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The Transnational Tobacco Industry Frances Stillman, EdD, and Heather Wipfli, MA Institute for Global Tobacco Control Johns Hopkins University Section A Background Why Study the Industry “A sane policy response to the evidence against tobacco does and should threaten the viability of the industries themselves.” Advocacy Institute, Smoke and Mirrors, 1998 4 Describing a Disease HOST VECTOR AGENT ENVIRONMENT 5 The Agent Image source: www.cdc.gov/tobacco/ images/sgrad6.jpg retrieved 2/28/06 6 The Host Image source: Institute for Global Tobacco Control 7 The Vector Image source: http://www.nlm.nih.gov/hmd/frankenstein/frank_promise.html retrieved 2/12/06 8 Section B Background Background 1890—American Tobacco Company (ATC) formed 1900—ATC virtually controls all tobacco production and trade worldwide 1911—ATC broken up into several companies, including ATC, R.J. Reynolds (RJR), Liggett & Meyers Tobacco Company, Lorillard, and British American Tobacco (BAT) Continued 10 Background 1911–1980 − Tobacco industry comprised of numerous independent companies − Tobacco growing and trade flow largely between U.S. and Western Europe 1980–Present − A few mega companies − Majority of tobacco growing in low- and middleincome countries − Global production and trade 11 What Is a “Transnational” Company? An enterprise comprising entities in more than one country which operate under a system of decisionmaking that permits coherent policies and a common strategy The entities are so linked, by ownership or otherwise, that one or more of them may be able to exercise a significant influence over the others and, in particular, to share knowledge, resources, and responsibilities with the others 12 Major Transnational Tobacco Companies Philip Morris (USA) British American Tobacco (UK) Japan Tobacco (Japan) Reemsta (Germany) Altadis (Spain / France) 13 Cigarette Production 6000 5000 4000 3000 2000 1000 04 20 02 20 20 00 19 98 19 96 19 94 92 19 90 19 19 70 0 19 50 Number of cigarettes (billions) World Cigarette Production Year Data sources: U.S. Department of Agriculture and U.S. Bureau of Census as quoted in "Vital Signs 2005" published by WorldWatch Institute. 14 Company Size and Wealth PMI, BAT, JT own or lease manufacturing facilities in over 50 countries PMI, BAT, JT have combined sales of over U.S. $121 billion 15 TNC Sales and Developing Countries Philip Morris’ (PM) 1998 revenues ($74 billion) exceeded the GDP of many countries including Ireland, Hungary, Ecuador, Kuwait, Guatemala, and Kenya RJR Nabisco’s 1998 revenues ($14 billion) exceeded the GDP of Jamaica, Laos, or Malawi Sources: Philip Morris, 1999 Annual Report (consolidated revenues); RJR Nabisco, 1998 Annual Report (does not include RJR International revenues); CIA World Factbook, 1999 16 China National Tobacco Corporation World’s largest tobacco company Near monopoly over domestic market Numerous cooperative agreements with TTCs to modernize manufacturing, improve crop yields, and build tobacco processing plants Indications that it is considering entering international market Continued 17 A Return to the Past? Global Cigarette Market Share 16.40% 31% 15.40% 7.20% 30.00% Philip Morris BAT JTI China Tobacco Other Data sources: 1. Mackay, J., and M. Eriksen. 2002. The Tobacco Atlas. World Health Organization. 2. World Health Organization http://www.wpro.who.int/media_centre/press_releases/pr_20050830.htm retrieved 3/7/06 18 Section C Globalization of the Tobacco Industry A Global Market 00 20 90 19 80 19 70 19 60 19 50 19 40 19 30 19 20 19 10 19 00 19 18 18 90 6000 5000 4000 3000 2000 1000 0 80 Number of cigarettes (billions) Global Cigarette Consumption Year Number of cigarettes consumed in 1998 (billions) Cigarette Consumption - Top 5 countries 1800 1600 1400 1200 1000 800 600 400 200 0 Indonesia Data source: Mackay, J and Eriksen, M. 2002. The Tobacco Atlas. World Health Organization. Russia Japan Country USA China 20 Looking Abroad “Tobacco exports should be expanded aggressively, because Americans are smoking less.” —Vice President Dan Quayle (1990) 21 Going Abroad Accessed on 2/21/06 from the National Center for Tobacco-Free Kids http://www.tobaccofreekids.org/reports/falsefriends/philipmorrisus.pdf 22 A Global Business 2004 Revenue & Profit Splits for British American Tobacco Net Sales Africa & Middle East 13% America-Pacific 28% Europe 26% Latin America 15% Data source: http://www.bat.com/oneweb/sites/uk__3mnfen.nsf/vwPagesWebLive/D O59NQAG?opendocument&SID=&DTC=&TMP=1, accessed 2/21/06 Asia-Pacific 18% 23 Factors Fueling Global Expansion Opening of formally closed economies in former Soviet Union, Eastern Europe, and China World Bank and IMF pressure to liberalize foreign investment laws and privatize state-owned companies Expansion of free trade areas 24 Trade Liberalization General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO) Regional Agreements (NAFTA) 25 Impact of Trade Liberalization Korea (1988–1989) 18.4%–30% in teenage boys 1.6%–8.7% teenage girls − 6% of market in one year Taiwan 50% increase in high school students in two years − 1% to 20% of annual sales in less than two years Japan (1990–1996) 26%–40% in 17 year old boys 5%–15% in 17 year old girls − 2% to 22% market share in ten years 26 Tobacco Leaf Production Leading Producers of Tobacco Leaves, 2001 2500 2000 1500 1000 500 wi Pa ki st an Ar ge nt in a al a M ee ce Gr Ita ly Tu rk ey Zi m ba bw e In do ne sia US A az il Br In di a na 0 Ch i Thousands of metric tons 3000 Data source: Mackay, J. and Eriksen, M. 2002. The Tobacco Atlas. World Health Organization. 27 Tobacco Leaf Trade Top 10 Tobacco Leaf Exporters, 1999 Thousand metric tons 350 300 250 200 150 100 50 0 Brazil USA Zimbabwe China Turkey India Greece Italy Malawi Argentina Top 10 Tobacco Leaf Importers, 1999 Thousand metric tons 300 250 200 150 100 50 0 Russia USA Germany UK Netherlands Japan France Ukraine Data source: Mackay, J. and Eriksen, M. 2002. The Tobacco Atlas. World Health Organization. Poland Egypt 28 Privatization Over 140 mergers and acquisitions between international companies and state-run companies A few examples − 2003 BAT buys Duvanska (Serbia) − 1997 PM buys Tabaqueira (Portugal) − 1994 PM buys Kharkov (Ukraine) − 1993 PM buys Klaipeda (Lithuania) − 1992 PM buys Czech Tabac − 1991 BAT buys Hungary’s State company 29 Foreign Investment—Ukraine Foreign tobacco firms invested $520 million between 1991 and 1999—1/4 of all foreign direct investment Over 90% manufacturing capacity now run by Western companies Platform for exporting to other countries throughout Central and Eastern Europe 30 Major Company Mergers 1999 − BAT buys Rothmans − Philip Morris buys Liggett − Japan Tobacco buys RJR International Transformed size and global reach of largest three companies 31 Marlboro Market Share (2001) Netherlands—39% France—30% Germany—30% Spain—15.5% Poland—7.2% Russia—2.0% Romania—1.8% Saudi Arabia—53.2% Mexico—42.5% 32 Marlboro’s Global Penetration Credit:© 1993 Lauren Goodsmith, Courtesy of Photoshare Image source: http://www.library.uiuc.edu/mortenson/images/marlboro.jpg accessed 2/21/06 33 Section D Industry Strategies I: Science and Public Relations Industry Strategies Advertising and promotion Buying science Public relations Philanthropy Lobbying Front groups Intimidation Legislation and public policy 35 Modeling Industry Activities Messages Media Manipulation Public Relations Undermining Science Issue Framing Usurping the Agenda Harassment Legal & Economic Intimidation Creating Illusion of Support Harassment Lobbying & Legislative Strategy Public Covert Science PR Lobbying Tactics Action Source: Trochim, W.M.K., Stillman, F.A., Clark,, P.I., Schmitt C.L. Development of a model of the tobacco industry’s interference with tobacco control programmes. Tob Control 2003; 12;140-147. 36 Undermining Science Messages Media Manipulation Public Relations Undermining Science Issue Framing Usurping the Agenda Harassment Legal & Economic Intimidation Creating Illusion of Support Harassment Lobbying & Legislative Strategy Public Covert Science PR Lobbying Tactics Action Source: Trochim, W.M.K., Stillman, F.A., Clark,, P.I., Schmitt C.L. Development of a model of the tobacco industry’s interference with tobacco control programmes. Tob Control 2003; 12;140-147. 37 Sworn Public Statements “I believe nicotine is not addictive.” — William Campbell (Phillip Morris, U.S. Congressional Hearings, 1994) Image source: http://www.nlm.nih.gov/hmd/frankenstein/frank_promise.html retrieved 2/8/06 38 Confidential Statements “Nicotine is addictive. We are, then, in the business of selling nicotine—an addictive drug effective in the release of stress mechanisms.” − Brown and Williamson, 1963 “…BAT should learn to look at itself as a drug company rather than as a tobacco company.” − BAT 1980 “ . . . [T]he entire matter of addiction is the most potent weapon a prosecuting attorney can have in a lung cancer/cigarette case. We can’t defend continued smoking as ‘free choice’ if the person was ‘addicted.’” − Tobacco Institute 1980 39 Standardised mortality rate for lung cancer per 100,000 Buying Science and Intimidation Cigarette smokers 32-79 30 Non smoker Familial passive smoking (+) 15-50 20 10 Non smoker Familial passive smoking (-) 8-70 Total 108,905 Letters to BMJ regarding the 1981 Hirayama Study: − Misclassification X Active smoking X Passive smoking − Confounding − Statistical error − Plausibility 0 21895 69645 17366 Population at enrollment (Non smoker wives of non smoker husbands) (Non smoker wives of husbands with smoking habits) (Women with smoking habits) Data source: Hirayama T. 1981. Non-smoking wives of heavy smokers have a higher risk of lung cancer: a study from Japan. BMJ 282:183–5 40 The Attack on Meta-Analysis Tweedie, R.L. & K.L. Mengersen. 1995. Meta-analytic approaches to doseresponse relationships, with application in studies of lung cancer and exposure to environmental tobacco smoke. Statistics in Medicine 14: 545-569. Excerpt from Acknowledgements – “The paper was completed at Colorado State University, with partial support from several tobacco companies; the methods and analysis here are however entirely those of the authors and should not be otherwise ascribed.” Bailar, J.C. 1997. The promise and problems of meta-analysis. New England Journal of Medicine 337 (8): 559-61. Fleiss, J.L. & A.J. Gross. 1991. Meta-analysis in epidemiology, with special reference to studies of the association between exposure to environmental tobacco smoke and lung cancer: a critique. Journal of Clinical Epidemiology 44 (2): 127-139. Excerpt from Acknowledgements – “This research was supported by a grant from The Tobacco Institute, Washington, D.C., USA. We thank Dr Myron Weinberg, President of the Weinberg Group/WASHTECH, for encouraging us to develop this critique.” 41 Junk Science Gori, G.B., J.C. Luik. Passive Smoke: The EPA’s betrayal of science and policy. The Fraser Institute. Milloy, S.J. 1995. Science without sense. The risky business of public health research. Cato Institute, Washington D.C. 42 International Agency for Research on Cancer (IARC) “The massive effort launched across the tobacco industry against one scientific study is remarkable.” Source: Ong, E. K. and Glantz, S. A. (2000, April 8). Tobacco industry efforts subverting International Agency for Research on Cancer’s second-hand smoke study. The Lancet 355 (9211): 1253–1259. 43 Industry Tactics to Undermine IARC “Delay the progress and/or release of the study.” “Affect the wording of its conclusions and official statement of results.” “Neutralize possible negative results of the study . . .” “Counteract the potential impact of the study on government policy, public opinion, and actions by private employers and proprietors.” − WHO Expert Panel on Industry Documents 44 Philip Morris and SHS “Public health officials have concluded that secondhand smoke from cigarettes causes disease, including lung cancer and heart disease, in non-smoking adults, as well as causes conditions in children such as asthma, respiratory infections, cough, wheeze, otitis media (middle ear infection) and Sudden Infant Death Syndrome. In addition, public health officials have concluded that secondhand smoke can exacerbate adult asthma and cause eye, throat and nasal irritation.” Source: Philip Morris USA website http://www.philipmorrisusa.com/en/health_issues/secondhand_smoke.asp Retrieved 2/21/06 45 Japan Tobacco and SHS “. . . available evidence does not support the assertion that environmental tobacco smoke (ETS) is harmful to health.” — Japan Tobacco Source: Submission to the WHO Public Hearings on the Framework Convention on Tobacco Control, October 2000 46 Public Relations Messages Media Manipulation Public Relations Undermining Science Issue Framing Usurping the Agenda Harassment Legal & Economic Intimidation Creating Illusion of Support Harassment Lobbying & Legislative Strategy Public Covert Science PR Lobbying Tactics Action Source: Trochim, W.M.K., Stillman, F.A., Clark,, P.I., Schmitt C.L. Development of a model of the tobacco industry’s interference with tobacco control programmes. Tob Control 2003; 12;140-147. 47 Public Statements on Youth “. . . would be willing to support prevention efforts that affected our bottom line. Absolutely . . . if we can come up with a program that . . . prevents all teenagers from smoking cigarettes we would be delighted to see that happen. And if that meant that fewer people smoked as adults, so be it.” — Corky Newton, Vice President of Corporate and Youth Responsibility Programs, Brown and Williamson Source: Transcript of meeting with SWAT (Students Working Against Tobacco), U.S., November 6, 1999. Cited in PR in the Playground, ASH UK, 2000. 48 Private Statements on Youth “We [Philip Morris] refined the objective of a juvenile initiative program as follows: maintain and proactively protect our ability to advertise, promote, and market our products via a juvenile initiative.” “Juvenile initiative = a series of programs and events to discourage juvenile smoking because smoking is an adult decision.” Source: Cathy Leiber (18 May 1995), Philip Morris International, Youth Initiatives. Bates No. 2503019011/14. Cited in PR in the Playground, ASH UK, 2000. 49 Minimum Age 18 Image source: http://kumu.icsd.hawaii.gov/health/healthylifestyles/tobacco/tpeprtoc.htm, retrieved 21/2/06 Image source: http://www.dhss.delaware.gov/dhss/dph/ dpc/youthaccess.html, retrieved 21/2/06) 50 Changing the Issues Smoking manners “Smoking is prohibited in public places like railway stations, airports, museums and art galleries, except for designated smoking areas. There are some wards ("ku" in Japanese) that have specific rules in the form of bylaws concerning smoking. If these regulations are broken, the smoker is liable to pay a fine. There is a provision of punishment for smoking on the street or in public places without carrying a portable ashtray as well as for throwing away cigarette butts.” Source: http://www.tourism.metro.tokyo.jp/english/basic/basic09.html accessed 2/23/06 51 Philanthropy 52 Corporate Social Responsibility “… Because for us, economic performance is not the only measure of our success. Honesty, integrity, and social responsibility are just as important to the way we measure ourselves.” − Philip Morris International “Our companies are committed to providing consumers with pleasure through excellent products and to demonstrating that we are meeting our commercial goals in ways that are consistent with reasonable societal expectations of a responsible tobacco group in the 21st century.” − British American Tobacco 53 BATS Social Reports Argentina Australia Brazil Germany Hong Kong Hungary Japan Korea Malaysia Mexico New Zealand Nigeria Poland Russia South Africa USA 54 Today on Addiction PHILIP MORRIS USA/PHILIP MORRIS INTERNATIONAL TOBACCO ISSUES Cigarette Smoking: Health Issues for Smokers Cigarette Smoking and Addiction We agree with the overwhelming medical and scientific consensus that cigarette smoking is addictive. It can be very difficult to quit smoking but this should not deter smokers who want to quit from trying to do so. − http://philipmorris.com/default.asp Continued 55 Today on Addiction PHILIP MORRIS USA/PHILIP MORRIS INTERNATIONAL TOBACCO ISSUES Cigarette Smoking: Health Issues for Smokers Cigarette Smoking and Disease in Smokers There is an overwhelming medical and scientific consensus that cigarette smoking causes lung cancer, heart disease, emphysema, and other serious diseases in smokers. Smokers are far more likely to develop serious diseases, like lung cancer, than non-smokers. There is no "safe" cigarette. These are and have been the messages of public health authorities worldwide. Smokers and potential smokers should rely on these messages in making all smoking-related decisions. − http://philipmorris.com/default.asp 56 Public Health Advocates? If you decide to quit smoking… QuitAssist Information Resource Philip Morris USA “Introducing QuitAssist QuitAssist is an information resource sponsored by Philip Morris USA. It’s designed to help you connect with a wealth of expert quitting information available – usually for free – from government agencies, universities, and respected nonprofit organizations. This QuitAssist guide points the way to programs, telephone quitlines, websites, guides, and more that can help you find your own path to success. You can also read this guide at QuitAssist Online. Log on through www.philipmorrisusa.com From there, you can link directly to dozens of resources to help you move ahead and leave cigarettes behind.” Never mentions the word “addiction” Source: http://philipmorrisusa.com/en/quitassist/index_flash.asp accessed 2/23/06 57 Truth in Advertising Aggressively markets the only legal product that, when used as intended by its manufacturers, eventually kills half its users 58 Section E Industry Tactics II: Industry Advertising, Promotion, and Sponsorship Marketing “We refined the objective of a juvenile initiative program as follows: Maintain and proactively protect our ability to advertise, promote, and market our products via a juvenile initiative.*“ — Cathy Leiber, PM International, 1995 Notes: *Juvenile initiative = a series of programs and events designed to discourage juvenile smoking because smoking is an adult decision. 60 Industry Expenditures on Advertising Amount spent $million Changes in cigarette marketing expenditure in the USA 1970-99 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1970 1975 1980 1985 1990 1995 2000 Data source: Mackay, J. & M. Eriksen. 2002. The Tobacco Atlas. World Health Organization. 61 Communicating Disease According to the trade magazine “Advertising Age” the Marlboro man was the most powerful advertising image of the 20th century Image source: http://www.cdc.gov/tobacco/sgr/sgr4kids/adbust.htm retrieved 2/23/06 62 Advertising Strategies Targeting women Targeting youth Selling America Sponsorship of sporting events and concerts Contests and give-aways Brand stretching 63 Grand Prix Image source: http://www.nas.nasa.gov/About/Education/Racecar/development_emobig.html retrieved 2/23/06 64 Section F Industry Tactics III: Lobbying, Legislation, and Litigation Lobbying and Legislation Messages Media Manipulation Public Relations Undermining Science Issue Framing Usurping the Agenda Harassment Legal & Economic Intimidation Creating Illusion of Support Harassment Lobbying & Legislative Strategy Public Covert Science PR Lobbying Tactics Action Source: Trochim, W.M.K., Stillman, F.A., Clark,, P.I., Schmitt C.L. Development of a model of the tobacco industry’s interference with tobacco control programmes. Tob Control 2003; 12;140-147. 66 A Long History of Lobbying 1890—Tobacco appeared in the U.S. Pharmacopeia (official U.S. government listing of drugs) 1905—Dropped from list before the 1906 Food and Drug Act (legislation that created the Food and Drug Administration) 2005—FDA cannot regulate nicotine in tobacco 67 Political Lobbying: U.S. Four of the twelve most generous donors to the 2000 Bush Campaign (#1 Phillip Morris, RJR, UST, Brown and Williamson) $18 million to federal candidates between 1997 and 2003 − 82% to Republican candidates and committees U.S. $43 million spent to counter McCain bill (highest amount ever spent on a sustained issue advocacy campaign in the U.S.) 68 The Latin Project: Argentina Counter regulations aimed at creating smoke-free workplaces and public places − September 30, 1991—Neri Bill approved by Senate (advertising, promotion and sampling ban, limit public smoking) − Industry campaign—media debates, briefing packages to Senators and the President, paid chief scientific advisor to President − October 13, 1991—President vetoes law 69 The Czech Republic June, 2001 Philip Morris presents members of the Health and Social Affairs Committee of the Czech Parliament, a "study" concluding that smoking is good for the Czech government's finances because of the savings from early deaths caused by smoking 70 Preemption “We could never win at the local level. . . . The reason is [that] all of the health advocates, the ones that I unfortunately used to call ‘health nazis,’ they’re all local activists who run the little political organizations. . . . So the Tobacco Institute and the tobacco companies’ first priority has always been to preempt the field, preferably to put it all on the federal level, but, if they can’t do that, at least on the state level, because the health advocates can’t compete with me on the state level.” — Victor Crawford, former Maryland state legislator 71 Industry Self-Regulation? British American Tobacco 11 September 2001 INTERNATIONAL TOBACCO PRODUCTS MARKETING STANDARDS The parties subscribing to these Standards (the “Participants”) wish to record their belief that tobacco products should be marketed in a responsible manner and that reasonable measures should be taken to ensure that the promotion and distribution of tobacco products is: • directed at adult smokers and not at youth, and • consistent with the principle of informed adult choice 72 International Tobacco Marketing Standards “We have analyzed the nine-page agreement and believe that the multinationals’ strategy is proactive and is a way to improve their image . . .” “Also, by proactively setting new international tobacco marketing standards, the multinationals could be trying to counter a number of proposals that the WHO has been working on to curb the amount of cigarettes that are consumed on an international level.” “. . . Interestingly, in many countries the existing laws or industry codes are already more restrictive than the provisions of the international marketing standards.” Source: International Tobacco Marketing Standards, September 2001 73 Creating the Illusion of Support Messages Media Manipulation Public Relations Undermining Science Issue Framing Usurping the Agenda Harassment Legal & Economic Intimidation Creating Illusion of Support Harassment Lobbying & Legislative Strategy Public Covert Science PR Lobbying Tactics Action Source: Trochim, W.M.K., Stillman, F.A., Clark,, P.I., Schmitt C.L. Development of a model of the tobacco industry’s interference with tobacco control programmes. Tob Control 2003; 12;140-147. 74 Front Groups It has been a common practice of Big Tobacco to use third parties or to create front groups "to be out in front fighting" smokefree policies, while the industry remains behind the scenes, protecting its public image. Buying citizen involvement (letter writing, phone banking campaigns) by supporting front groups “Hand” of the industry remains hidden -Americans for Nonsmokers’ Rights http://www.nosmoke.org/getthefacts.php?dp=d21|d 23 accessed 2/23/06 . 75 Industry Front Groups and Allies "I've learned from experience that as soon as I'm identified as a representative of the Tobacco Institute, I lose all credibility. They just sneer us away...so I try to work behind the scenes whenever I can." - Ron Saldana, lobbyist for the Tobacco Institute, 8/24/86 Source: http://www.no-smoke.org/getthefacts.php?dp=d21|d23 accessed 2/23/06 76 International Tobacco Growers Association ITGA “[Establish] ITGA [International Tobacco Growers Association] [as a] front group for our third world lobby activities at WHO” Source: Report of the WHO Committee of Experts on Tobacco Industry Documents Source: Report of the WHO Committee of Experts on Tobacco Industry Documents 77 Legal and Economic Intimidation Messages Media Manipulation Public Relations Undermining Science Issue Framing Usurping the Agenda Harassment Legal & Economic Intimidation Creating Illusion of Support Harassment Lobbying & Legislative Strategy Public Covert Science PR Lobbying Tactics Action Source: Trochim, W.M.K., Stillman, F.A., Clark,, P.I., Schmitt C.L. Development of a model of the tobacco industry’s interference with tobacco control programmes. Tob Control 2003; 12;140-147. 78 Intimidating Johns Hopkins “Tobacco Industry in Fight To Get Universities’ Data Legal Moves Termed Fishing Expedition” -The New York Times, Jan. 20, 2002. “The tobacco companies have commenced nothing short of a campaign of harassment against the academic institutions that discovered smoking is injurious to the public health.” − Estelle A. Fishbein, general council for Johns Hopkins University 79 Industry Harassment PUBLIC HEALTH MATTERS Public Health Under Attack: The American Stop Smoking Intervention Study (ASSIST) and the Tobacco Industry - White, J. and L.A. Bero 80