Three tobacco companies prepare marketing curbs ahead of U.N. treaty
Sept. 11 â€” The three largest multinational tobacco companies, under mounting pressure from governments world-wide, plan to announce Tuesday they will curtail some of their global advertising and marketing practices.
PHILIP MORRIS Cos. of the U.S., British American Tobacco PLC of the United Kingdom, Japan Tobacco Inc. and four smaller cigarette makers have together agreed to adhere to minimum global standards that will, among other things, effectively pull their ads off television and radio and eliminate celebrity endorsements.
The companies began negotiating the current, voluntary pact early last year as the United Nations public-health agency, the World Health Organization, stepped up efforts to promote a global treaty to curb cigarette smoking. A draft of the treaty, called the Framework Convention on Tobacco Control, is still being hammered out by delegates from 191 countries and so far calls for strict, enforceable limits on tobacco marketing.
Though the companiesâ€™ new standards tighten marketing restrictions in countries where there currently are few, some of the measures are less stringent than those the tobacco firms follow in the U.S., Canada, Western Europe and even in some developing countries.
In the U.S., for example, cigarette makers not long ago agreed, as part of a 1998 settlement with state governments, to halt advertising on billboards. They also have been banned from TV and radio advertising for years. Under the new international plan, however, billboards are still permissible if they are located more than 100 meters from schoolyard perimeters. Thailand has banned all cigarette advertising â€” an option being considered in other nations.
The companies pledge to halt ads that suggest that smoking enhances popularity, or athletic, professional or sexual success. The companies also agreed not to use advertising â€œaimed atâ€ or with â€œparticular appeal toâ€ youth. Another measure specifies that clothing emblazoned with cigarette brands be made available only in adult sizes.
The agreement also limits where and how ads can be run. Among other things, the pact shrinks the allowable size of billboards. It restricts print advertising to publications with less than 25% youth readers and bars ads from their outside covers or wrappings.
Most significant, perhaps, is the companiesâ€™ agreement to pull ads from radio and television by the end of next year, unless the companies can insure that minors wonâ€™t see the ads â€” a near impossibility. The pact imposes the same restriction on Internet ads. Currently, TV ads are still allowed in many Asian and Latin American countries. Radio ads are also pervasive in some countries, including Spain.
Tobacco companies have been under increasing pressure from antismoking activists as well as governments to rein in their marketing, especially in developing countries. The activists point to differences in the companiesâ€™ business practices at home compared to abroad. Antismoking groups recently called attention to a Philip Morris-funded study in the Czech Republic that highlighted the money saved by the government from the earlier demise of smokers.
Yet the new standards are apt to do little to reassure health groups. â€œThey are offering up voluntary measures as a hope to avoid real regulation,â€ said Judith Wilkenfeld, director of international programs for U.S.-based Campaign for Tobacco-Free Kids. â€œBelow the surface they wonâ€™t do anything to curb their practices.
Philip Morris Companies Inc. (MO)
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Philip Morris, with its Marlboro brand, BAT (maker of Lucky Strike) and Japan Tobacco (which sells Camel and Winston outside the U.S., as well as Mild Seven) dominate the international cigarette market, with a combined market share of roughly 40.5%, said Martin Feldman, an analyst with Salomon Smith Barney.
Vera da Costa e Silva, project manager for the WHOâ€™s tobacco-free initiative, and others are skeptical about enforcement of the plan. For example, the companies say that â€œreasonable measuresâ€ will be taken to prevent youth sales of cigarettes through vending machines and to avoid showing tobacco ads in cinemas where less than 75% of the audience are adults. â€œThese canâ€™t be implemented,â€ said Ms. Da Costa e Silva. â€œWhoâ€™s to say whatâ€™s reasonable?â€
Ms. Wilkenfeld of the Campaign for Tobacco-Free Kids questions the logic of promising to market only to adults. She said that kids increasingly aspire to the symbols of adult life â€” not Barney.
David Davies, senior vice president of corporate affairs for Philip Morris International, said â€œour motivation is to secure meaningful, sensible regulation everywhere we do business.â€ When told that some observers view the companiesâ€™ agreement as a way to stave off WHO action, he said, â€œit is expected that people will be cynicalâ€ about the companiesâ€™ intentions.
Mr. Davies conceded that some of the guidelines will be a challenge to implement. Philip Morris, he said, will work to define â€œprecise mechanicsâ€ to give it â€œa comfort level that we are acting responsibly.â€ But overall, he said, the plan â€œprovides a significant base line, and will change the [marketing] landscape in many countries around the world.â€
Neither Philip Morris nor BAT would quantify how the new standards would affect ad spending. Philip Morris did say, however, that the company may be disadvantaged by competitors that do not undertake similar measures. â€œBut we feel the price is one well worth paying to seek to meet the expectations of society,â€ said Mr. Davies.
Signatories said they will comply with the new standards by the end of next year, except for certain rules on sponsorships that wonâ€™t kick in until 2006.
The four other companies that have signed the agreement are Compania Industrial de Tabacos SA of Bolivia; Grupo Iberoamericano de Fomento SA of Spain; Papastratos of Greece; and Thailand Tobacco Monopoly.
Two other U.S. companies â€” R.J. Reynolds Tobacco Holdings Inc. and Loews Corp.â€™s Lorillard Tobacco â€” arenâ€™t participating since they market cigarettes only in the U.S.