate and responsible businesses.

After decades of silence and denials on key issues such as health, the tobacco companies have been forced into a PR offensive. They can no longer afford to be seen as global bogeymen, spreading disease and addiction to unsuspecting Third World countries.

Like the pharmaceutical and petro-chemical industries before them, the tobacco companies are attempting an awesome task. They are cleaning up their image.

Philip Morris led the way last year by admitting for the first time that there might be a link between smoking and cancer.

London-based BAT, which has a slightly smaller share of global business than Philip Morris but is exposed to more international markets, has made similar admissions on its corporate website.

The company, which manufactures in 68 countries and has a business presence in 180 countries, last year claimed to spend £20m on health, safety and the environment.

Philip Morris, which also owns Kraft foods and the Miller breweries, seems intent on combating domestic violence and feeding the hungry – as well as running AIDS education programmes. It has trumpeted its new, caring stance in a series of TV ads.

Both companies even offer advice on giving up smoking.

This extraordinary change of tactics has nothing to do with profits – which continue to roll in unabated – and everything to do with the continued legitimacy of tobacco manufacturing, which is under attack from all sides.

Beset by legal problems in the US and threatened by increased legislation in Europe – where the EU is threatening to ban the manufacture of high tar cigarettes – it is also facing the wrath of WHO, which wants to impose European-style regulation on the developing world.

WHO chief Gro Harlem Brundtland has likened smoking to a communicable disease, which is spread by advertising and marketing. She has pledged to work with the 191 WHO member countries towards a global ban on tobacco advertising by 2003, when the body meets to discuss its Framework Convention on Tobacco Control.

BAT’s response has been to raise concerns about WHO interference in the sovereignty of developing countries.

In a recent speech to business leaders in Hungary, BAT’s non-smoking chairman, Martin Broughton, attempted to seize the moral high-ground, claiming “new colonialists” were enforcing Western values on the rest of the world.

Broughton mounted a similarly impassioned defence of the tobacco industry’s ethical record in his submission to the Commons Health Select Committee, telling MPs: “The term Big Tobacco is used by the anti-smoking lobby as a pejorative term. In fact, Big Tobacco is responsible tobacco.

“The popular understanding is that smoking is addictive. Nevertheless, our consumers are neither fools nor helpless addicts. Our shareholders are not amoral. Our 10,000 employees are not villains. Shopkeepers selling cigarettes are not drug pushers.”

No one at BAT was available to comment when Marketing Week contacted the company last week.

Sandra Macleod, chief executive of media-tracking group Echo, which has worked with BAT and Philip Morris, believes increased openness and accountability is the only viable course of action for tobacco companies. “There has been an attitude in some industry sectors that if we keep our heads down we will have a quieter life – but that is changing.

“The chemical companies have certainly become more open – and it has worked for them. They have even come out and announced bad news.

“This is the only legitimate route available to the tobacco companies, but I suspect it will be a tremendously difficult internal change for them,” says Macleod.

Michael Register, senior partner at Register Larkin, which specialises in managing corporate PR crises, believes the industry may have left it too late.

“Some PR situations are not 100 per cent recoverable for companies, and tobacco is nowhere near 100 per cent. The industry doesn’t have the potential to recover its reputation to the point where it will be liked and praised.

“But, given that there is a demand for the product and that there is an argument that people should have the freedom of choice to smoke, there are things around the product that can be changed, such as the companies’ attitude to the Third World.

“But it should not just be a knee-jerk response purely to appease governments or the WHO.

“They may have left it too late. They have kept their head in the sand for too long,” adds Register.

Self-regulation in the Third World

Nick Mustoe, chief executive of Mustoe Merriman Herring Levy, and a veteran of advertising campaigns for Imperial Tobacco, believes the tobacco industry should introduce UK-style self-regulation in developing countries.

He argues that crude, unregulated Third World advertising, particularly on television and in cinemas, does not go down well with Western legislators and opinion-formers.

“Pakistan’s state-owned tobacco industry came to see us about five years ago. They showed us these cheap ads they had made, which were effectively re-makes of James Bond movies. They were quite crude in their depiction of smoking and glamour.

“It was basically a case of man in dinner jacket saves girl and gets cigarettes out.”

He adds: “It would be unwise of the major players to resist a level of responsibility for their marketing, to curb some of the worst excesses.”

The tobacco companies are in a similarly ambiguous position on under-age smoking.

In the US, Philip Morris spends about $100m (£62.5m) a year on preventing youth smoking.

Last week it pulled advertising for Marlboro in dozens of teen-oriented magazines, such as Rolling Stone and Outdoor Life, to avoid breaching an agreement on youth advertising.

Like Philip Morris, BAT has emphasised that smoking must be an “adult choice” and has made much of its campaigns to curb under-age smoking.

It has even lobbied the UK Government to raise the age when cigarettes can legally be bought from 16 to 18.

But the point at which an under-age smoker becomes a young adult making an informed choice is far from clear.

Targeting the young

BAT’s marketing efforts with highly profitable premium brands such as Lucky Strike are clearly directed at young, European urbanites, who until now have favoured Philip Morris’s Marlboro brand.

One industry observer says: “In Germany, BAT talks about Marlboro as an ageing brand that your parents smoke.

“There is a lot of talk about the post-Marlboro generation. But it is tough to make progress. BAT is still a long way behind, but it’s clear that Philip Morris is not invincible.”

The tobacco industry’s attempts to project itself as caring and socially responsible will be hard to swallow for many. And there is some evidence that the companies themselves are unsure of its efficacy.

A public relations consultant with links to the tobacco industry told Marketing Week: “There is evidence that Philip Morris and BAT are trying hard with their research to find out whether their new approach is having any impact.”

But the tobacco industry is nothing if not tenacious. And, although the current liberal consensus is against it, it is not inconceivable for the tide to turn in tobacco’s favour again. The industry must be relishing the prospect of Republican George W Bush – a long-time friend of tobacco – entering the White House later this year.

SINNERS…

BAT is facing a Department of Trade investigation into allegations that it colluded with international smugglers.

Tobacco exporters BAT and Gallaher have threatened to close their UK factories – which would result in the loss of thousands of jobs – if the EU carries out its threat to ban the manufacture of high tar cigarettes.

Sick smokers are about to be awarded vast, punitive damages from US tobacco companies for the first time in the landmark Engle class action.

The World Health Organisation has called smoking a “disease” and is fighting for a worldwide ban on advertising to prevent the growth of the habit in the Third World.

Philip Morris is facing a court battle over allegations that it colluded with Colombian drug cartels and smuggling gangs.

OR SAINTS?

BAT is campaigning to eradicate child labour in Brazil and to set up primary health care schemes in Pakistan. It also carries out AIDS education projects in Zimbabwe.

Philip Morris spent £100m last year on preventing youth smoking in the US and offers millions in grants to help the community. It also has anti-hunger and AIDS education programmes in place.

BAT, Philip Morris and others – with the exception of Imperial Tobacco – now admit evidence of a link between smoking and cancer.

With major tree-planting programmes, BAT claims to be one of the world’s leaders in re-forestation, outside the printing industry.

BAT is lobbying to raise the legal age for buying cigarettes in the UK from 16 to 18, and claims to run anti-youth smoking initiatives in many of its markets. It has also pledged to develop safer cigarettes.

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