Supermarkets offload cigarette brands in bid to avoid litigation

Supermarket chains are transferring ownership of their own-label cigarette brands, annually valued at 720m, to tobacco manufacturers in an attempt to distance themselves from future legal action and negative publicity.

Tesco is preparing to transfer ownership of its cigarette brand benington to the manufacturer RJ Reynolds, and industry sources predict others will follow. The British Medical Association attacked Tesco in October 1995 as hypocritical for launching the cut-price benington brand while maintaining its “healthy image” positioning.

Observers say Tesco’s move marks increasing anxiety among the big retailers as anti-tobacco feeling hardens in the UK. It comes as Gallaher and Imperial Tobacco face legal action from a group of cancer sufferers in the UK and the Labour Party renews its threat to ban tobacco advertising – dismissed by the Tobacco Manufacturers’ Association as “nothing more than a political gesture based on folklore rather than fact”.

In the US, Chesterfield cigarette maker the Liggett Group has admitted cigarettes cause cancer and are addictive. This week, jury selection begins for a case against RJ Reynolds in Florida brought by the family of a woman who died from lung cancer.

A source from a UK retailer, which has recently switched ownership of one of its brands to its manufacturer, says: “We were told by a manufacturer that all the major multiples are doing it [changing ownership]. It can be done fairly quickly and is being driven by the retailer. For example, it could sell the brand name to the manufacturer for 1. Everybody is panicking about the health implications and litigation.”

Benington, launched in June 1995 without any marketing support, was registered with the Patent Office in February 1996 as belonging to Tesco Stores Limited, Delamere Road, Cheshunt, Hertfordshire. It was still in the retailer’s name on Monday.

Sainsbury’s sells a brand called Statesman but has the name registered with its manufacturer, JT International Europe (Japan Tobacco).

One insider says: “If a little old lady says her husband died of a horrible smoking-related disease, and that he smoked benington from Tesco, the retailer can say the brand has nothing to do with us, it belongs to RJ Reynolds and they have to deal with the bad publicity.”

Nick Tilt, UK marketing director for RJ Reynolds, says: “We have legal documentation that says this trademark is an RJ Reynolds brand.” But a trade marks expert, who wishes to remain anonymous, points out: “The trade mark owner is responsible for the products on which its trade mark appears. Tesco would be the company any third party would turn to. It is the legal owner if its name is registered at the Patents Office.” He says trade mark ownership can be split into legal and “beneficial” ownership, where the latter receives royalties, for example.

A Tesco spokesman says: “Benington is an RJ Reynolds brand – If it was under Tesco’s name it is a technicality. It never was exclusively for Tesco; RJ Reynolds does what it sees fit with it. If the documentation is not with it, it will be shortly.”

He refuses to say why the brand is changing ownership, but denies it is to avoid bad publicity.

Tesco recently launched a cigar produced by RJ Reynolds called Havanita, but the spokesman stresses the cigar was not exclusive to Tesco but was also available in Greenalls pubs and the Co-op. “We don’t feel we should be the moral guardians of whether people should smoke or not,” says the spokesman. “But we do not seek to promote tobacco or encourage people to buy it.”

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