Transcript Smoking in the Former Soviet Union

The Predatory Practices of
the Tobacco Industry
Dr Anna Gilmore
MBBS DTM&H MSc FFPH PhD
[email protected]
EUROPEAN CENTRE ON HEALTH OF SOCIETIES IN TRANSITION
London School of Hygiene and Tropical Medicine
Tobacco’s health impacts
• 1 in 2 long term smokers killed by tobacco
• On average, among 1000 20-year-olds who
smoke cigarettes regularly:
–
about 1 will die from homicide
– about 6 will die from motor vehicles
– about 250 will be killed by smoking in
MIDDLE age alone
– 250 more will be killed by tobacco in OLD
age)
Deaths from tobacco
Annual deaths attributed to smoking
M=million deaths / year (Peto, Lopez et al, 1994)
Developed
Developing
World total
1990
2M
~1M
3M
1 in 10
2030
3M
~7M
~10M
1 in 6
Annual cigarette consumption per adult
(no. cigarettes)
Trends in cigarette consumption:
Increasing in the developing world
3000
2500
2000
Developed
Developing
World
1500
1000
500
0
1970-72
1980-82
1990-92
Source: World Bank Report 1999
Tobacco’s Challenge to Public
Health
“Tobacco use is unlike other threats to global
health. Infectious diseases do not employ
multinational public relations firms. There are no
front groups to promote the spread of cholera.
Mosquitoes have no lobbyists.”
(WHO Committee of Experts 2000)
- Essentially a political issue
The global tobacco industry
4 companies now control almost 70% of world
cigarette market:
– (CNTC) 32.6%
– Philip Morris 14.5%
– BAT 12.2%
– JTI 7.8%
Source: ERC 2005 data
Marlboro, Chesterfield,
State Express 555, Lucky Strike,
Benson & Hedges, Rothmans
Mild Seven, Salem
Big 3 transnational tobacco companies’ sales &
various countries’ gross domestic product (GDP)
Philip Morris
BAT
Japan Tobacco
Peru
Bangladesh
Hungary
Sri Lanka
Ghana
Senegal
Kenya
0
10
20
30
US$ billions
40
50
60
The 9 Ds of industry survival
• Deny the health consequences of smoking
• Deceive consumers about the true nature of
cigarettes through marketing and public relations
• Damage the credibility of industry opponents
• Direct advertising to women and youth, in addition to
men, to maximize sales volume
• Develop new markets around the world
• Defeat attempts to regulate the industry or control
smoking
• Delay legislation if it can't be defeated
• Destroy legislation once it passes, either by trying to
overturn the law in court, by disobeying the law, or by
exploiting the loopholes.
• Defend lawsuits filed against the industry
Cunningham. Smoke and Mirrors: The Canadian Tobacco War. 1996
The 9 Ds of industry survival
• Deny the health consequences of smoking
• Deceive consumers about the true nature of
cigarettes through marketing and public relations
• Damage the credibility of industry opponents
• Direct advertising to women and youth, in addition to
men, to maximize sales volume
• Develop new markets around the world
• Defeat attempts to regulate the industry or control
smoking
• Delay legislation if it can't be defeated
• Destroy legislation once it passes, either by trying to
overturn the law in court, by disobeying the law, or by
exploiting the loopholes.
• Defend lawsuits filed against the industry
Cunningham. Smoke and Mirrors: The Canadian Tobacco War. 1996
Deception and Denial:
Nicotine addiction
– “Nicotine is highly
addictive, to a degree
similar to or in some
respects exceeding
addiction to ‘hard’ drugs
such as heroin or
cocaine”
Royal College of
Physicians UK, 2000)
– Most smokers do not
smoke out of choice but
because they are
addicted
Industry’s private response to
nicotine addiction
• 1962: “we now possess a knowledge of the effects of
nicotine far more extensive than exists in published
scientific literature”
• 1963: “We are, then, in the business of selling nicotine, an
addictive drug”
• 1970s - optimising the effect of nicotine by increasing the
pH of cigarettes (increases the unbound form of nicotine
which increases its physiological impact)
• “if we meekly accept the allegations of our critics and
move toward reduction or elimination of nicotine in our
products then we shall eventually liquidate our business”
Public response: Denial
US Congressional hearings 1994: “I do not believe
that nicotine is addictive” CEO B&W
Trinidad, 1998
Directing advertising
Players gold leaf
Russia: female smoking prevalence
25
Primary/incomplete
secondary
Complete secondary
20
Higher
15
10
5
0
1994 1995 1996 1998 2000 2001 2002 2003
Developing new markets
Destroying legislation
How BAT bought Uzbekistan
BAT in Uzbekistan
• 1994 BAT established
monopoly
• Invested > $300 M
• >31% of total FDI (1992-2000)
• Uzbekistan’s largest
investment to date
Prime Minister Utkir Sultanov:
"British American Tobacco is a
model foreign investor"
President Karimov
Two of Karimov’s quotes:
– "Such people must be shot in the
forehead! If necessary, I'll shoot
them myself" (1998)
– "I'm prepared to rip off the heads
of 200 people, …in order to save
peace and calm in the
republic…If my child chose such
a path, I myself would rip off his
head.” (1999)
1st Presidential decree: BAT avoid
a tender
Note to the board of BAT Industries plc: Central Asian republics - briefing paper 27/1/94
2nd Presidential Decree: establishes BAT
monopoly
Health Decree 30
• Issued by Chief Sanitary Doctor July 1994
• Discovered by BAT in August 1994
• Implemented highly effective tobacco
control measures
• Highlighted adverse health impacts of
tobacco
• Noted “large scale” tobacco advertising
Yet, just one year earlier,
marketing environment:
"very primitive, limited use of stickers.….
a single-site sophisticated electronic
billboard .. seen on the outskirts of
Tashkent.”
“unique in the world in terms of its
singularly unexploited advertising and
promotional environment”
Uzbekistan: Preliminary marketing report following visit to
Tashkent & Samarkand 26 - 30 July 1993
BAT claimed
• HD 30 would jeopardise foreign investment (one
supported by Karimov)
• “still a controversy about smoking and health”
• “smoking has not been proven to actually cause”
diseases
• “world wide experience consistently shows that
advertising bans do not reduce consumption”
• “advertising … is not intended to increase the
overall market”
(500898516-21, 500898525-7, 500852336-9)
Yet, BAT marketing plans
• Projected 45% increase in cigarette
consumption between 1993 and 1999
• Potential to expand sales to women:
“Historically, local products have been too
strong to attract large numbers of female
smokers. Female smoking is now more
socially acceptable and females can be
drawn into the market via menthol offers or
lighter brands”
“growth in incidence among women”
(203465973-93, 301734356-406)
Yet, BAT marketing plans
• Projected 45% increase in cigarette
consumption between 1993 and 1999
• Potential to expand sales to women:
“Historically, local products have been too
strong to attract large numbers of female
smokers. Female smoking is now more
socially acceptable and females can be
drawn into the market via menthol offers or
lighter brands”
“growth in incidence among women”
(203465973-93, 301734356-406)
Health Decree 30
ORIGINAL DECREE
" The following will be
permanently prohibited:
1.2 Advertising of local
and foreign brand tobacco
products including
advertising through the
mass media (television,
radio, cinema,
newspapers, magazines
etc.),
AMENDED DECREE
1.2 Advertising of local and
foreign brand tobacco
products, including
advertising through the
mass media, (tv, radio,
cinema, newspapers,
magazines etc) will be
restricted according to
the attached code [at this
point they intend to use the
Russian voluntary code]
ORIGINAL DECREE
" The following will be
permanently prohibited:
1.3 smoking in public
places, on the transport,
at health care institutions,
kindergartens, schools
and other institutions for
children, colleges and
universities…..”
AMENDED DECREE
1.3 “smoking at healthcare
institutions, kindergartens,
schools and other
institutions for children will
be prohibited. At other
institutions and
enterprises, and on
public transport, both
smoking and
nonsmoking areas will
be provided”
The public face
(BAT Bulletin, August 1995, p22, emphasis added)
A new voluntary code for advertising, developed jointly by
BAT and the government of Uzbekistan, has been introduced
in the Central Asian Republic. The document crowns almost
a year of intensive work by BAT and Uzbek government
agencies. It has the legal force of a government decree,
which all tobacco companies operating in Uzbekistan will be
obliged to comply with.
Entitled The Provision of Tobacco Advertising Conduct, it
sets out guidelines for tobacco advertising, in accordance
with the norms adopted in a number of countries throughout
the world. BAT’s key role in formulating the code, is seen by
many as a reflection of the company’s responsible
attitude to its advertising practices.
Influencing taxation
• Established allies in Ministries of Taxes and
Finance including Deputy Finance Minister
who was
“very keen that BAT should work with him and his
officials on the drafting of indirect tax legislation….
which he admits they have neither the personnel
or expertise to do.”
(Dufty C. Uzbekistan - indirect tax meeting with
Ministry of Finance. 03/03/1994.)
Influencing taxation
“The excise authorities appear very receptive to
excise proposals.. …..
The impression was that BAT could have almost
any exemption it wanted” (Notes from visit to
Tashkent, Jan ‘94)
Managed to secure:
• A >50% reduction in excise rates
• Design of an excise system to benefit its brands
and disadvantage competitor’s brands (Ad
valorem taxes “to hit Marlboro”)
• Tax marker system to police imports (from which
it would be exempt)
Outcome - Uzbekistan
• Overturned 3 most effective tobacco control
measures
• Cigarette prices lowest in WHO European region
• Production capacity increased 5 to 30 bn pa
• By 1999 BAT had market share of over 70%
• Consumption increasing: 7-8% annually primarily
among young people, WTF estimates 50% increase
in sales between 1990 and 1996
• BAT has secured major benefits including extension
of its preferential tax-exempt status for an additional
5 years
• Tobacco control remains incredibly weak
Further restricted competition
• Absorbed potential competitors
• Exclusive manufacturing rights
• No other business could be licensed to
process leaf
• No other brands could be registered without
BAT approval
• Exclusive dealing: state distribution agency
& local advertising agencies
• “Protection of the domestic tobacco products
market” through excise reform
References
Gilmore A, McKee M. Tobacco and transition: an
overview of industry investments, impact and
influence in the former Soviet Union. Tobacco Control
2004;13: 136-142.
Gilmore A, Collin J, McKee M. British American
Tobacco’s erosion of health legislation in Uzbekistan.
British Medical Journal 2006;332:355-358.
Gilmore A, Collin J, Townsend J. Transnational tobacco
company influence on taxation policy during
privatization: the case of BAT in Uzbekistan (in press)
Am J Public Health.
Gilmore A, McKee M, Collin J. The invisible hand. How
British American Tobacco precluded competition in
Uzbekistan (in press) Tobacco Control.