Analyst reveals truth about tobacco companies’ international marketing code – it’s a sham.



print
Thursday 01 November 2001

Action on Smoking and Health (London) press release

Embargo: Thursday 1st November 2001

Indiscreet stock analyst reveals truth about tobacco companies’ new international marketing code – it’s a sham

A tobacco stock analyst has privately revealed that a global marketing code proposed by BAT, Philip Morris and Japan Tobacco International is a sham – designed to improve their image, head off legislation, but without any meaningful restraint on tobacco marketing.

 

The voluntary code has been announced with much hype and public relations, but critics such as ASH dismissed it as meaningless and ineffective – aimed at sidetracking the WHO tobacco convention. Now it has emerged that Bonnie Herzog, Wall St tobacco analyst for Credit Suisse Group, agrees.  In a research note obtained by ASH she reassures investors as follows:

 

“We have analysed the 9-page agreement and believe that the multinationals’ strategy is proactive and is away to improve their image. These international marketing standards partly came as a result of increasing pressure from governments worldwide and anti-smoking activists.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.

”One would think that the elimination of certain marketing practices would effectively decrease advertising spending and hence increase margins, however we believe the modest amount the multinationals actually spend on these types of practices will be redirected into other types of marketing promotions i.e.,point of sale activity.

 

Commenting on this support from this unexpected source, Clive Bates, Director of Action on Smoking and Health said:

 

“When Wall Street is reassuring investors that this voluntary marketing code is no threat to business as usual for the tobacco multinationals, then it’s time to consign the whole sordid initiative to the waste bin.

 

“As life gets harder for them in the West, the tobacco companies are aggressively targeting developing countries and Eastern Europe.  The shareholders need to be reassured that nothing will stop the relentless search for new customers.

 

“The tobacco industry has always been a reliable backer of measures that will not work but look good.  There is no evidence that the measures proposed in their code will work, and plenty of evidence that the only way to deal with tobacco advertising is to ban it completely.

 

“One of the biggest threats to the international tobacco industry is that governments will come together under the auspices of the WHO and introduce a global ban on tobacco advertising.  This voluntary code was designed to derail the WHO convention and mislead governments.

 

“For the UK we need legislation that bans tobacco advertising completely.  The government has disgraced itself by dithering over legislation that on its own figures would save 3,000 lives and £40 million of NHS expenditure each year.

 

Notes:

[1] www.bat.com

[2] The analyst’s report is on the ASH web site at www.ash.rg.uk/html/advspo/pdfs/csfb.pdf

[3] The next meeting of the WHO Convention is 22-28 November in Geneva. The ASH briefing on this is at www.ash.org.uk/?international

[4] The UK tobacco advertising legislation could be rescued by the House of Lords -the second reading of a private members bill (Lord Clement Jones L-D) is 2nd November.

Contact: Clive Bates +44 20 7739 5902(w)  +44 77 6879 1237(m) – ISDN available