Lorraine Fry, Executive Director Non-Smokers Rights Association Smoking & Health Action Foundation. PTCC KE Conference February 10, 2016

Transcription

1 Lorraine Fry, Executive Director Non-Smokers Rights Association Smoking & Health Action Foundation PTCC KE Conference February 10, 2016

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3 Still making billions in profits in Philip Morris International Inc. (Rothman s, Benson & Hedges) PMI PROFIT: $9.54 billion CAD (-12.6%) RBH market share in Canada: 37.6% 2. British American Tobacco (Imperial Tobacco Canada) BAT PROFIT: $8.45 billion CAD (-17.7%) ITC market share in Canada: 50.2% 3. Japan Tobacco Inc. (JTI-MacDonald) JTI PROFIT: $5.42 billion CAD (+1.1%) JTI-Macdonald market share in Canada: 12.2%

4 How is the Canadian tobacco industry reaching potential and current smokers? Tobacco companies allowed to advertise in two venues only in Canada: Direct mail, addressed to a named adult Signs in a place where young persons are not permitted by law (i.e. bars) For this reason, tobacco companies have referred to Canada (& Australia) as the dark markets

5 Illegal advertising; legal advertising in bars Cross-border advertising: U.S. magazines Focusing on new products & package design as prime marketing vehicle Flavoured tobacco products Payments and incentives to retailers Movies, television, video games, music videos New promotions: bars, direct mail, internet, social marketing Discount cigarettes Still buying goodwill and legitimacy via philanthropic funding, CSR initiatives (ITL)

6 Outside washrooms at Remy's, restaurant Toronto, Sept. 27, 2013 Women's washroom, Remy s restaurant

7 Taken on the property of the On property of Ottawa Youth Hostel summer 2012 Part of a Pride Week event

8 Taken on the property of the On property of Ottawa Youth Hostel Ad for summer Number 2012 Seven in washroom of bar July 2015

9 Sport Illustrated, October 2013 Playboy, Rolling Stone magazines, October 2013

10 Cross-border Advertising - U.S. Magazines: Vogue Magazine, Feb advertising for Natural American Spirit cigarettes

11 Industry Promotion: The Package

12 The product itself... is very interesting, because in the cigarette business there is very little to distinguish, particularly in Canada, because we all use the same kind of tobacco. Put it in a package and put a name on it, and then it has a lot of product characteristics. (Don Brown, Vice-President, Imperial Tobacco Canada, 1989)

13 Under conditions of total ban, pack designs have enormous importance. Therefore the most effective symbols, designs, colour schemes, graphics and other brand identifiers should be carefully researched. An objective should be to enable packs, by themselves, to convey the total product message. (British American Tobacco, Guidelines on Communications Restrictions and New Opportunities in Marketing, 1979)

14 New logos, colours, inks Numbers, colouring schemes replace banned descriptors light and mild New package sizes and shapes Pack of 20s replacing 25s Novel opening styles Fliptops replacing slide-and-shell Increased use of descriptive phrases on pack inside and out, cellophane overwrap, stickers Colours, logos on pack liner, cigarette filter, cigarette paper

15 Typical slide-and-shell cigarette pack, circa 2005

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18 Package Design: New Sizes and Shapes Goal: To set du Maurier apart from competition; reinforce image as Canada s leading premium brand Timing: Total tobacco sales plummeting; du Maurier losing market share to discount brands Result: 2% increase in market share shortly after launch (Barezzi Award, 2006)

19 Package Design: New Sizes and Shapes

20 Package Design: New Sizes and Shapes

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22 Vogue superslims

23 Package Design: Benson & Hedges Superslims

24 Player s Rich & Player s Smooth get rid of the warnings altogether!

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26 John Player Standard Using the inside of the pack to convey brand image

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28 Flavoured Tobacco: Cigarillos

29 Prime Time cigarillos became Prime Time Plus cigars, available in fewer flavours Bullseye cigarillos became Bullseye Extra cigars, available in 6 most popular flavours

30 Flavoured shisha sold with no health warnings Flavoured oral tobacco

31 Implementation dates for flavours ban including menthol: Nova Scotia May 31, 2015 New Brunswick Jan. 1, 2016 Alberta June 1, 2015 for all flavours, except Sept. 30, 2015 for menthol Quebec Aug. 26, 2016 Ontario Jan. 1, 2016, except Jan. 1, 2017 for menthol PEI currently developing regulations

32 Imperial Tobacco has filed a legal challenge against Nova Scotia's menthol ban. Menthol products have been in the market for over 80 years and data shows that they are preferred by an older demographic. Instead of buying them from responsible retailers who comply with the law, the adult smokers who choose to smoke menthol products will turn to criminals to purchase their products. "It is not often that illegal tobacco dealers get a new business opportunity presented to them on a silver platter," said Ms. Ferland

33 Skoal Citrus Flavour became Crisp Blend Skoal Cherry Flavour became Rich blend

34 New Products: Camel Crush BOLD Camel increased its market share among year olds by 21 percent a gain attributed to the Camel Crush cigarette which switches from plain to menthol when you squeeze it.

35 New Products: RBH Menthol Capsule cigarettes in Canada Belmont Hybrid Next Snap (Québec Next Klik) Benson & Hedges Unison Canadian Classics Crush

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37 Flavourings - easy for kids to smoke Misperception of harm Relative ease of access Social and exotic appeal

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40 New Products: Dissolvable Tobacco

41 New Products: Electronic Cigarette (e -cigarettes)

42 Disposable Rechargeable with pre-filled cartridges

43 Rechargeable Refillable with e-liquid

44 Rechargeable Refillable with e-liquid

45 E-cigarettes are unproven cessation aids: should have to undergo same rigorous testing for safety/ efficacy as other NRTs E-cigs pose health risks to user/others E-cigs have potential to undermine major tobacco control gains Opponents E-cigarettes are clean drug delivery device that can satisfy smokers addiction to nicotine and to smoking behaviours Even if not fully known, health risks of e-cigarettes are dramatically lower than risks of cigarettes Proponents

46 Imperial Tobacco launches Jai Feb 15; pending medical licence for Puritaine Feb 15; buys Blu 14; buys Dragonite Sept 13 BAT division Nicoventures Voke inhaler granted UK medical licence Sept 14; launches Vype July 13 PMI buys Nicocigs last half of 2014 Japan Tobacco buys E-Lites Jun 14; markets Ploom 2012 Altria buys Green Smoke Feb 14; Altria subsid NuMark launches MarkTen brand Aug 13 Lorillard buys Skycigs Oct 13; Blu 2012 RJ Reynolds Vapor launches Vuse Jun 13

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48 Toronto subway, Oct 2013 Sports Illustrated, winter th Anniversary Swimsuit Issue

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50 Recent approval of an e- cigarette-type product made by a tobacco company. British American Tobacco s Voke resembles an e- cigarette Produces no visible vapour and functions like a nicotine inhaler Voke is a nicotine inhaler for smokers who want to reduce, replace or stop smoking. (

51 Tobacco Japan Tobacco (Ploom) Philip Morris International Reynolds American Cannabis Ploom

52 Zerostyle series smokeless cigarette Cartridges filled with granulated tobacco leaf that fits into a pipe-shaped holder that user inhales Mint (May 2010); Bitter Leaf (Dec 11); Blue Mint (May 13) Zerostyle Stix (Nov 2013): Blue mint; Brown flavor; Pink flavor; Green mint Zerostyle snus (July 2013) Pouches of tobacco powder user inserts into mouth

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54 Tobacco companies developing an array of less harmful products to suit the needs of a broad spectrum of smokers Some of these products contain tobacco, but unlike traditional cigarettes, they heat it not burn it. Philip Morris International (PMI): A strong portfolio of Reduced Risk Products to address all adult smoker preferences

55 Marlboro HeatStick (tobacco product) + iqos system (electronic holder) Introduced in two test cities in Q Japan, Italy National expansion in 2015; launch in other markets

56 BAT, Leading in Next Generation Products, Investor Day presentation, September 2015

57 BAT, Leading in Next Generation Products, Investor Day presentation, September 2015

58 BAT, Leading in Next Generation Products, Investor Day presentation, September 2015

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62 Based on large-scale rigorous studies, latest estimate 37% of new young U.S. smokers recruited to smoke by exposure to smoking in the movies Actions that would eliminate the depiction of tobacco use in movies, which are produced and rated as appropriate for children and adolescents, could have a significant effect on preventing youth from becoming tobacco users. (Surgeon General 2014) Influence of smoking in film now especially strong in Canada since we have banned almost all other forms of promotion Number of youth-rated films with tobacco depictions shown in theatres higher in Canada than US: OFRB classifies more movies as 14A or PG (18A here) that are rated R in US. Films delivering 86% of tobacco impressions were accessible to adolescent filmgoers in Ontario but to only 55% of adolescents in the USA

63 WHO, CDC, NCI, US Surgeon-General Reports all endorse the same 4 point plan: 1. Rate new smoking movies 18A 2. Certify no payoffs 3. Require strong anti-smoking ads before any film with tobacco presence 4. Stop identifying tobacco brands 5. Make media productions with smoking ineligible for public subsidies Evidence is sufficient to conclude that there is a causal relationship between depictions of smoking in the movies and smoking initiation (Surgeon General 2012)

64 Internet Marketing

65 Internet Marketing I would die for these cigarettes. I ve been smoking them for about a year now and they re awesome!

66 Social Network Marketing

67 Tobacco products being promoted in new smartphone app medium global reach, huge consumer base of various age groups and underdeveloped regulation Study published in Tobacco Control Journal Jan. 2014: search of Apple App Store and Android Market for prosmoking apps in Feb Results: 107 pro-smoking apps identified 42 from Android Market and downloaded by over 6M users. Some with explicit images of cigarette brands

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69 ITC still donating to the arts and cultural sector & philanthropic organizations - gives the industry legitimacy and visibility, generates goodwill; announcements give companies favourable publicity Under the Framework Convention on Tobacco Control (FCTC), donations by tobacco companies for socially responsible causes considered a form of sponsorship promotion

70 Fighting contraband/opposing tax increases Opposing new tobacco control measures Litigating Maintaining close relationships with retailers Using third parties/front groups to convey their message

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72 Months of pressure from media and health groups Government reversed position on December 30, 2010 and announced new warning labels Imperial Tobacco Canada denounced decision, claiming government ignoring today s real tobacco problem contraband cigarettes, ignoring fact that vast majority of cigarettes smoked in Canada supplied by legal manufacturers

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74 Imperial Tobacco/BAT saying contraband such a big problem that governments shouldn t be doing anything on tobacco control other than working on measures to reduce contraband Real problem is not the regulated and enforced legal industry However, at the same time BAT making presentations to investors saying contraband down by almost 50% in Canada; BAT says dramatic decline due to increased enforcement and public awareness

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76 We fully support any form of evidence-based regulation but there is no proof to suggest plain packaging of tobacco products will be effective in discouraging youth initiation or encouraging cessation by existing smokers. Plain packaging would only exacerbate an already significant illicit tobacco trafficking problem In addition, Imperial Tobacco Canada is challenging in court the constitutionality of government s decision to increase the size of graphic health warnings to 75% on Canadian tobacco products. This challenge is on-going.

77 Imperial Tobacco Canada The Hill Times February 1, 2016

78 Canadian tobacco industry working actively with the Canadian Convenience Stores Association (CCSA) and the National Coalition for Action on Contraband Tobacco (NCACT) Ontario Convenience Stores Association (OCSA) has traveled to many Ontario cities to bring its anticontraband message

79 BAT contraband campaign in Canada: front groups are key

80 National Coalition Against Contraband Tobacco website

81 Ottawa Hill Times ad, October 21, 2013

82 Globe and Mail ad, November 3, 2015

83 NCACT/public relations firm Dawson Strategic & Macdonald-Laurier Inst. held 2 workshops on illicit tobacco trade in ON Nov. 2014, March 2015 Claims made that current levels of contraband were up to 40 and 50% of total cigarette markets in Quebec and Ontario respectively Key messages: need to close the wide price differential between legal and illicit cigarettes and to lower taxes and increase efforts/resources on the enforcement front.. Macdonald-Laurier Institute Executive Director Brian Lee Crowley

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85 OCSA ipad campaign, 2013

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87 Campaign against higher taxes: The Ontario government recently increased taxes on legal tobacco products. Higher taxes make cigarettes more expensive and drive more people to buy illegal, contraband cigarettes. More contraband tobacco means that your community will become less safe. Small businesses will continue to close, more youth will gain access to tobacco products and organized crime will grow. Add your name below to tell the Ontario government that contraband tobacco HURTS your community, and that you want to see them ACT to correct this problem.

88 Campaign to Oppose Bill 45 - a ban on all flavoured tobacco products, including menthol NCACT:" additional changes to the legal market, such as a ban on menthol cigarettes, will be counterproductive, serving only to line the pockets of the criminals involved in the trade and undermining the governments overall aims. OCSA: Ontario Retailers Condemn Inclusion of Menthol in Flavour Ban Legislation "Just one week after Minister Sousa tabled the Fall Economic Statement and vowed to work towards correcting contraband, the government introduces a ban that will flood the illegal market with new customers," says Dave Bryans, CEO of the Ontario Convenience Stores Association (OCSA). "They were aware that menthol currently exists within the contraband market and yet still proceeded with this legislation.

89 Campaign to Oppose Bill 45 - a ban on all flavoured tobacco products, including menthol CCSA: Retailers Frustrated by Misleading Menthol Stats Contraband tobacco the largest contributor to youth smoking Canada's convenience store retailers believe that statistics are being used improperly while provincial governments consider a menthol ban and are diverting attention from the real culprit behind youth smoking: inexpensive and easily obtained contraband tobacco. OKBA: Menthol ban punishes retailers, rewards organized crime Members of the strong Ontario Koreans Businessmen's Association (OKBA) are concerned that such a ban will only serve to further grow the contraband tobacco market, and hurt small businesses in Ontario. With approximately 40% of all tobacco being consumed in Ontario coming from the illicit market, the ban of yet another currently longstanding legal product will only lead to increased profits for illegal traffickers and harder times for law abiding family businesses.

90 Who are the real terrorists? The cigarette makers. C. Everett Koop Former U.S. Surgeon-General

91 Lorraine Fry Non-Smokers Rights Association/ Smoking and Health Action Foundation