Perspectives in Health Magazine
The Magazine of the Pan American Health Organization
Volume 8, Number 1, 2003

The Tobacco Files

For adults only?

A smoker buys cigarettes at a corner store and shares his purchase with a female friend. Most long-term smokers developed their habit before the age of 18.

Facing growing public sympathy in Latin America and the Caribbean for stronger tobacco control, the industry made special efforts beginning in the 1990s to appear amenable to, even cooperative with, "reasonable" regulation. A 1993 memo by Cathy Leiber, Philip Morris’s director of corporate affairs for Latin America, describes the industry’s approach to the particularly sensitive issue of youth smoking:

Taking into consideration the emerging adverse legislative climate in the region, we have an opportunity to create good will for the tobacco industry by going public with a campaign to discourage juvenile smoking. Our objective is to communicate that the tobacco industry is not interested in having young people smoke and to position the industry as a "concerned corporate citizen" in an effort to ward off further attacks by the anti-tobacco movement.

By 1997, Leiber was describing the development and promotion of model legislation on minimum age for cigarette purchase, for use throughout the region. The idea was that "to continue to protect our ability to market and advertise to adults, we must be preemptive, proactive, communicative and cooperative with government officials."

Yet during the same period, industry marketing plans for the region refer openly and repeatedly to the "Young Adult Smoker" or "Young Adult Urban" market segments. The vast majority of the industry documents define these groups as 18- to 24- or 25-year-old smokers, but several point to the deliberate targeting of so-called "starters." One such document is a 1992 brand strategies report by the Argentine BAT affiliate Nobleza Piccardo:

Camel is the U.S. International full flavour cigarette for men who see themselves as independent, self-assured and individualistic in their lifestyle. The target smoker is male, urban, aged 19 to 24 ... Starters are an important part of the target.

Similarly, a 1994 analysis of Marlboro in the region describes the brand as "#1 in terms of starters and young adult smokers."

A street vendor sells cigarettes and household items to commuters in a Lima suburb. Smuggled cigarettes are an important market segment for the industry.

As a result of other documentary investigations, UK officials have launched an investigation of BAT involvement in smuggling in Asia and Latin America. In addition, authorities from Canada, Colombia, Ecuador, the European Union and the United States have filed lawsuits to recoup tax revenues they believe have been lost to the illegal cigarette trade.

Analysis of industry documents in Latin America and the Caribbean shows that strategies for competing in and expanding so-called "duty not paid" (DNP) markets could be traced to the highest corporate levels. In a 1993 memo, BAT’s regional manager for Latin America, Keith Dunt, wrote:

Due to the sensitivity, management and co-ordination of the DNP business, all brand should be concentrated on one operator per channel.… There should be complete clarification in the coordination and management of the DNP.… Due to the importance of this business in the region, we propose that a "Border Trading Group" be formed to monitor and take decisions, when appropriate, to protect BAT Industries’ interests. It is recommended that there be one member from Souza Cruz, one from Nobleza Piccardo, and one from BATCo.

Other documents discuss the contraband market in great detail with respect to product pricing, competition for market share and contributions to total sales.

Yet the ethical dilemma presented by the industry’s active participation in smuggling was not ignored. In a 1992 memo, Dunt wrote to Nobleza Piccardo, BAT’s affiliate in Argentina: "We will be consulting here on the ethical side of whether we should encourage or ignore the DNP segment. You know my view is that it is part of your market and to have it exploited by others is just not acceptable."

A 1992 memo from BAT’s Mark Waterfield to Delcio O. Laux, then president of C.A. Bigott in Venezuela, discussed the companies’ strategy for straddling the ethical fence on the issue, preserving the image of a good corporate citizen while maintaining its presence in the illegal trade:

It is recommended that a BATCO Company is given responsibility to develop the group share of the others DNP segment of the Venezuelan market. It would be unappropriate [sic] for Bigott’s marketing staff to develop the strategy to increase share of this segment. The role of Bigott is to persuade the authorities to close the borders and confiscate DNP product which is transmitted into Venezuela.

Similarly, a 1992 BAT marketing document confirms the involvement of both Philip Morris and BAT in supplying Argentina's illegal market through their affiliates in

Brazil and Paraguay. The document glibly rationalizes this involvement, noting that "contraband is 9 percent of the Argentine cigarette market and 46 percent of the market in NEA [northeast Argentina]. DNP cigarettes are a fact of life and almost institutionalized. DNP has at no recent stage been significantly restrained by the authorities. DNP volumes are more likely to grow than to reduce in the foreseeable future."

The writer notes that the potential market for DNP is even greater and that "assuming there is an unsatisfied market, our priority is to cover this with brands which have a future in the Argentine market."

Aside from these clearly illegal activities, it is perhaps not surprising that the tobacco industry has employed aggressive strategies in Latin America and the Caribbean—as it has elsewhere—to defend its products and its ability to promote them as it sees fit. Any industry might be expected to do the same; the difference is that tobacco is the only product that, when used legally and as directed, will kill up to half of those who consume it.

Yet the revelations about its past deceptions should make it increasingly difficult for the tobacco industry to develop new arguments and to conceal the true dangers of its products and its marketing practices. For public health advocates, the hope is that growing awareness—among policymakers, government officials and consumers throughout the region—will translate into growing support for tougher tobacco controls.

Donna Eberwine is editor of Perspectives in Health. Stella Aguinaga Bialous is a U.S.-based consultant and researcher who has published extensively on tobacco industry documents and tobacco control issues. Stan Shatenstein, of Canada, is a contributing editor for the journal Tobacco Control and editor of the online bulletin GLOBALink News & Information.

Additional Information:
Friends in high places

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