Of­fi­cials fume as Philip Mor­ris eyes youth

Kuwait Times - - ANALYSIS -

SK Arora spent more than three years trudg­ing through the In­dian sum­mer heat and mon­soon rains to in­spect tobacco kiosks across this sprawl­ing megac­ity, tear­ing down cig­a­rette ad­ver­tise­ments and hand­ing out fines to store own­ers for putting them up. But as fast as he re­moved the col­or­ful ads, more ap­peared. The chief tobacco con­trol of­fi­cer at the Delhi state gov­ern­ment, Arora asked the ma­jor cig­a­rette com­pa­nies to put a stop to the cat-and-mouse rou­tine. In of­fi­cial let­ters and face-to-face meet­ings, he told them In­dia’s tobacco con­trol laws barred such pub­lic ad­ver­tis­ing and pro­mo­tion of cig­a­rettes.

That in­cluded the In­dian arm of Philip Mor­ris In­ter­na­tional Inc, the world’s largest pub­licly traded tobacco com­pany. Early last year, Arora said, he met with a Philip Mor­ris di­rec­tor for cor­po­rate af­fairs in In­dia, a man named R Venkatesh, and told him the signs were an unequiv­o­cal vi­o­la­tion of In­dian law. Like other tobacco com­pa­nies, Philip Mor­ris kept up its ad blitz.

Venkatesh says Philip Mor­ris is do­ing noth­ing wrong. In re­sponse to ques­tions from Reuters, he said the com­pany’s ad­ver­tis­ing is “com­pli­ant with In­dian law” and that Philip Mor­ris has “fully co­op­er­ated with the en­force­ment au­thor­i­ties” on the mat­ter. But In­dian gov­ern­ment of­fi­cials say Philip Mor­ris is us­ing meth­ods that flout the na­tion’s tobacco-con­trol reg­u­la­tions. These in­clude tobacco shop dis­plays as well as the free dis­tri­bu­tion of Marl­boro - the world’s best-sell­ing cig­a­rette brand - at night­clubs and bars fre­quented by young peo­ple.

In in­ter­nal doc­u­ments, Philip Mor­ris In­ter­na­tional is ex­plicit about tar­get­ing the coun­try’s youth. A key goal is “win­ning the hearts and minds of LA-24,” those be­tween le­gal age, 18, and 24, ac­cord­ing to one slide in a 2015 com­mer­cial re­view pre­sen­ta­tion. As with the point-of-sale ads at kiosks, pub­lic health of­fi­cials say that giv­ing away cig­a­rettes is a vi­o­la­tion of In­dia’s Cig­a­rettes and Other Tobacco Prod­ucts Act and its ac­com­pa­ny­ing rules.

Philip Mor­ris’ mar­ket­ing strat­egy for In­dia, which re­lies heav­ily on kiosk ad­ver­tis­ing and so­cial events, is laid out in hun­dreds of pages of in­ter­nal doc­u­ments re­viewed by Reuters that cover the pe­riod from 2009 to 2016. In them, Philip Mor­ris presents these pro­mo­tions as key mar­ket­ing ac­tiv­i­ties. In re­cent years, they have helped to more than quadru­ple Marl­boro’s mar­ket share in In­dia, where the com­pany is bat­tling to ex­pand its reach in the face of an en­trenched lo­cal gi­ant. Reuters is pub­lish­ing a se­lec­tion of those doc­u­ments in a search­able repos­i­tory, The Philip Mor­ris Files.

‘Within Walk­ing Dis­tance’

The com­pany’s goal is to make sure that “ev­ery adult In­dian smoker should be able to buy Marl­boro within walk­ing dis­tance,” ac­cord­ing to an­other 2015 strat­egy doc­u­ment. In tar­get­ing young adults, Philip Mor­ris is de­ploy­ing a pro­mo­tional strat­egy that it and other tobacco com­pa­nies used in the United States decades ago. A study pub­lished in the Amer­i­can Jour­nal of Pub­lic Health in 2002 found that dur­ing the 1990s, “tobacco in­dus­try spon­sor­ship of bars and night­clubs in­creased dra­mat­i­cally, ac­com­pa­nied by cig­a­rette brand para­pher­na­lia, ad­ver­tise­ments, and en­ter­tain­ment events in bars and clubs.”

With cig­a­rette sales de­clin­ing in many coun­tries, Philip Mor­ris has iden­ti­fied In­dia, pop­u­la­tion 1.3 bil­lion, as a mar­ket with op­por­tu­nity for sig­nif­i­cant growth. “In­dia re­mains a high po­ten­tial mar­ket with huge up­side with cig­a­rette mar­ket still in in­fancy,” says a 2014 in­ter­nal doc­u­ment. Ac­cord­ing to gov­ern­ment data, In­dia has about 100 mil­lion smok­ers. Of those, about two-thirds smoke tra­di­tional hand-rolled cig­a­rettes. Tobacco use kills more than 900,000 peo­ple a year in In­dia, and the World Health Or­ga­ni­za­tion es­ti­mates that tobacco-re­lated dis­eases cost the coun­try about $16 bil­lion an­nu­ally.

Philip Mor­ris is not alone in us­ing mar­ket­ing meth­ods that In­dian of­fi­cials say are il­le­gal. The coun­try’s largest cig­a­rette maker, ITC Ltd, uses sim­i­lar tac­tics, such as ad­ver­tis­ing at kiosks. Bri­tish Amer­i­can Tobacco Plc and In­dian state-run com­pa­nies have large, pas­sive stakes in ITC, which con­trols about 80 per­cent of the mar­ket. Tobacco-con­trol of­fi­cer Arora, a short, mus­ta­chioed man with a gruff de­meanor, sent a let­ter to Philip Mor­ris and other tobacco com­pa­nies in mid-April, giv­ing them un­til the end of the month to re­move all ad­ver­tise­ments. “Le­gal ac­tion will be ini­ti­ated against the com­pany” if it did not com­ply, he wrote in the let­ters, copies of which were re­viewed by Reuters.

Cig­a­rette Raid

A day af­ter Arora’s dead­line passed, he and his team con­ducted a raid in an af­flu­ent area of cafes and cof­fee shops in New Delhi that showed his let­ters did not have the de­sired ef­fect. On that hot af­ter­noon in May, the team cut down about a dozen ad­ver­tise­ments for Marl­boro and var­i­ous ITC brands. As word of the raid spread, wor­ried ven­dors cov­ered their ads with news­pa­pers or took them down.

One kiosk owner, Rakesh Ku­mar Jain, re­moved his Marl­boro ads be­fore Arora’s team ar­rived. Jain said the signs had been put up by Philip Mor­ris rep­re­sen­ta­tives. In re­turn, he said, he re­ceived free cig­a­rettes each month worth about 2,000 ru­pees (about $30). Jain knew that putting up the posters was il­le­gal, but they helped im­prove sales, he said. About a dozen kiosk own­ers in­ter­viewed by Reuters said that tobacco com­pa­nies paid them a monthly fee for ad­ver­tise­ments and prod­uct dis­plays, with the amount de­ter­mined by fac­tors such as lo­ca­tion, vol­ume of busi­ness and type of pro­mo­tional ma­te­rial. In pay­ment re­ceipts seen by Reuters, Philip Mor­ris’ In­dia unit promised to pay 500 In­dian ru­pees ($7.50) a month to a cig­a­rette seller with a small road­side kiosk in New Delhi for putting up Marl­boro ads. The re­ceipts were signed by a com­pany rep­re­sen­ta­tive.

Dur­ing the raid, fines were is­sued to some ven­dors, many of them re­peat of­fend­ers, and they were threat­ened with court ac­tion if the ads went up again. Like Philip Mor­ris, ITC says that it is in full com­pli­ance with In­dia’s 2003 tobacco con­trol law. If it wasn’t, the com­pany said in a state­ment to Reuters, then “the rel­e­vant gov­ern­ment au­thor­i­ties would have ini­ti­ated ac­tion”.

Since Arora’s threat of le­gal ac­tion in April, there are fewer Philip Mor­ris ad­ver­tise­ments out­side cig­a­rette shops in the cap­i­tal. But both Philip Mor­ris and ITC say that ad­ver­tis­ing inside a shop is al­lowed. “Ad­ver­tise­ments of tobacco prod­ucts at the en­trance and inside the shops sell­ing tobacco prod­ucts are clearly and cat­e­gor­i­cally per­mit­ted,” ITC said in re­sponse to ques­tions from Reuters.

Arora, how­ever, said all ad­ver­tis­ing is pro­hib­ited - “There are no two ways about it,” he in­sisted - but he can’t start le­gal pro­ceed­ings un­til get­ting fur­ther guid­ance from the fed­eral gov­ern­ment. He has yet to re­ceive an an­swer. Fed­eral health of­fi­cials say in in­ter­views that the ads are out of bounds. Amal Pusp, a di­rec­tor for tobacco con­trol at the health min­istry, told Reuters that “there is no con­fu­sion”: All ad­ver­tise­ments - inside and out­side shops - are il­le­gal.

‘In­no­cent Minds’

The 2003 law al­lows tobacco com­pa­nies to ad­ver­tise at shops, but sub­se­quent rules is­sued by the gov­ern­ment pro­hibit it. In 2004, In­dia be­came one of the first coun­tries to rat­ify the World Health Or­ga­ni­za­tion’s Frame­work Con­ven­tion on Tobacco Con­trol (FCTC) treaty. The pact has 181 mem­bers and con­tains a raft of an­ti­smok­ing pro­vi­sions, in­clud­ing tobacco taxes, warn­ing la­bels on cig­a­rette packs and ad­ver­tis­ing bans. The coun­try en­acted its na­tional tobacco con­trol law the year be­fore rat­i­fy­ing the FCTC, and since then the gov­ern­ment has added rules to strengthen the law in line with FCTC treaty pro­vi­sions.

The health min­istry pub­lished rules in 2005 that banned any dis­play of brand names, pack im­ages or pro­mo­tional mes­sages. The rule spec­i­fied that tobacco re­tail­ers could only dis­play a 60-by-45 cen­time­ter board, roughly 24 by 18 inches. The sign can have a de­scrip­tion of the type of tobacco prod­ucts sold - such as cig­a­rettes or chew­ing tobacco - but can­not in­clude any brand ad­ver­tis­ing and must carry a large health warn­ing.

The health min­istry’s rules were challenged in court by a group of cig­a­rette dis­trib­u­tors and put on hold by a state-level High Court for seven years. They fi­nally came into force in 2013 on or­ders of In­dia’s Supreme Court. The High Court had over­looked the fact that ad­ver­tise­ment of tobacco prod­ucts “will at­tract younger gen­er­a­tion and in­no­cent minds, who are not aware of grave and ad­verse con­se­quences of con­sum­ing such prod­ucts,” the Supreme Court said in its rul­ing.

Philip Mor­ris has lob­bied against the pass­ing of stricter tobacco con­trol rules by the In­dian gov­ern­ment. In doc­u­ments de­tail­ing the com­pany’s plans for the bi­en­nial FCTC treaty con­ven­tion in In­dia last Novem­ber, Prime Min­is­ter Naren­dra Modi emerges as a prime tar­get. A key goal: to pre-empt Modi from tak­ing “ex­treme an­ti­to­bacco mea­sures” be­fore del­e­gates were to gather from around the world for the treaty meet­ing, ac­cord­ing to a 2014 cor­po­rate af­fairs Pow­erPoint pre­sen­ta­tion.

The com­pany planned to gain Modi’s ear through those close to him. It iden­ti­fied sev­eral peo­ple in this group, in­clud­ing Com­merce Min­is­ter Nir­mala Sithara­man, Health Min­is­ter Ja­gat Prakash Nadda, and Amit Shah, pres­i­dent of the rul­ing Bharatiya Janata Party. Modi and the other politi­cians didn’t re­spond to re­quests for com­ment. Philip Mor­ris In­ter­na­tional also didn’t com­ment on the plan.

Marl­boro Par­ties

The tobacco gi­ant’s ef­forts to fend off anti-smok­ing steps have had limited im­pact so far. Last year, for in­stance, In­dia or­dered man­u­fac­tur­ers to cover 85 per­cent of the sur­face of cig­a­rette packs with health warn­ings, up from 20 per­cent. The rule, which is still be­ing challenged in a state court by the tobacco in­dus­try, in­clud­ing Philip Mor­ris’ In­dia part­ner, was im­ple­mented by or­der of the Supreme Court. Marl­boro has just a 1.4 per­cent share of the al­most $10 bil­lion cig­a­rette mar­ket in In­dia. The in­dus­try is dom­i­nated by ITC, which has a strong grip on dis­trib­u­tors and re­tail­ers.

One ma­jor method Philip Mor­ris is de­ploy­ing to gain ground, the mar­ket­ing doc­u­ments show, is the free dis­tri­bu­tion of cig­a­rettes at bars and night­clubs - known as Le­gal Age Meet­ing Points, or LAMPs, in com­pany jar­gon. The hir­ing of young women and men to work at these gath­er­ings is out­sourced to event man­age­ment com­pa­nies, ac­cord­ing to peo­ple with knowl­edge of the gath­er­ings. Some of the re­cruit­ing takes place on­line. “Hey girls... We are search­ing A++ Hot & Gor­geous girls for the Marl­boro pub ac­tiv­ity... Pay: 2000/day... Work: Pro­mo­tion in clubs in Delhi,” read one post on a Facebook pub­lic group in June last year. There was no com­pany name at­tached to the ad.

At sev­eral par­ties at­tended by Reuters in Delhi and Mum­bai, young women dressed in the col­ors of the lat­est Marl­boro vari­ant handed out packs of cig­a­rettes. Dur­ing one party at a night­club in a Delhi ho­tel, a young woman walked around with a tablet show­ing an ad that high­lighted Marl­boro fea­tures. A tele­vi­sion screen played a video pro­mot­ing the brand: “For trend­set­ters, for for­ward thinkers, a smooth and bal­anced smok­ing ex­pe­ri­ence.”

In many ways, it was right out of the Philip Mor­ris 1990s play­book. The Amer­i­can Jour­nal of Pub­lic Health study, draw­ing on pre­vi­ously se­cret in­dus­try doc­u­ments, found that Philip Mor­ris ran bar pro­mo­tions in 1990 us­ing rac­ing jack­ets, and added “neon mes­sage boards and cock­tail trays” in 1991. The study de­scribed meth­ods for col­lect­ing names for a com­pany data­base “to gen­er­ate smoker pro­files, di­rect mail­ing cam­paigns, and con­duct tele­phone re­search stud­ies af­ter the bar events”. At the par­ties in In­dia, peo­ple who took the Marl­boro packs were asked their names, ages and pre­ferred brands. Philip Mor­ris calls this dis­tri­bu­tion of free cig­a­rettes “sam­pling”, which it says in an in­ter­nal doc­u­ment is al­lowed un­der the law.

Brief Re­spite

The com­pany has spent mil­lions of dol­lars on these ac­tiv­i­ties. In 2014, for ex­am­ple, Philip Mor­ris es­ti­mated it spent $1.6 mil­lion on LAMP events and sam­pling at kiosks in In­dia, ac­cord­ing to the 2015 com­mer­cial re­view pre­sen­ta­tion. The com­pany planned to use LAMPs in 2015 to gen­er­ate 30,000 “tri­als,” or sam­plings of cig­a­rettes. And it planned to gen­er­ate an­other 500,000 tri­als that year through sam­pling at cig­a­rette shops and kiosks, ac­cord­ing to the 2015 strat­egy doc­u­ment. The com­pany in­structs em­ploy­ees to watch their words. An un­dated train­ing man­ual for mar­ket re­searchers says: “Do not say this is a ‘PRO­MO­TION’ or ‘AD­VER­TIS­ING’.”

In­dian health min­istry of­fi­cials say that any­one who hands out free cig­a­rettes, what­ever the cir­cum­stances, is break­ing the law. — Reuters

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