Tobacco in Australia, Fact and Issues

Tobacco in Australia Facts & Issues
A comprehensive online resource
tobaccoinaustralia.org.au
Book excerpt
List of chapters available at

tobaccoinaustralia.org.au
Introduction
Chapter 1 Trends in the prevalence of smoking
Chapter 2 Trends in tobacco consumption
Chapter 3 The health effects of active smoking
Chapter 4 The health effects of secondhand smoke
Chapter 5 Factors influencing the uptake and prevention of smoking
Chapter 6 Addiction
Chapter 7 Smoking cessation
Chapter 8 Tobacco use among Aboriginal peoples and Torres Strait Islanders
Chapter 9 Smoking and social disadvantage
Chapter 10 The tobacco industry in Australian society
Chapter 11 Tobacco advertising and promotion
Chapter 12 The construction and labelling of Australian cigarettes
Chapter 13 The pricing and taxation of tobacco products in Australia
Chapter 14 Social marketing and public education campaigns
Chapter 15 Smokefree environments
Chapter 16 Tobacco litigation in Australia
Chapter 17 The economics of tobacco control
Chapter 18 The WHO Framework Convention on Tobacco Control
Appendix 1 Useful weblinks to tobacco resources
Tobacco in Australia: Facts and Issues. Third Edition

A comprehensive review of the major issues in smoking and health in Australia, compiled by Cancer Council Victoria.
First edition published by ASH (Australia) Limited, Surry Hills, NSW, 1989
Second edition published by the Victorian Smoking and Health Program, Carlton South, Victoria (Quit Victoria), 1995
Third edition published by Cancer Council Victoria 2008 in electronic format only.
ISBN number: 978-0-947283-76-6
Suggested citation: Scollo, MM, Winstanley, MH [editors]. Tobacco in Australia: Facts and Issues. Third Edition. Melbourne: Cancer Council Victoria; 2008. Available from: www.TobaccoInAustralia.org.au
Tobacco in Australia: Facts and Issues; 3rd Edition updates earlier editions of the book published in 1995 and 1989. This edition is greatly expanded, comprising chapters written and reviewed by authors with
expertise in each subject area. Tobacco in Australia: Facts and Issues is available online, free of charge. A hard copy version of this publication has not been produced.
This work has been produced with the objective of bringing about a reduction in death and disease caused by tobacco use. Much of it has been derived from other published sources and these should be quoted
where appropriate. The text may be freely reproduced and figures and graphs (except where reproduced from other sources) may be used, giving appropriate acknowledgement to Cancer Council Victoria.
Editors and authors of this work have tried to ensure that the text is free from errors or inconsistencies. However in a resource of this size it is probable that some irregularities remain. Please notify Cancer
Council Victoria if you become aware of matters in the text that require correction.
Editorial views expressed in Tobacco in Australia: Facts and Issues. Third Edition are those of the authors.
The update of this publication was funded by the Australian Government Department of Health and Ageing.
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Tobacco in Australia Facts & Issues A comprehensive online resource tobaccoinaustralia.org.au
Chapter 10
The tobacco industry in Australian society
Chapter 10: The tobacco
industry in Australian society 1
Chapter 10
The tobacco industry in
Australian society
Margaret Winstanley
Table of contents
10.1 The global tobacco manufacturing industry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10.2 The manufacturing industry in Australia.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10.3 Retail value and volume of the market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

10.3.1 Comparison of tobacco sales with sales of other product
categories from Australian supermarkets, grocers and
convenience outlets. . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10.4 The tobacco companies operating in Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

10.4.1 British American Tobacco Australia Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.4.2 Philip Morris (Australia) Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.4.3 Imperial Tobacco Australia Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.5 Major importers operating in the Australian market.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

10.5.1 Stuart Alexander Pty Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.5.2 Swedish Match Australia Pty Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.5.3 Other importers of tobacco products into Australia.. . . . . . . . . . . . . . . . . . . . . . 15
10.6 Market share and brand share.. . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

10.6.1 Market share by brand—cigarettes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.6.1.1 Brand preference among Australian secondary
school students.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.6.2 Market share by brand—roll-your-own tobacco.. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.6.3 Market share by brand—cigars.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.6.4 Price bracket and pack size. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.7 Trends in products and packaging.. . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

10.7.1 Flavoured cigarettes.. . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.7.2 Shorter or wider cigarettes.. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.7.3 Smokeless tobacco and ‘snus’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2 Tobacco in Australia:
Facts and Issues
10.7.4 Countering second-hand smoke.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 20

10.7.5 Potentially reduced exposure products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.7.6 ‘Roll-your-own’ and ‘make-your-own’ cigarettes.. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.7.7 Organic, ‘green,’ and additive free cigarettes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.7.8 Packaging trends.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.7.9 Reduced fire risk cigarettes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 24
10.7.10 Specialty products.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 25
10.7.11 Accessories.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 25
10.8 The tobacco growing industry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 26

10.8.1 Global. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 26
10.8.2 Australia.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 26
10.8.2.1 Brief history. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 26
10.8.2.2 Government regulation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.8.2.3 The decline of tobacco farming in Australia. . . . . . . . . . . . . . . .. . . 27
10.9 The tobacco industry and the illegal tobacco market.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

10.9.1 Chop-chop.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 28
10.9.2 Imported counterfeit cigarettes and loose tobacco leaf. . . . . . . . . . . . . . . . . . . 30
10.9.3 Is smuggling advantageous to the international tobacco
industry?.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.10 The tobacco industry exposed: tobacco industry document

repositories.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.11 Corporate responsibility and the birth of good corporate

citizenship. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.11.1 Corporate makeover—Philip Morris and Altria—a case
study in brief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.12 The tobacco industry’s revised stance on health issues.. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 35

10.12.1 Smoking, health and addiction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 35
10.12.2 Second-hand smoke. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.13 Encouraging young people not to smoke.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 36

10.13.1 Youth access programs.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 37
10.13.2 ‘Life skills’ programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 38
10.13.3 Anti-smoking advertising.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.14 The environmental impact of tobacco production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 39

10.14.1 Land clearing and deforestation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 40
10.14.2 Pesticide use.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 41
10.14.3 Tobacco production and climate change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.14.4 Genetically-modified tobacco leaf.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.15 Ethical farming issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.15.1 Tobacco farming and child labour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.15.2 Tobacco farming and ‘fair trade’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.16 The environmental impact of tobacco use.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.17 The tobacco industry’s response to tobacco litter.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.18 Corporate links with charities and social causes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.19 Tobacco industry lobbying—overview. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.20 Tobacco industry lobbying—the tools.. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

10.20.1 Tobacco industry sponsored consultants.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.20.2 Tobacco industry affiliated research foundations.. . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.20.3 Australian-based organisations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.20.4 Tobacco industry funded research in institutions.. . . . . . . . . . . . . . . . . . . . . . . . . 52
10.20.5 Establishment of international manufacturers’ and
growers’ organisations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
10.20.6 Australian manufacturers’ organisations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.20.6.1 The Tobacco Institute of Australia Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.20.6.2 The Tobacco Information Centre Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.20.7 Smokers’ rights groups.. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.20.8 Tobacco retailers as a lobby base.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.20.9 Marshalling opposition to smoking bans in entertainment
and social venues. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.21 Tobacco industry lobbying—the targets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

10.21.1 Major scientific reviews.. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.21.2 Countering tobacco control legislation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.21.2.1 Case study: pre-emptive self regulation. . . . . . . . . . . . . . . . . . . . . . . . . 60
10.21.2.2 Case study: opposing the introduction of
reduced fire risk cigarettes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.21.2.3 Case study: undermining the Framework
Convention on Tobacco Control.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.21.3 Subverting public health initiatives and tobacco control
organisations.. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.22 Donations to political parties.. . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.23 Public attitudes to the tobacco industry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

10.23.1 ‘Denormalisation’ of tobacco use and the tobacco
industry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Facts and Issues
10.24 The future of the tobacco industry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

10.24.1 In Australia and other mature markets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 67
10.24.2 … and elsewhere.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 68
10.24.3 Alternative uses for tobacco crops?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Tables and figures
Table: 10.1 Estimated global market share of tobacco companies, 2007.. . . . . . . . . . . . . . . . . . . 7
Table 10.2 Value of retail sales of tobacco products, and percentage of

total retail sales in each sector represented by tobacco,
Australia 2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 10.3 Ranking by sales value of leading product categories in

Australian groceries and supermarkets, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 10.4 Ranking by % of sales value of leading product categories in

Australian convenience retail outlets, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 10.5 Ranking of tobacco products and manufacturers in the top

100 grocery items by value of retail sales, 2007 (sales by
grocery stores and supermarkets).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 10.6 Tobacco companies operating in Australia: summary table

for 2006–07.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 10.7 British American Tobacco (Australasia Holdings), 2002–06. . . . . . . . . . . . . . . . . 12
Table 10.8 Products and brands manufactured or imported by British

American Tobacco (Australia) Ltd, 2007.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table 10.9 Philip Morris (Australia), 2002–06. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table 10.10 Products and brands manufactured or imported by Philip

Morris (Australia) Ltd, 2007. . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table 10.11 Imperial Tobacco Australia Ltd, 2002–06.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 10.12 Products and brands sold or imported by Imperial Tobacco

(Australia) Ltd, 2007.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 10.13 Products and brands imported by Stuart Alexander for sale
in the Australian market, 2007.. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 10.14 Products and brands imported by Swedish Match for sale in
the Australian market, 2007.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 10.15 Market share by retail sector, Australian tobacco companies,

2007.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 10.16 Top 10 cigarette brands (and their manufacturers) sold by

convenience stores ranked by % value of market share,
Australia, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 10.17 Top 10 cigarette brands among Australian secondary school

students aged 12–17 who had smoked in the past week, 2005. . . . . . . . . . . . . . . 17
Facts and Issues
Table 10.18 Leading roll-your-own tobacco brands (and their

manufacturers or importers) sold by convenience stores
ranked by % value of market share, Australia, 2007. . . . . . . . . . . . . . . . . . . . . . . . .. . . . 17
Table 10.19 Leading cigar brands (and their importers) sold by

convenience stores ranked by % value of market share,
Australia, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table 10.20 Cigarette sales in the supermarket and grocery sector

dissected by price band and pack size, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 18
Table 10.21 Industry tactics used to counter tobacco control measures.. . . . . . . . . . . . . .. . . . 49
Table 10.22 Political donations declared by tobacco companies in

Australia to registered political parties; financial years
1998/99–2006/07. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

The tobacco industry in
Australian society
10.1
The global tobacco manufacturing

industry
More than 5000 billion cigarettes are manufactured worldwide each year by an industry
dominated by five main players: the state owned industry in China, which accounts for
more than one third of global market share, and four transnational companies which vie
for dominance in the remaining market (Table 10.1).1
According to industry reports, China National Tobacco Corporation (CNTC) has a more
than 99% market share in China,2 making it the single largest tobacco manufacturer
in the world.1 Philip Morris (International and US operations combined) runs second
to Chinese National Tobacco, with 19% of global market share, followed by British
American Tobacco, Japan Tobacco (recently merged with British-based Gallaher)1
and Imperial Tobacco (now merged with Spanish-based Altadis).3 The driving force
behind consolidation of the tobacco companies is the desire to increase market share,
particularly in emerging markets. For example Japan Tobacco’s takeover of Gallaher has
given Japan Tobacco market dominance in Russia, the largest market in Europe.4*
Philip Morris International (PMI) is the largest of the multinational tobacco companies.
It owns seven of the top 15 global brands including Marlboro, which according to PMI
has held the number one position in the world since 1972. Other leading international
brands owned by PMI include Chesterfield, Diana, Parliament, L & M, Lark, Merit and
Virginia Slims.5
Senior executives at PMI are optimistic about the future for their
company5 and to a large extent, this is facilitated by the spin-off of
PMI from the parent company Altria6(See also Section 10.11.1). Table 10.1
Additionally, the establishment of licensing agreements and joint Estimated global market share of
ventures with local tobacco industries has extended PMI’s market tobacco companies, 2007
reach. One of the most important of these agreements is PMI’s
partnership with the CTNC.6 The agreement establishes a joint-
venture company equally owned by both tobacco groups, to be Estimated market
Company
share (% rounded)
headquartered in Lausanne. It licenses the CTNC to produce and
Chinese National Tobacco Corporation 35
distribute Marlboro in China, and in return, facilitates entry for the
Philip Morris (International and US groups) 19
CNTC to the global tobacco market with a portfolio of ‘Chinese
British American Tobacco 17
heritage brands’7 carefully modified to appeal to foreign palates,6
Japan Tobacco 11
as well as providing the CNTC with other international business Imperial Tobacco 6
opportunities. Both companies benefit from shared sales, distribution Others 12
and other business infrastructure.7
* Japan Tobacco is not discussed further in this chapter because it has only minor engagement in the Australian market through a small Sources: BATA Annual Report 2007,1 Imperial
Tobacco Group website3
number of imported brands.
Section: 10.1
Facts and Issues
British American Tobacco ranks as second largest transnational tobacco company

after PMI. According to BAT, one in six of the world’s smokers chooses a BAT brand.
Although BAT has about 300 brands in its portfolio, it regards Dunhill, Kent, Lucky Strike
and Pall Mall as its most important ‘Global Drive’ brands. Since 2005, BAT has also
become active in the market for Swedish-style snus.8*
The Imperial Tobacco Group (ITG) has substantially increased its global expansion
since the mid-1990s, through brand acquisition (as has occurred in Australia) as well
as increase in market share. Since its acquisition of Reemtsma Cigarettenfabriken
GmbH in 2003, ITG has become the second largest tobacco company in Germany and
the fourth largest international tobacco company in the world, manufacturing and
distributing cigarettes, loose tobaccos, cigars and smoking-related paraphernalia such
as cigarette papers, filters and tubes. The company cites Asia, Eastern Europe, Africa
and the Middle East as its key growth regions, and its leading global brand as West,
particularly in Germany, and central and Eastern Europe.3
The trend towards globalisation of the tobacco industry has lead to a globalised
approach to marketing, research and lobbying,9 and factors such as trade liberalisation
have opened new and lucrative markets to the transnational companies. Companies
are increasingly focused on their ‘international’ brands, it being more cost effective to
manage and market a smaller number of iconic brands than to develop smaller, market-
specific brands.10
Although the companies engage in strong competition, as an industry they are
generally united in their desire to promote their products and undermine tobacco
control measures.** At an international level, the tobacco industry engages against
instrumentalities including the World Health Organization, the World Bank and the
United Nations. It fights bitterly to discourage countries from adopting the Framework
Convention on Tobacco Control. The industry has marshalled and given voice to an
international lobby for tobacco growers, especially powerful in countries where tobacco
is a major agricultural commodity.*** Using arguments honed over decades of cooperation,
the industry as a whole continues to peddle misinformation about the nature of its
products, obfuscates about addiction, and persists in its denials that advertising recruits
new smokers.10 Many of these issues are discussed in later sections of this chapter.
10.2
The manufacturing industry in Australia

The Australian tobacco industry is a subset of the global industry. All three tobacco
companies which operate in Australia (British American Tobacco Australia—BATA,
Philip Morris International (Australia)—PMA and Imperial Tobacco Australia—ITA)
are wholly owned subsidiaries of their overseas parent. Although the Australian tobacco
market is considered to be mature3 and per capita consumption is in decline, the tobacco
companies remain highly profitable entities and business is strong: according to tobacco
industry estimates, the equivalent of 1100 packs of 25 cigarettes are sold in Australia
every minute.11
Overseas ownership of the Australian companies means that no tobacco company
is currently listed on the Australian Stock Exchange and that the availability of
* For further information on snus, see Section 10.7.3, Chapter 3 Section 3.33 and Chapter 12 Attachment 12.3.
** An important exception is Philip Morris USA, which has broken ranks by publicly supporting proposed legislation which would grant the US
Food and Drug Administration regulatory authority over tobacco products. See Section 10.24.1.
*** The tobacco industry has been adept at styling itself as a vital contributor to the economies of some countries. For discussion, see Chapter 17,
Section 17.3.4.
Section: 10.2
information specific to local company operations is limited. BAT offers a website*
with some Australian emphasis, but PMI and the ITG provide little in the way of
Australian data. It is probable that the tobacco companies prefer not to expose their
activities to any more scrutiny than is strictly required by law. Most of the information
used in the following sections discussing the Australian tobacco companies and their
operating environment has been sourced from literature published by various trade
and marketing associations, and cannot be independently verified.** Given the immense
impact of the tobacco industry on the health of Australians, this lack of accountability
and disclosure is completely inconsistent with government priorities to reduce tobacco
use and could easily be remedied by legislation.
Reflecting international trends, the companies operating in Australia have undergone
consolidation. Only two of the three companies, PMA and BATA, own local
manufacturing facilities. Brands sold by ITA, which entered the market following
the merger of WD & HO Wills and Rothmans in 1999 are marketed under licence
by BATA. In addition, a small number of companies import speciality products and
brands. Sections 10.3–10.6 provide further detail on the size and composition of the
Australian tobacco industry.
10.3
Retail value and volume of the market

Note: a key reference for this section is a report prepared by PricewaterhouseCoopers (PwC) for British
American Tobacco Australia, Sales of Cigarettes and Tobacco Products by Type of Retail
Business. This report was subsequently tabled by BATA as an appendix to their Submission to the
Joint Select Committee Inquiry into Tobacco Smoking in New South Wales, and is available online
from the Parliamentary website.*** Data reported by PwC relates to 2004. Other data published by
trade magazines Australian Convenience Store News and Retail World are more recent, but
limited in scope.
In 2004, sales of cigarettes and other tobacco products accounted for about 4.7% of
all retail sales in Australia. The total retail value of the Australian tobacco market was
estimated at about $9.3 billion, and tobacco products could be purchased from about
35,000 retail outlets.12 About half of all tobacco sales occurred through supermarkets
and grocery stores (51%). A further fifth (19%) of sales were made by tobacconists,
and 13% were from convenience stores.**** Remaining sales took place through mixed
businesses (9%), hotels and clubs (3%), liquor stores and petrol stations.12
Despite falling tobacco consumption and lower sales volumes (see Chapter 3), the
value of tobacco sales has increased over the years, due to price increases caused
in part by taxation increases. The taxation component accounts for about 70% of
the final recommended retail price of a packet of cigarettes.13 However profitability
has increased as well, and sales of tobacco products represent a lucrative market for
retailers, and (except in the case of tobacconists) offer a strong return on relatively
little floor space. In the period between 1997‒98 and 2004 the value of retail sales
* See: http://www.bata.com.au/
** Market and industry analysts IBISWorld (http://www.ibisworld.com.au/default.aspx) and Euromonitor (http://www.euromonitor.com/
Tobacco) produce reports on the tobacco companies in Australia which are available for purchase. The authors of this and other chapters in
this book have not made use of these subscription-only resources due to copyright constraints. Some tertiary institution libraries may provide
access to these publications.
*** See http://www.parliament.nsw.gov.au/prod/parlment/committee.nsf/0/2b14b998dda58536ca2571620017ecd2/$FILE/Sub%2046%20
BATA%20-%20Attachment%202.pdf
**** Convenience stores include businesses such as 7-Eleven and other stores open for extended hours which provide grocery and other products.
These shops may be linked with petrol stations.
Section: 10.3
Facts and Issues
increased by 32%, and at the same time, the average gross margin earned by tobacco
retailers increased from 7% to about 13%.12 However different retail outlets generally
set different profit margins on tobacco products. For example, convenience stores set
Table 10.2 an estimated 30% gross margin* per pack. At the other end of the scale, supermarkets/
Value of retail sales of tobacco grocers and tobacconists, which rely more heavily on larger sales volumes and
products, and percentage of total discounted sales by the carton, have an average margin of 8% and 6% respectively.
retail sales in each sector represented Tobacconist stores are declining in numbers, especially in locations close to
by tobacco, Australia 2004 supermarkets where they find it harder to compete.12
The number of outlets selling tobacco products declined by
13% between 1999 and 2004, mainly because of a decline
Percentage of total
Value of retail sales
retail sales in this
in numbers of smaller mixed grocers and tobacconists
Type of retail outlet of tobacco products and a consumer trend towards convenience stores and
sector represented
(including GST) $m
by tobacco products supermarkets.12 Convenience stores anticipate an added boost
Supermarket/grocer 4880 7 to tobacco sales because sales from venues such as pubs and
Tobacconist 1880 95 clubs are restricted.14
Convenience stores 1203 33
In 2004, tobacco sales accounted for about one third of all
Mixed businesses 875 20
Hotels/clubs (including sales
sales (by value) from convenience stores and petrol stations,
244 1 20% of total sales by mixed businesses, and 7% of sales from
via vending machines)
Newsagents 171 4 supermarkets and grocers. Although supermarkets and
Liquor stores 151 1 groceries reported a sales value of tobacco far in excess of all
Petrol stations 92 30 other types of retail outlets, because these businesses sell so
many different types of goods, the overall percentage of retail
sales due to tobacco is comparatively small. Not surprisingly,
Source: Compiled from data reported by PwC.12 tobacconists are most dependent on tobacco sales, which
contribute 95% of total retails sales in this sector (Table 10.2).
More recent data are available for the grocery and supermarket sector and convenience
stores. Data for these retail categories are presented below.
Table 10.3 10.3.1

Ranking by sales value of leading
product categories in Australian Comparison of tobacco sales with sales of
groceries and supermarkets, 2007
other product categories from Australian
Rank Product category
Sales value supermarkets, grocers and convenience
1 Dairy case
($ billion)
5 outlets
2 Cigarettes 4
3 Cold beverages 3 In 2007, consumers spent about $4 billion on cigarettes in the Australian
4 Health and beauty 2.2 grocery industry,15 up from $3.8 in the year before.16 Tobacco ranked second
5 Frozen foods 2 only to dairy produce in sales value, and the total sales value of tobacco
6 Confectionery 1.8 products was earned at least twice as much as from the frozen foods, bread
7 Bread, rolls and hotplate 1.6 and confectionery categories (Table 10.3).
8 Pet needs 1.4
Tobacco is even more important to route traders and convenience store
9 Household cleaning/pest control 1.2
traders.** Data from AC Neilsen Reports,17 annual industry reviews that
10 Snack foods 1.1
compile information on market size and brand share of products sold
through convenience outlets, show that cigarettes are their leading source of
Source: Retail World.15
* Gross margin is defined as ‘the difference between the price for which a business purchases goods and the price for which these goods are
sold.’ Pricewaterhouse Coopers, 2005.12 p 22
** ‘Route’ traders are generally small businesses which are located outside shopping malls, in strip shopping centres or in isolation. ‘Convenience
stores’ are defined by AC Neilsen as outlets such as Coles Express, 7Eleven, and Night Owl, and shops co-located with Caltex, BP, Mobil and
Gull petrol stations.17
Section: 10.3.1
sales revenue, bringing in more than a third of total sales value in 2007, and more than Table 10.4
twice the amount spent on the next strongest category, carbonated soft drinks (Table Ranking by % of sales value of
10.4). Taking into account other tobacco products (such as roll-your-own tobacco and leading product categories in
cigars) which ranked ninth, tobacco brought in almost 40% of sales revenue.17 Australian convenience retail
Breaking the market down still further, cigarette brands are among the outlets, 2007
top selling names of all grocery brands in Australia. In 2007, Winfield
was the top-ranking of all brands available in the Australian grocery and
supermarket sector, generating sales in excess of $750 million.18 Cigarette % share of
Rank Product category
sales value
brands accounted for six of the top 10 brands measured in terms of sales
1 Cigarettes 37.1
revenue, and of the top 100 brands, 13 were cigarette or roll-your-own
2 Carbonated beverages 17.3
tobacco products (Table 10.5).
3 Communications 13.6
4 Confectionery 8.7
10.4 5 Milks 7.2
6 Magazines/newspapers 5.3
The tobacco companies operating 7

8
Icecream
Snack foods
2.6
2.4
in Australia 9
10
Other tobacco products
Fruit juice drinks
1.9
1.3
The tobacco market in Australia is dominated by three major companies,

of which the largest is BATA. In the financial year ending in June 2007, the Source: Convenience Store News.17
three tobacco companies had a combined turnover of almost $2.5 billion,
made a combined net profit after taxes of $586 million and employed about
2000 people (Table 10.6).
Table 10.6
Table 10.5 Tobacco companies operating
Ranking of tobacco products and manufacturers in the top 100 grocery items by value in Australia: summary table for
of retail sales, 2007 (sales by grocery stores and supermarkets)* 2006–07
Rank (out Retail sales BATA PMA ITA

Brand (and product type) Manufacturer
of top 100) bracket ($m) Total revenue ($m) 1476.7 623.3 386.5
British American Tobacco Net profit after tax ($m) 410.7 172.6 2.7
1 Winfield (cigarettes) 750+
Australia (BATA) Shareholders’ funds ($m) 632.6 403.4 25.1
2 Coca-Cola (carbonated beverages) Coca-Cola Company 750+ Total assets ($m) 2962.1 627.5 176.7
3 Longbeach (cigarettes) Philip Morris Australia (PMA) 750+ Number of employees >110019 691 299*
4 Peter Jackson (cigarettes) PMA 500–750 Approximate market
5 Horizon (cigarettes) Imperial Tobacco Australia (ITA) 500–750 4619 34** 1820
share in Australia (%)
6 Benson & Hedges (cigarettes) BATA 250–500
7 Holiday (cigarettes) BATA 250–500
8 Tip Top (bread) George Weston Foods 250–500 * figure for 2006
9 Cadbury Chocolate (confectionery) Cadbury Schweppes 250–500 ** figure assumed on the basis of market
10 Huggies (disposable nappies) Kimberly-Clark 250–500 share reported by BATA and ITA, and
19 Dunhill (cigarettes) BATA 150–250 assuming that a small percentage of the
Australian market is accounted for by
34 Alpine (cigarettes) PMA 100–150
imported brands.
44 Winfield (RYO tobacco) BATA 100–150
Sources: The BRW Top 1000,21BAT Website,1
70 Marlboro (cigarettes) PMA 75–100 BATA Website,19 Imperial Tobacco Group
75 Champion Ruby (RYO) ITA 75–100 Website.20
94 Drum (RYO) ITA 50–75
97 Peter Stuyvesant (cigarettes) ITA 50–75
* excludes route trade outlets (such as milk bars, newsagents and service stations), convenience stores, mass merchandisers (such as
Kmart and Big W) food service outlets and vending machines.
Source: AdNews.18
Section: 10.4
Facts and Issues
10.4.1
British American Tobacco Australia Ltd
British American Tobacco Australia (BATA) is a wholly-owned subsidiary of British
American Tobacco (BAT).19 BAT is a publicly listed company on the London Stock
Exchange.
BATA was created in 1999 by the merger of WD and HO Wills Holdings Ltd (controlled
by BAT) and Rothmans Holdings Ltd.22 The merger of the two Australian companies
mirrored the international merger of BAT with Rothmans International, making the
newly formed BATA the largest tobacco company operating in Australia. The then
Chairman of Wills (and former Premier of New South Wales), Mr Nick Greiner,
subsequently became Chairman of BATA.22 The new corporate entity soon realised
higher profits due to sales growth, cost reductions and distribution advantages arising
from rationalisation of resources.23
The head office and main manufacturing base for BATA are located in Eastgardens,
in suburban Sydney.19 In addition to engagement in manufacturing, marketing and
distribution of tobacco products, BATA owns its own packaging arm. Formerly a
subsidiary of Rothmans, Anzpac is a specialist printing and packaging company which
now provides for BATA’s tobacco packaging requirements, as well as servicing the fast
food, breakfast cereal and confectionery industries.24
BATA employs about 1100 people in Australia, mostly in manufacturing. Taking
into account the wider region, British American Tobacco Australasia employs a total
workforce of about 2300, with additional manufacturing facilities in Papua New Guinea,
New Zealand, Fiji, the Solomon Islands and Western Samoa. BATA also produces
tobacco goods for export throughout other Pacific Island nations, through its own
export division.1 BATA imports some tobacco products, and is under contract by
Imperial Tobacco Australia to manufacture a range of products (see Section 10.4.3).
Since BATA is wholly-owned by its UK parent BAT, financial data specific to BATA do
not need to be made publicly available. In BAT’s annual company reports, Australia
is included in the Asian-Pacific region, for which results from New Zealand and the
South Pacific, and Asian countries including Indonesia, Malaysia, India, Pakistan,
Bangladesh, South Korea and Vietnam are pooled.25 Limited financial information for
BATA is compiled and published annually as part of Business Review Weekly’s (BRW) and
Table 10.7 IBISWorld’s annual ‘1000 Index.’ Information from recent BRW reports is presented
British American Tobacco (Australasia in Table 10.7. Because these data collapse the Asian-Pacific region, as do BAT’s annual
Holdings)*, 2002–06 reports, it is not possible to isolate Australian performance.
For the year 2006, the Business Review Weekly21 ranked BATA at
190 out of Australia’s top 1000 companies on the basis of total
2002 2003 2004 2005 2006 revenue, and 70th out of 1000 for net profit after tax. Within
Year ending December
the food, beverage and tobacco manufacturing sector, BATA
Total revenue ($m)** 1232.5 1310.4 1325.7 1431.8 1476.7
was the third largest company in 2006, ranking behind the
Profit after tax ($m)** 117.6 200.4 248.0 412.7 410.7
Foster’s Group and Cadbury Schweppes.21
Shareholders’ funds ($m)** 1681.9 1671.1 1294.5 1412.9 632.6
Total assets ($m)** 3034.3 2844.7 2852.5 3018.8 2962.1 BATA claims market leadership in Australia and the Pacific,
Number of employees* 2364 2009 2025 N/A 2300 with about 46% of market share in Australia, 75% in New
Zealand and 100% throughout the Pacific Islands. BATA’s
major brands in Australia are Dunhill, Winfield and Benson &
* Figures unadjusted for inflation Hedges.1 BAT’s annual reports since 200325, 30-32consistently
** Table includes data from all operations allude to increasing profits in Australia, attributing this
throughout the Asian-Pacific region
success to higher margins, reductions in overheads and
Sources: Business Review Weekly21, 26-29 BATA1
improved supply chain efficiencies, and strong performances
N/A: Information not available
Section: 10.4.1
by its key brands, Winfield, Dunhill, Benson & Hedges and Holiday. Table 10.8
Table 10.8 presents BATA’s Australian brand portfolio. Products and brands manufactured
or imported by British American
Tobacco (Australia) Ltd, 2007
Benson & Hedges, Cambridge, Craven A, Holiday, Kent, Kool, Pall Mall, Rothmans,
Locally manufactured cigarettes
Stradbroke, Wills, Winfield
Dunhill (Dunhill, Domenican Republic)
Importer of manufactured cigarettes (manufacturer and country of origin shown in brackets)
Vogue (Martin Brinkman, Western Germany)
Locally manufactured loose tobacco (RYO) Capstan, Port Royal, Winfield
Imported loose tobacco (RYO) (manufacturer and country of origin shown in brackets) Samson (Royal Theodorus Niemeyer BV, The Netherlands).
Captain Black (Lane Ltd, USA)
Dunhill (DMD, Belgium)
Importer of cigars (manufacturer and country of origin shown in brackets)
Mercator (NV Tobacofina Vander Elst SA, Belgium)
Schimmelpenninck (Schimmelpenninck Sigarenfabrieken, The Netherlands)
Source: The NSW Retail Tobacco Traders’

Association.33
10.4.2
Philip Morris (Australia) Ltd
Philip Morris (Australia) Ltd is the Australian subsidiary of Table 10.9
Philip Morris International (PMI), based in Lausanne. Philip Philip Morris (Australia), 2002–06
Morris (Australia) Ltd (PMA) was established in 1954, the
first overseas affiliate to be set up by PMI.5 PMA’s Australian
head office and main manufacturing facility are located in 2002 2003 2004 2005 2006
Moorabbin, a suburb of Melbourne, Victoria. The Australian Year ending December
headquarters provides support to Philip Morris interests in Total revenue ($m)* 615.8 633.1 655.0 635.4 623.3
other countries in the Asian region, including Hong Kong, Profit after tax ($m)* 121.2 155.2 187.1 193.4 172.6
Japan, Malaysia, the Philippines and India.5 PMA also Shareholders’ funds ($m)* 275.4 315.2 335.6 431.4 403.4
manages the ordering, sales and distribution of its products Total assets ($m)* 591.8 563.4 670.2 644.6 627.5
locally.5 Number of employees 753 732 735 745 691
On the basis of market share, PMA is the second largest

tobacco company in Australia.5 Since its delisting as a * Figures unadjusted for inflation
public company during the 1990s, PMA has had no formal Sources: Business Review Weekly21, 26-29
requirements to publicly lodge annual reports or financial
statements specifying results from its Australian operations.
No Australia-specific information is reported in PMI’s annual
reports. However, limited information is available through
the annual listings compiled by the Australian Business Review
Weekly and IBISWorld. Data from these sources are presented
Table 10.10
Products and brands manufactured
in Table 10.9. For 2006 PMA was rated 464th out of Australia’s
or imported by Philip Morris
top 1000 enterprises on the basis of total revenue, and 143rd
(Australia) Ltd, 2007
out of 1000 for
profit after tax.21
PMA’s brands are

Locally manufactured cigarettes Alpine, Longbeach, Marlboro, Peter Jackson
shown in Table
Importer of manufactured cigarettes (manufacturer and country of origin shown in brackets) Marlboro (imported variant from Philip Morris Ltd, USA)
10.10.
Imported loose tobacco (RYO) (manufacturer and country of origin shown in brackets) Marlboro (Philip Morris, Belgium)

Association 33
Section: 10.4.2
Facts and Issues
10.4.3
Imperial Tobacco Australia Ltd
Imperial Tobacco Australia (ITA) Ltd is the smallest and most recently formed of the
tobacco companies operating within Australia. ITA was established to coincide with
the merger of WD & HO Wills Holdings Ltd and Rothmans Holdings Ltd as British
American Tobacco Australia. At the time of the proposed merger, concerns were raised
about the likelihood of reduction in competition in the Australian marketplace, thereby
potentially causing a breach of Section 50 of the Trade Practices Act. The Australian
Competition and Consumer Commission agreed to permit the merger to proceed, on
condition that another tobacco company enter the Australian market. The UK-based
Imperial Tobacco Group was invited to enter the Australian market and in September
1999, ITA commenced operations.34, 35 As part of the agreement allowing the formation
of BATA, ITA was sold a portfolio of cigarette, roll-your-own tobacco and cigarette
paper trademarks previously owned by Rothmans or WD & HO Wills for the sum of
Table 10.11 $325 million. The purchase gave ITA an opening market share of 17.1%.35 For the year
Imperial Tobacco Australia Ltd, 2006, ITA was rated 695th out of Australia’s top 1000 enterprises on the basis of total
2002–06 revenue, and 693rd out of 1000 for profit after tax.21
Table 10.11 shows a range of ITA’s performance indicators between
2002–06.
2002 2003 2004 2005 2006
($m)* Year ending September The head office for ITA is located in the suburb of Baulkham Hills,
Total revenue ($m)* 271.4 306.7 342.7 367.9 386.5 north-west of Sydney. Regional offices operate in Melbourne,
Profit after tax ($m)* 27.2 36.5 47.7 53.2 2.7 Adelaide, Perth and Brisbane. In 2006, ITA employed about 320
Shareholder’s funds ($m)* 62.4 97.5 67.7 73.2 25.1 personnel.34 ITA does not own manufacturing plant in Australia,
Total assets ($m)* 128.5 161.8 146.2 158.8 176.7 but subcontracts BATA to produce its Australian-made range of
Number of employees 261 274 278 299 317 cigarettes and tobaccos.35 Additionally, ITA imports a range of
cigarettes and loose tobacco products from its international stable
of brands.
* Figures unadjusted for inflation
Sources: Business Review Weekly,21, 26–29, 34, 36 According to ITA, it holds the ‘most fragmented brand and
product portfolio of all the Australian tobacco manufacturers.’34
ITA’s overall market share in Australia in 2007 was 17.5%, slightly
down from 17.8% in 2006.20 ITA’s brand portfolio is shown in Table
10.12.
Table 10.12
Products and brands sold or
imported by Imperial Tobacco
(Australia) Ltd, 2007
ITA brands locally manufactured by BATA under licence Brandon, Escort, Horizon, John Player Premium, Peter Stuyvesant
Superkings (Imperial Tobacco, UK)
Importer of manufactured cigarettes (manufacturer and country of origin shown in brackets)
Camel, More (Japan Tobacco International, USA)
Bank, Drum, White Ox (Imperial Tobacco, The Netherlands)
Imported loose tobacco (RYO) (manufacturer and country of origin shown in brackets) Champion, Dr Pat, Five Star, Flagship, Stockman’s (Imperial Tobacco, NZ)
Log Cabin (Imperial Tobacco UK)
Amphora (Imperial Tobacco, UK)
Imported loose tobacco (pipe) (manufacturer and country of origin shown in brackets) Dr Pat (Imperial Tobacco, NZ)
Log Cabin (Imperial Tobacco, UK)
Importer of cigars (manufacturer and country of origin shown in brackets) Davidoff (Oettinger Davidoff Group, Germany)

Association.33
Section: 10.4.3
10.5
Major importers operating in the

Australian market
Apart from the three major companies listed in the preceding section, a small number
of companies operate within Australia as distributors of imported cigarettes and other
tobacco products, and smokers’ requisites such as cigarette papers and filters for roll-
your-own users.
10.5.1
Stuart Alexander Pty Ltd Table 10.13
Products and brands imported by
Stuart Alexander is an importer, marketer and distributor for tobacco products as well Stuart Alexander for sale in the
as a range of packaged food products.37 Australian market, 2007
RYO tobacco Old Holborn

Pipe tobacco Irish Cake, Mac Baren
Cigars Backwoods, Bering, Hav-a-tampa, Henri Wintermans, Henry Clay, King Edward, Old Port, Phillies, Santa Damiana
10.5.2
Swedish Match Australia Pty Ltd
Association.33
Swedish Match Australia is the Australian operating division of the Stockholm-based,

publicly listed company, Swedish Match. Swedish Match is engaged in the manufacture
and distribution of moist snuff (snus), cigars, pipe and chewing tobacco, matches and
lighters. Swedish Match operates production facilities in 11 countries, and is active in
more than 100 countries. It is the largest producer of snus in Scandanavia, and is market
Table 10.14
Products and brands imported
leader for chewing tobacco products in the USA.38
by Swedish Match for sale in the
Swedish Match Australia concentrates its efforts in the cigar market (Table 10.14).33 Australian market, 2007
Cigarettes Davidoff, Djarum (Indonesian kreteks)

Pipe tobacco Borkum Riff, Erinmore
Alternativos, Arturo Fuente, Ashton, Aurora, Avo, Cuesta-Rey, Dannemann, Delicias, Diamond Crown, Don Sebastian, Dunhill, Excalibur, La Flor Dominicana, La Paz, La Regenta,
Cigars
La Unica, Leon Jimenes, Macanudo, Puros Indios, Real A L Pedro, Rigoletto, Ritmeester, Sosa, St Luis Rey, Tabacalera, Tatiana, Tiparillo, Tueros, Villiger, White Owl, Willem II, Zino

Association.33
10.5.3
Other importers of tobacco products into Australia
Several other businesses import cigarettes, cigars and other tobacco products into
Australia. These include standard American and European cigarettes, as well as
kreteks, flavoured cigarettes from Hong Kong and Chinese brands from the Shanghai
Cigarette Factory.11, 33 Chinese brands in particular sell more cheaply in Australia than
many other brands, so appeal to the value end of the market as well as to expatriate
Chinese smokers.11
Section: 10.5.3
Facts and Issues
At least two Australian distributors, Alexanders Cigar Merchants39 and Cigarworld

Australia,40 operate their own specialist retail outlets which sell cigars as well as other
tobacco related paraphernalia and giftware. Alexanders Cigar Merchants also distributes
Cigar Aficionado publications.
10.6
Market share and brand share

BATA was the clear market leader in 2007, with 42% of tobacco sales in the grocery
market and 56% in the convenience sector. Philip Morris ranked second, followed by
Imperial (Table 10.15).17, 41
Table 10.15 10.6.1

Market share by retail sector,
Australian tobacco companies, 2007 Market share by brand—cigarettes
Table 10.5 in Section 10.4 above ranks tobacco brands among
Retail sector % market share other leading brands of all products sold through supermarket and
Company Grocery/supermarket Convenience stores grocery outlets. BATA owns three brands in the top 10 (Winfield,
BATA 42 56 Benson & Hedges and Holiday), PMA owns two (Longbeach and Peter
Philip Morris 40 33 Jackson) and ITA only one (Horizon).18 Data on market share of
Imperial 18 22 individual brands expressed as a percentage of the total tobacco
market are not publicly available for supermarket and grocery
outlets, which account for about half of all tobacco sales.
Sources: Retail World,41Convenience Store News17
Table 10.16 shows the top 10 brands ranked by share of total
tobacco sales value in Australian convenience stores in 2007.
BATA clearly dominates the sector with the popularity of Winfield,
Benson & Hedges and Dunhill, followed by PMA, with Peter Jackson
and Longbeach. ITA is represented much lower in the rankings, with
Horizon and Peter Stuyvesant.17 Marlboro, the world’s most popular
Table 10.16 brand5, is not a market leader in Australia. In 2007, Marlboro had
Top 10 cigarette brands (and their about 4% of market share in sales from convenience outlets.17
manufacturers) sold by convenience BATA dominated sales through convenience outlets, with a 56%
stores ranked by % value of market share of the total value of cigarette sales. PMA held a third of the
share, Australia, 2007 market (33%) and ITAss had only 11%.17 The data in Table 10.16
relate only to sales via convenience outlets, which account for only
13% of the market.12
Share of market value of
Rank Brand Manufacturer
total tobacco sales (%)
1 Winfield BATA 31.7 10.6.1.1
2 Peter Jackson PMA 15.6
3 Longbeach PMA 11.3 Brand preference among Australian secondary
4
5
Benson & Hedges
Dunhill
BATA
BATA
11.2
8.2
school students
6 Horizon ITA 4.9
National surveys of smoking prevalence and behaviours among
7 Peter Stuyvesant ITA 4.4
Australian secondary school pupils have included questions about
8 Marlboro PMA 3.9
brands smoked. Table 10.17 shows the cigarette brands most
9 Holiday BATA 3.0
commonly smoked by school students in 2005.42 Brand preference
10 Alpine PMA 2.2
among school-aged smokers is broadly similar to that indicated
by the total market share surveys shown in the preceding tables.
Sources: Convenience Store News17; Australian In 2005, one in three young school-aged smokers smoked Winfield
Retail Tobacconist33
Section: 10.6.1.1
cigarettes. Since it is illegal in Australia to sell cigarettes to children under the age of 18, Table 10.17
underage smokers are more likely to procure cigarettes from friends or the home, so Top 10 cigarette brands among
brands usually smoked are likely to reflect the preferences of the older smokers around Australian secondary school students
them. Other factors known to influence choice of brand among young people include aged 12–17 who had smoked in the
price and marketing. The brands most likely to be smoked by children include products past week, 2005
available in packs of 20 or 25, which are cheaper in price than packs of 30 or
more cigarettes.42
Males Females Total
Cigarette brand %*
10.6.2 Winfield 33 30 32
Market share by brand—roll-your-own Peter Jackson

Longbeach
15
11
20
14
17
12
tobacco Benson & Hedges

Dunhill
10
7
8
4
9
6
ITA and BATA lead the RYO sector. According to data from convenience stores Marlboro 5 3 4
Horizon 3 5 4
sales, ITA is clear market leader, with its brand mix including Champion and
Holiday 4 5 4
Drum (Table 10.18.) However, the data in Table 10.18 relate only to sales from
Escort 2 4 3
convenience outlets, which account for 13% of the total tobacco market.17 Sales
Alpine 2 1 2
data from the combined supermarket and grocery sectors which rank brand
leaders from all product categories show that BATA’s Winfield is the leading
RYO brand, but that ITA’s sales from Champion and Drum probably give it * Percentages exclude responses from
greater overall market share in this retail sector18 (see Table 10.5, Section 10.4). students who gave more than one brand,
and percentages do not add to 100 as only
the most frequent responses are listed.
10.6.3 Source: White and Hayman.42
Market share by brand—cigars

All cigars sold in Australia are imported, and apart from BATA, the tobacco companies
do not have substantial engagement in the cigar market (Table 10.19).17 Based on data
on sales data from convenience stores, the importer Stuart Alexander has greatest
market share, followed by Swedish Match.
Although the cigar market remains small at about 2% of the total tobacco market, cigars
have grown in popularity in recent years, with an annual growth in sales volume of
about 5%.43 The two most popular cigar brands, Café Crème (a Henri Wintermans variant)
and Willem II, together hold more than 50% of the total Australian cigar market.11 Cigars
are discussed further in Section 10.7.10.
Table 10.18 Table 10.19

Leading roll-your-own tobacco brands (and their manufacturers or importers) Leading cigar brands (and their importers) sold by convenience stores ranked
sold by convenience stores ranked by % value of market share, Australia, 2007 by % value of market share, Australia, 2007
Manufacturer Share of market value of Share of market value

Rank Brands Rank Importer Major brands
or importer total RYO tobacco sales (%) of total cigar sales (%)
Champion, White Ox, 1 Stuart Alexander Henri Wintermans, Old Port 47.4
1 Imperial 59.7
Drum, Dr Pat, Bank 2 Swedish Match Willem II, Ritmeester 34.7
2 BATA Winfield, Port Royal 39.2 Captain Black,
3 BATA 17.8
3 Philip Morris Marlboro 1.0 Schimmelpenninck
Stuart Old Holborn, Irish
4 0.1
Alexander Cake, Mac Baren
Sources: Convenience Store News17; Australian
Sources: Convenience Store News17; Australian
Section: 10.6.3
Facts and Issues
10.6.4
Table 10.20
Cigarette sales in the supermarket
Price bracket and pack size
and grocery sector dissected by price The Australian cigarette market has a number of differentiating features apart from
band and pack size, 2007 brand, including variations on flavour or blend, pack size, and price.
Although BATA is overall market leader in
the grocery sector (Table 10.5 in Section 10.4)
Volume Value
Price band Leading brands (in order of importance) (% market (% market
it does not lead in all segments of the market
segment)* segment)* when examined by price positioning and pack
Longbeach, Horizon, Holiday, Brandon, Choice, Stradbroke, size. In broad terms, the cigarette market is
Value* * 46.3 43.5
Pall Mall broken into three main price brackets: ‘value’,
Mainstream** Winfield, Peter Jackson, Escort, Superkings 35.7 36.8 for the price conscious smoker; ‘mainstream’
Premium** Benson & Hedges, Dunhill, Alpine, Marlboro, Peter Stuyvesant 18.1 19.7 for the middle price range, and ‘premium’
Volume Volume for the higher end of the market. Table 10.20
Pack size (% market (% market shows that in the supermarket and grocery
segment) segment)
sector, value brands are the most important
20s 9.4 9.8
segment in terms of percentage of cigarettes
25s 35.8 37.9
sold by volume and value, occupying about
30s 24.0 23.4
45% of market share. Mainstream brands
35s 1.4 1.4
40s 16.9 16.0
account for just over one third of the market,
50s 12.4 11.6 and the most expensive brands account for
Total volume (billion sticks) 10.5 fewer than 20% of the market volume and
Total value of cigarettes in grocery/supermarket sector ($ billion) $4 value. PMA is market leader in the value
sector, through the strength of Longbeach.
BATA is firmly in control of the mainstream
* percentages may not total 100 exactly due segment due to the dominance of Winfield,
to rounding. and also leads the premium market with Benson & Hedges and Dunhill. ITA’s strongest
** cigarette brands have been divided into showing is in the value sector, where Horizon ranks second to PMA’s Longbeach. In both
these three price categories in the Retail
World report, without defining the price
other sectors, ITA claims less than 10% of the market.41 The most popular pack size is
brackets. Cross checking price listings for 25s, followed by 30s. In 1999, larger pack sizes lost their appeal due to changes in the
these brands published in The Australian federal excise tax which eliminated the price advantage of purchasing greater quantities
Retail Tobacconist provides the following
of cigarettes (see Chapter 13 for discussion).
approximate breakdown: Value $9.60-
$10.10 per pack of 25s; Mainstream In the convenience sector, ‘mainstream’ brands (Winfield and Peter Jackson) account for
$10.65 – 11.50 per pack of 25s; Premium
$11.40-11.90 per pack of 25s. about 47% of all cigarette sales. Brands in the ‘premium’ bracket are next most popular
Sources: Retail World,41 Australian Retail (such as Benson & Hedges, Dunhill, Peter Stuyvesant and Marlboro), with about 30% of sales
Tobacconist.44 in total, and ‘value’ brands (Longbeach, Horizon and Holiday) account for about 20% of the
market. The most popular pack sizes sold in the convenience sector in 2007 were 25s
(about 40%), followed by 30s, 20s, and 40s.17
The recent emergence of a ‘sub-value’ category of cigarettes has been noted in the
industry press.11 The sub-value segment includes cheaper brands and smaller pack sizes
(the minimum legally permissible in Australia being packs of 20) to help meet tighter
personal budgets. Imported brands from China and elsewhere are competing to supply
this end of the market.11
10.7
Trends in products and packaging

Whether retaining old customers or appealing to new ones, addressing public concerns
about tobacco or manoeuvring to avoid or accommodate regulation, it is vital for the
tobacco industry’s survival to take a flexible and innovative approach to developments
Section: 10.7
in product and packaging. This section takes a look at some recent developments
observed in the Australian and international marketplace.
10.7.1
Flavoured cigarettes
It has long been industry practice to add ingredients to alter the flavour of tobacco.
For example menthol variants of many brands have been available for decades,
menthol additives improving the palatability of inhaled smoke by providing sensations
of coolness and smoothness.45 Flavourings have also been used to compensate for
variations in quality of tobacco leaf,46 and for perceived loss of body and flavour in
lower tar cigarettes.47 Flavourings mask unpleasant tastes and sensations associated with
smoking cigarettes, making them of greater appeal to novice users.48 Flavours may be
added to the tobacco itself or to the paper cigarette tube, and patents have been awarded
that incorporate flavourings into the filter of the cigarette, as well as the packaging in
order to impart a pleasant smell.49 A variety of smokeless tobacco products, cigars and
cigarette rolling papers have been augmented with novelty flavourings.49
In the USA a staggering range of flavourings has been introduced, including fruit (for
example orange, mandarin, lime, cherry, coconut, strawberry, apple), confectionery
(toffee, truffle, vanilla, chocolate, honey, fudge, marshmallow), spices (cinnamon,
mint, spearmint, wintergreen, coffee, herbs) and flavours reminiscent of cocktails or
liquors (for example margarita, amaretto, rum, cognac, bourbon). The products are
stylishly packaged49 and the cigarettes themselves may also be coloured, patterned and
decoratively filter tipped.50, 51 Flavoured varieties have also been made available on a
seasonal or themed basis.51 No Australian tobacco company has promoted products
on the basis of novelty flavouring, but a small number of flavoured brands have been
imported. DJ Mix Special Feel, available in flavours that include orange, strawberry and
iced green apple flavour, and Peel, in menthol orange, and sweet melon flavour, are
imported from Hong Kong. Chocolate-flavoured Black Devil and vanilla Pink Elephants are
imported from the Netherlands.52
Studies on the popularity of mainstream flavoured brands in the USA (such as those
produced by the major tobacco companies RJ Reynolds and Brown & Williamson)
have shown that they are used primarily by younger people.51 The recent proliferation
of flavoured brands has been attributed to the tobacco industry’s need to attract new
smokers in an increasingly challenging regulatory environment.49, 51
The sale of flavoured tobacco products is banned outright in South Australia, NSW
and Tasmania and their display (but not sale) has been banned in Western Australia.
On 23 May 2008, the Ministerial Council on Drug Strategy announced the intention
for all states and territories to enact legislation prohibiting the sale of fruit and
confectionery flavoured cigarettes within their jurisdictions by December 2009. The
same announcement stated that the Australian Government had agreed to investigate
the feasibility of a ban on importation of these products.53
10.7.2
Shorter or wider cigarettes
Limited opportunities to smoke due to the introduction of smoking restrictions in
many environments has prompted the development of a shorter cigarette that allows
quicker smoking (seven puffs instead of the more usual 10) while still aiming to deliver
Section: 10.7.2
Facts and Issues
a satisfying dose of nicotine. One company to cater for this market is Philip Morris,
with Marlboro Intense, which has been launched in Turkey.6
Philip Morris has also developed Marlboro Wides, a thicker but shorter than usual
cigarette that is packaged in a box with a flip top opening from side to side instead of
front to back.6
10.7.3
Smokeless tobacco and ‘snus’
As its name states, smokeless tobacco does not generate smoke, which makes it
attractive to tobacco users who wish to access nicotine without breaching smoking
restrictions. It is also promoted to the youth market, and to women in societies where
overt smoking is not socially acceptable.54 In Australia, sales and marketing of smokeless
tobacco are banned,*55 but the international market for smokeless tobacco continues
to expand.54 The health consequences of oral tobacco use are discussed in Chapter 3,
Section 3.33.
A particular type of smokeless tobacco product known as ‘snus’ is widely used in
Scandanavia. Although addictive, snus is less harmful than other forms of tobacco use,
and it may also be useful as an aid in cessation.56 Philip Morris and RJ Reynolds are
promoting snus-style smokeless tobacco products in test markets in the USA.57 BAT are
promoting their own snus brands in South Africa, Japan and Canada.8
Whether snus may have a wider role in reducing harm caused by smoking is a matter
of vigorous debate.58-62 For discussion, see Chapter 12. The health consequences of using
snus are discussed in Chapter 3, Section 33.
In the USA, a company called Star Scientific63 has developed another variation on
traditional oral tobacco products.64 Ariva is presented in the form of a compressed
capsule of tobacco designed to dissolve in the mouth, thereby eliminating the need
for spitting or disposing of the spent product. Ariva is intended for ‘adult smokers
who increasingly find themselves in situations where they can’t smoke—for example,
mothers who choose not to expose their children to second-hand smoke, travellers who
fly on long plane trips, or restaurant patrons…’.64
10.7.4
Countering second-hand smoke
A range of products claiming to mask, reduce or eliminate second-hand smoke has
been developed since the rise in concern about environmental tobacco smoke during
the 1980s. (Some of these products have also claimed to offer health benefits to the
user – see Section 10.7.5).
Lemon and vanilla-scented cigarettes were test marketed in the USA and Germany in
the late 1980s, the fragrant smoke intended ‘to overcome most of the objections non-
smokers have about the smell of burning tobacco.’ 65 In 1992, Philip Morris investigated
marketing a new ‘reduced odour’ cigarette, declaring that the long-term goal of its
research and development activities was to develop a completely odourless cigarette.66
RJ Reynolds (RJR) experimented in the USA in the mid-1990s with Salem Preferred 67
that was claimed to mask and change the odour of cigarette smoke (while not actually
reducing its quantity68). A variation on this, Salem Pianissimo, was launched by RJR in
* Although individuals may legally import small quantities for personal use. See Chapter 3, Section 33 for discussion.
Section: 10.7.4
Japan in 1995, claiming to be ‘the clean cigarette,’ offering ‘less lingering smell’ and ‘less
sidestream smoke.’ Following the success of Salem Pianissimo, RJR launched four more
brands in Japan that claimed similar attributes, announcing that ‘these cigarettes were
designed to encourage peaceful coexistence among smokers and non-smokers…’. Since
then, other manufacturers have also launched ‘cleaner’ cigarettes.68
Entirely new ways of consuming tobacco have also been devised with the intention of
reducing sidestream smoke. RJR tested Premier in the USA briefly in 1989.69 Premier,
which delivered nicotine to the user by heating rather than burning the tobacco, was
withdrawn soon after not only because smokers disliked the flavour, but, ironically,
because it had an unpleasant and pervasive aroma which tended to spread well beyond
the smoker.65 RJR has since launched another non-combustion, low emission product,
Eclipse (see Section 10.7.5 below). Philip Morris has developed a product called the
Heatbar, a battery-powered plastic device which heats rather than burns tobacco.
Inhaling the warmed tobacco delivers a flavoured aerosol to the user, while producing
90% less sidestream smoke than a normal cigarette. The Heatbar has undergone limited
market testing in Switzerland and Australia6 but does not appear to have impressed
younger smokers.70 In the USA, Ruyan America has developed an alternative nicotine
delivery electronic cigarette called the V-8 E-cigarette, which simulates smoking without
creating sidestream smoke.71
How popular these latest innovations will be with consumers remains to be seen.
10.7.5
Potentially reduced exposure products
Industry efforts to produce a ‘safer’ cigarette go back many decades. While publicly
maintaining that their products did not cause disease or death among their users, the
tobacco companies experimented with various forms of filters, ventilation systems,
and modifications to the tobacco leaf itself in an effort to reduce harmful emissions
from tobacco smoke.* Of these, products claiming to deliver lower levels of tar, nicotine
and carbon monoxide were the major focus from the 1970s onwards, even though the
tobacco companies were well aware that these product modifications delivered little or
no real health benefits to smokers75-78 Cigarettes promoted as being ‘light’, ‘ultra light’
and ‘mild’ came to dominate the market during the 1980s and 1990s, descriptors now
banned in Australia (see Chapter 12 for detailed discussion). It is now a matter of
record that ‘smoking cigarettes with lower machine-measured yields of tar and nicotine
provides no clear benefit to health.’79 p25
Other modifications to the standard cigarette designed to reduce the smokers’ exposure
to the harmful contents of cigarette smoke have since been developed. These ‘potentially
reduced exposure products’ (PREPs) are generally claimed to emit reduced levels of
nicotine or carcinogens due to the use of additives, different techniques in leaf blending
and processing, using genetically-modified leaf, or by the application of new filtration
methods.80 In the USA, several products of this nature have been introduced with
varying degrees of success. Some examples include Liggett-Vector’s Quest,81 Brown &
Williamson’s Advance Lights,82 and Philip Morris’s Marlboro Filter Plus.6 Several PREPs have
been discontinued, presumably due to low sales. These include Liggett-Vector’s OMNI,83
Philip Morris’s Next and Brown & Williamson’s Advance.82
* From the 1970s onwards, tobacco companies patented many inventions to lower the quantities of toxic chemicals in cigarette smoke, but
they were not adopted at the time. To incorporate them in to standard cigarette design and promote a ‘safer cigarette’ would be tantamount
to admitting that tobacco use was dangerous, something which no tobacco company openly declared before 1999. There is no proof that any
of these inventions would have produced a ‘safer’ cigarette. For further information about changes to cigarette design and technology, refer to
The US Surgeon General’s Report for 1981, The Changing Cigarette,72 and more recent articles such as those by Baker73 and Boyd.74
Section: 10.7.5
Facts and Issues
New concepts in PREPs have also been developed that deliver nicotine by heating of
the tobacco instead of burning it. Examples of these are RJR’s Eclipse and Philip Morris’s
Accord, which have the appearance of conventional cigarettes but which claim to deliver
lower levels of toxins to the smoker, as well as reduced second-hand smoke.69, 77 A range
of tobacco-free products which resemble cigarettes, cigars and pipes have also been
introduced. These battery-powered electronic devices deliver doses of nicotine in an
aerosol to the user in a range of flavours, including fruit, ginseng, coffee, mint and
chocolate. Promotional material for these electronic devices claims that they are less
hazardous to health.84-87 In Australia, at least one of these devices is being advertised and
sold over the internet and through selected retail outlets. The product, Egar, positions
itself as a cheaper and healthier alternative to smoking as well as an effective way of
sidestepping bans on smoking in offices, restaurants and other public places.85
Consumer acceptance of PREPs appears not to have been widespread at this stage. A
study on consumer responses to several of the products available in the USA during
2002 found that most smokers did not find them to be either a satisfying substitute
for traditional cigarettes, or of assistance in quitting smoking.82 However investment
in PREPS is substantial by some tobacco companies. According to industry analysts
JP Morgan, US$3 billion was invested in research and development of PREPs between
1999–2004, and the PREP market in the USA could be worth an estimated US$20
billion by 2015.88 Of the major tobacco companies operating in Australia, BAT and PMI
state that they are committed to research and development of safer cigarettes.5, 8
The implications of PREP use are of considerable concern to health interests. There is
evidence that consumers may overestimate the possible risk reduction associated with
using PREPs.77 This and other research raises concerns that PREPs might attract (and
addict) new users, discourage quitting, result in rebound usage of standard cigarettes
at a level even higher than before, or induce successful quitters to return to what they
perceive to be a safe form of tobacco use.77, 82 By leading consumers to believe that they
are safer, PREPs could also reassure young smokers that there is no need to quit, since
there are apparently safer alternatives to switch to in the future.80
Whether PREPs actually deliver the health benefits claimed by their manufacturers is
not known. The US Institute of Medicine of the National Academies of Sciences has
examined the current scientific knowledge about PREPs, concluding that they ‘have
not yet been evaluated comprehensively enough (including for a sufficient time) to
provide a scientific basis for concluding that they are associated with a reduced risk of
disease compared to conventional tobacco use.’89 p 232 The World Health Organization
has concluded that ‘Demonstration of reductions in smoke emissions or reduced
uptake of toxicants alone is not sufficient to support claims or implications of reduced
toxicity or harm.’80 p 9 Comprehensive, rigorous independent testing of PREPs is clearly
required.80, 89, 90 Even if PREPs are ultimately proven to be less toxic to users, their
contribution to uptake and persistent use in place of quitting could result in increased
harm due to tobacco use overall.77
10.7.6
‘Roll-your-own’ and ‘make-your-own’ cigarettes
The decision to use roll-your-own or make-your-own cigarettes is generally made
by consumers seeking a more economical way of smoking. Roll-your-own (RYO)
cigarettes comprise loose tobacco manually rolled up by the user into a cigarette paper
and sealed shut with saliva, with or without the addition of a filter. Make-your-own
(MYO) cigarette kits provide the user with loose tobacco, pre-fabricated paper cigarette
Section: 10.7.6
cylinders and filters that produce an end product much like manufactured cigarettes in
appearance.
In Australia the growing market for RYO has lead to several innovations. Slimmer
filters allow a packet of tobacco to last longer, by making more, smaller cigarettes. Loose
tobaccos closer in characteristics to the tobacco used in ready-made cigarettes have
been produced to accommodate smokers switching from factory-made cigarettes to
RYOs. Smaller pouch sizes accommodate price conscious smokers.43 Packaging has been
redesigned and updated to attract attention, and popular cigarette brands such as Peter
Jackson and Longbeach have been launched in an RYO variant. The availability of different
styles and sizes of cigarette papers and filters has been increased to encourage RYO
smokers to express their personal style.91
Overseas, innovations have included smaller, cheaper cigarette papers,57 and techniques
to expand the tobacco have allowed the smoker to make more cigarettes with the same
weight of tobacco.92 In Germany, Philip Morris has marketed its ‘tobacco block system’
(TBS), in which tobacco is sold in compressed blocks. A special machine is used that
inserts tobacco from the block into a ready-made cigarette cylinder. The TBS has
been introduced as a way of exploiting the tax differential between RYO tobacco and
manufactured cigarettes.6
10.7.7
Organic, ‘green,’ and additive free cigarettes
In recent years a variety of ‘green’ attributes have been claimed for particular tobacco
products, responding to growing consumer awareness of environmental concerns. With
no hint of irony, these include references to purity, naturalness and the lack of additives,
as well as claims for the farming practices employed in the production of the leaf—such
as allusions to organic growing conditions, reforestation programs, use of renewable
energy sources such as wind power93 and ethical sourcing from farmers.94 This trend
has been especially marked in the USA,93 where consumer concerns have lead to the
marketing of organic, ‘100% additive free natural’ brands such as American Spirit95 and
1st-Nation.94
There is also evidence that these types of descriptors tend to offer the consumer
reassurance, since ‘natural’ commonly connotes beneficial attributes.93 Although
some manufacturers are careful not to claim health attributes for their products,95 it
is significant that US tobacco companies have sought to retain the right to use the
descriptor ‘natural’ on their cigarettes sold outside the USA.93
At the time of writing no brands of Australian manufacture claim to be organic or
additive free, although at least two imported brands, American Spirit44 and Manatu11 are
available, as well as a small range of herbal cigarettes.
10.7.8
Packaging trends
Restrictions on tobacco advertising in Australia and other countries have made product
packaging an increasingly important vehicle for brand identity and positioning.96-98 In
Australia, Winfield cigarette packs directly allude to their former advertising campaigns
by carrying inside the flip top ‘…anyhow have a Winfield’, the slogan made famous by
actor Paul Hogan in advertisements outlawed in the 1980s.99
Section: 10.7.8
Facts and Issues
New trends in pack design include limited edition designer packages,* cigarette packs
that emulate sleek mobile telephone design,6 and splittable packs that become two
smaller packs, similar in dimensions to an ‘iPod.’100
For further information on packaging trends in Australia, see Chapter 11, Section
11.6.3.1.
10.7.9
Reduced fire risk cigarettes
Lit cigarettes are a leading cause of fires and death and injury due to fires.101 In Australia,
smoking is conservatively estimated to be the direct cause of at least 4574 fires
annually;102 and almost one in every four deaths due to fire is attributable to fires caused
by smoking103(see also Chaper 3, Section 3.19). The role of smoking-related materials
in causing fires has lead to the introduction of ‘reduced fire risk’ (RFR) cigarettes,
otherwise known as ‘reduced ignition propensity’ (RIP) cigarettes, in Canada and in
most states of the USA.104
RFR cigarettes self extinguish when not being actively smoked.102, 105 Other methods of
smoking (such as pipes, cigars and hand-rolled cigarettes) have always required active
inhalation from the smoker to keep the tobacco burning.106 Ordinary cigarettes remain
alight because of the addition of ‘burn accelerants.’ These additives keep the cigarette
burning at a constant rate and help hold the burning tip and ash together.107
The tobacco manufacturers have long had the technology to produce cigarettes with
reduced fire risk.108, 109
The most commonly used method involves making alterations to the paper in which
the cigarette is wrapped.110 The addition of two or three thin bands of less porous paper
works as ‘speed bumps’—when the tip of the cigarette burns down to one of the bands,
the change in the paper restricts oxygen supply to the burning tobacco and makes the
cigarette go out. Other ways of reducing ignition propensity include using expanded
tobacco, adjusting the size of the cigarette, or making other changes to wrapping
papers.106, 110 However RFR technology is not effective in all cases. Tests on cigarettes
for sale in the state of New York, where RFR regulations came into force 2004, have
shown that about one in 10 RFR cigarettes still burned for its full length.110 It is therefore
important not to regard or promote RFR cigarettes as completely ‘fire-safe’—but they
are less likely to cause a fire than other cigarettes.
As noted above, RFR requirements have now been mandated or are filed for legislation
in most states of the USA, and throughout Canada as well.104 In November 2007,
member states of the European Union voted to begin the process of regulating for RFR
cigarettes, and the government of the UK has made a separate announcement that it
intends to introduce regulations independently and to a more rapid timetable.111
In March 2007, Standards Australia, recognised by Australian governments as
Australia’s peak standards body,** finalised a standard for testing RFR cigarettes. The
Determination of the extinction propensity of cigarettes (Standard AS4830-2007) was developed
in collaboration with the Australasian Fire and Emergency Service, the CSIRO, the
three tobacco companies operating in Australia, and other stakeholders. The standard
tests the likelihood of combustion if a burning cigarette is placed in contact with
material similar to that of household furniture. 112
* Such as the limited edition Dunhill My Mixture range launched in an ‘innovative 20s spring-box format’ during late 2007.33 p 6-7
** http://www.standards.org.au/default.asp
Section: 10.7.9
In June 2008 the Product Safety Policy Section of the Australian Competition and
Consumer Commission (ACCC) released a regulation impact statement considering
workable options for introducing RFR regulation in Australia under the auspices of the
Trade Practices Act 1974.107 In the interests of protection of consumers and simplifying
compliance, the ACCC has recommended ‘establishing explicit government regulation
by declaring a mandatory minimum standard for RFR cigarettes.’107 p 15 In March
2008, the Australian government announced its support for these recommendations,
signalling that they could be implemented by early 2009.*
The tobacco industry has a history of opposing the introduction of RFR cigarettes. See
Section 10.21.2.2.
10.7.10
Specialty products
In the USA, restricted opportunities to smoke have led to increased emphasis on
specialty products designed to enhance the experience. While some people may
be smoking less, they are tending to smoke more selectively.57, 113 This has boosted
the premium end of the market. Top of the range cigarettes may be hand finished,
using special papers and filters, and presented in luxury tins or boxes. Holographic
cigarette papers that ‘provide a scintillating light show’ have been adopted by one
manufacturer.113 The demographic groups likely to be attracted to these premium
products are typified as the young, more affluent, adventurous, sophisticated, better
informed and sociable smoker; or secondly as established smokers who are cutting back
on tobacco use but treating themselves to quality products.113
As part of this trend, cigar use has also increased in popularity, and the market has
expanded to accommodate a broader range of sizes, styles and flavourings.57 Smaller
cigars are intended to appeal to ‘time-poor’ smokers. Sweeter and more aromatic
tobaccos that enhance flavour and improve the smell of second-hand smoke are making
cigars more appealing to female users.43
According to an industry report, cigars are popular across all social and cultural
boundaries.11 Not to have cigars on display ‘is like taking Mars Bars off the confectionery
shelf,’ according to a manager at Swedish Match, an importer of cigars into Australia.11
Other niche products include ‘green’, ‘organic’ and ‘fair-trade’ cigarettes—see Sections
10.7.7–10.15.2.
10.7.11
Accessories
Accessories and gimmicks used in support of tobacco use are an important means
by which tobacco companies can keep their products and brands interesting to the
consumer. Items such as cigarette cases, cigar cutters, humidors (for cigar storage),
crystals (intended to keep cigars fresh), glass pipes, hookahs, cigarette lighters and
odour neutralisers in the form of candles and incense are all trends in the USA.
According to a North American tobacco accessories distributor, ‘It’s like the fashion
business. It’s very difficult to predict. That’s why you have to keep refreshing your
assortment.’114
* See http://www.abc.net.au/news/stories/2008/03/26/2199878.htm
Section: 10.7.11
Facts and Issues
In the USA, the BIC Corporation has produced collectable lighters that feature classic
cars, tattoos, astrology and motor racing. Consumers are given the chance to participate
in selection of new designs by accessing the BIC Lighter’s consumer website. In another
innovation, one lighter brand has provided a code that becomes visible as the butane
level in the lighter drops. Prizes may be won by entering this code into the company’s
website.57
10.8
The tobacco growing industry

10.8.1
Global
Tobacco is grown in more than 120 countries. In 2004, more than one third of the
world’s tobacco was grown in China. Other major producers include Brazil, India, the
USA and Turkey. Tobacco leaf is an important source of export revenue for Brazil, the
USA, Turkey, Zimbabwe and Malawi. In recent decades tobacco growing has declined
in more developed countries, moving to less developed regions where consumption
trends remain buoyant and the industry has been welcomed by government. If this
trend continues, it is estimated that by 2010, more than 85% of the global tobacco leaf
requirement will be met by producers in developing countries.115
10.8.2
Australia
10.8.2.1
Brief history
Tobacco growing commenced during Australia’s early years of settlement. Governor
Macquarie experimented with plantings at Emu Plains in New South Wales in 1818, and
by the 1820s tobacco was cultivated by farmers in the Hunter Valley. During the 1850s
growing extended to Victoria and Queensland. It is likely that some proportion of the
early crop was intended to supply the colony with the makings of pesticide for use in
ridding sheep of parasites.116 Growing reached its peak in the early 1970s, when nearly
16,000 tonnes of leaf were sold annually,117 but by 2006 the crop yielded under 4000
tonnes.118 Prior to deregulation of the market, most Australian leaf was purchased by
local manufacturers.119
Major influences contributing to the downturn in local tobacco growing include
declining tobacco consumption in the Australian population, and successive
reductions in the protective tariff on Australian leaf during the 1990s, which permitted
manufacturers to purchase leaf more cheaply on the international market (see below).119
This led to an increase in diversion of Australian leaf into the illegal tobacco trade119 (see
also Section 10.9).
Commercial tobacco farming no longer occurs in Australia. The industry began to wind
down during the mid-1990s, with successive announcements at both state and federal
Section: 10.8.2.1
level for government-financed restructuring grants (exit grants) to tobacco farmers to
assist them in leaving the industry (see below).
10.8.2.2
Government regulation
Federal government support for the Australian tobacco growing industry commenced
in 1936, with the introduction of the Local Leaf Content Scheme (LLCS) which
encouraged the manufacturers to use at least a minimum percentage of locally grown
leaf. Doing so entitled the manufacturers to a tariff concession on the balance of
imported leaf they used.120
Imbalances between supply and demand in the industry, as well as ongoing problems
with grading and pricing of local leaf, lead to the passage of the Commonwealth Tobacco
Marketing Act (1965). This legislation established the Australian Tobacco Board (ATB)
as a statutory authority of the Australian Government. The ATB, which became known
in 1990 as the Australian Tobacco Marketing Advisory Committee or ATMAC, advised
federal and state ministers on interstate and overseas marketing of Australian tobacco
leaf, as well as the various state tobacco leaf marketing boards (established under
legislation in those states which grew tobacco) on the same matters. The ATB and later
the ATMAC was also responsible for the administration of the main instrument of
regulation, the Tobacco Industry Stabilisation Plans (TISP). In brief, TISPs and their
key component, LLCSs, served to control supply and guarantee the sale of Australian
leaf to local manufacturers at a pre-arranged price. The TISP introduced in 1965 raised
the minimum local leaf content to 50% of Australian leaf in the manufacture of their
products and in 1977 this requirement was increased to 57%.120
At a state level, each growing area had its own Tobacco Leaf Marketing Board, which
was responsible for allocating supply quotas of tobacco to individual growers.120
10.8.2.3
The decline of tobacco farming in Australia
During the 1980s and early 1990s a series of reviews evaluated the structure of the
tobacco growing industry in Australia.121-123 In 1990, it was the view of the Industry
Commission that taking into consideration statutory marketing arrangements, tariff
concessions and all other measures of government support, tobacco was by far the most
subsidised agricultural activity in Australia, receiving assistance at about 6.5 times the
rate of other horticultural activities, and more than 12 times the average rate for all
agricultural activities.124
In 1994 the Industry Commission published a review of the tobacco growing industry
in Australia, finding that the succession of TISPs and LLCSs had created an inefficient,
non-competitive industry which was now on the brink of collapse. The commission
recommended the phasing in of major deregulation of the leaf market to bring it into
line with other Australian manufacturing and agricultural industries and to permit
tobacco manufacturers to purchase leaf from overseas without penalty. Later that year,
the Australian manufacturing industry and tobacco growers submitted a proposal for
restructuring which was agreed to by the Commonwealth government in December
1994.125 The package allowed for the winding down of ATMAC and the abolition of the
LLCS and TISPs. Tariffs were to be removed from imported tobacco leaf and tobacco
products. Manufacturers were to purchase local leaf under arrangements which
conformed to the requirements of the Trade Practices Act (1974). In addition, the tobacco
Section: 10.8.2.3
Facts and Issues
manufacturers agreed to provide $10.8 million to aid restructuring, payment to be

matched by contributions from the Queensland, Victorian and New South Wales state
governments.125
In 1994, the year in which the final TISP ran its course, there were about 600 tobacco
growers remaining in Australia. Most of the crop (58%) was produced in northern
Queensland, about 38% was grown in Victoria around Myrtleford, and 4% was grown
around Ashford and Bonshaw in New South Wales.125 During 1994 and 1995 the
Victorian, New South Wales and Queensland state governments announced financial
incentives and other support for growers wishing to exit the market.125 By the end of
1995, only 366 tobacco growers remained, 240 in Queensland and 126 in Victoria.125
As foreshadowed, the ATMAC was wound up in 1995,126 and ultimately abolished in
April 1997, with the repeal of the Tobacco Marketing Act 1965,127and the organisation’s
assets were transferred to the Tobacco Research and Development Corporation, a body
intended to support the research needs of the industry.125 Over the following years the
manufacturers increased volumes of cheaper imported tobacco leaf, and the Australian
growing industry continued to fold, not without acrimony on the part of some of the
remaining growers.128-130 The Tobacco Research and Development Corporation was
abolished in 2003.131
The last sales contracts in Northern Queensland were filled in early 2004,130 and in
Victoria and Southern Queensland, a majority of growers voted in support of a federal
government and industry-funded buyout of the leaf growing industry announced
in October 2006. All outstanding sales transactions are expected to be completed in
2009.132
Most leaf used in Australian-made cigarettes is now grown in the USA, Brazil,
Zimbabwe and India.19
10.9
The tobacco industry and the illegal

tobacco market
10.9.1
Chop-chop
Chop-chop is finely cut, unbranded ‘black market’ tobacco that has been grown,
distributed and sold outside the government regulated and taxed system.133 Due to its
affordability, some smokers have adopted chop-chop as an alternative to, or in addition
to smoking manufactured tobacco.134-136 Although used on a regular basis by a small
minority of Australian smokers,137 the financial losses involved for the government, due
to lost taxation, and the tobacco companies, due to lost retail sales, are considerable.
According to tobacco industry-commissioned estimates, one in every 17 cigarettes
smoked in Australia contains chop-chop.138
Although the closure of the legal tobacco growing industry in Australia can be expected
to cause a downturn in the local chop-chop market, it does not preclude the possibility
that illegal growing will continue, as it does, for example, with cannabis.139 Illegal
importation of leaf and other tobacco products has also increased.140
Section: 10.9.1
Several factors combined to accelerate the growth of the black market in home-grown
tobacco in the late 1990s.133 The dismantling of the Tobacco Industry Stabilisation
Plans after 1995 allowed Australian tobacco manufacturers to source tobacco leaf from
the international market, putting downward pressure on the price of Australian leaf
and leading to problems with over-supply. The abolition of individual state business
franchise fees (state-levied tobacco taxes) in 1997, the change from charging federal
excise on a weight basis to a per cigarette basis in 1999, and the introduction of the
federal Goods and Services Tax in 2000* led to a uniform tax regime on tobacco
throughout Australia and a significant increase in excise collections from tobacco.
Obtaining tobacco illicitly, avoiding the tax and providing the product to the end user at
a discount was highly profitable activity.133
Chop-chop typically entered the market via individuals or groups who purchased
leaf directly from a tobacco grower, processed it for sale, and provided it to a range
of retailers (such as tobacconists, market stallholders, hairdressers, newsagents and
milk bars) for on-selling. The product was usually sold in half or one kilogram lots,
packed into clear plastic bags in loose leaf form, but has also been found converted into
ready-made cigarettes and presented in counterfeit tobacco packaging.133 According to a
news report just prior to the closure of the Victorian tobacco growing industry, tobacco
farmers could earn up to $10,000 per bale of tobacco on the illicit market, compared
to a top price of $800 the same bale would fetch on the legal market; and the same bale
would yield $30,000 in excise for the federal government.141 Bypassing the government,
tobacco companies and retailers also meant considerable savings for the end user, who
could purchase 100g of illegal tobacco for about $13, compared to a recommended
retail price for the equivalent legal product of about $36.142
The substantial financial consequences of the illicit tobacco trade have prompted
investigation from both the government133, 142 and the tobacco industry.138, 143 In a
report for the Australian Taxation Office in 2006,142 the Australian National Audit
Office (ANAO)** stated that illegal tobacco operations were a key priority in the area
of evasion and serious fraud. The ANAO estimated that in 2004‒05, almost 10% of
legally grown tobacco was diverted into the black market, and of this, only about
6% was intercepted.142 In an earlier report, the ANAO estimated that ‘tobacco excise
revenue leakage’ due to the illegal tobacco market in 2001 was likely to range from
$99 million‒$220 million annually.133 Tobacco smuggling has also been associated with
other serious criminal activity. On the basis of Australian Taxation Office research, the
ANAO observed that the organisers were ‘actively involved in other forms of criminality
such as drugs, money laundering, identity fraud and car rebirthing as well as tobacco
smuggling.’142 p 15 Illegal trading resulted in the murder of a Victorian tobacco grower in
2002.144
In two reports commissioned by British American Tobacco Australia, the consulting
firm PricewaterhouseCoopers (PwC) has also analysed chop-chop and other illegal
tobacco trade in Australia.138, 143 According to the more recent PwC report, 6.4% of all
tobacco consumed in Australia in 2007 was of illegal origin, representing an estimated
loss of $450 million in taxes (excise and GST combined).
The cessation of legal tobacco farming in Australia is discussed in Section 10.8.2.3. For
further information on the prevalence of the use of chop-chop in Australia, refer to
Chapter 1, Section 1.11.2. The health consequences of smoking chop-chop are discussed
in Chapter 3, Section 3.27.2.
* For detailed discussion of these changes to tobacco taxation, refer to Chapter 13.
** The Australian National Audit Office provides financial auditing services to the Parliament and Commonwealth public sector agencies and
statutory bodies. See http://www.anao.gov.au/index.cfm
Section: 10.9.1
Facts and Issues
10.9.2
Imported counterfeit cigarettes and loose tobacco
leaf
Smuggled counterfeit cigarettes account for almost 11% of all tobacco sales globally.145
Tobacco products are smuggled on the international market along with other
contraband such as class A drugs and alcohol by organised criminal syndicates.143
In Australia, Pricewaterhouse Coopers estimates that about 8% of the illegal tobacco
market is in the form of imported loose tobacco and counterfeit cigarettes, and predicts
that in line with international activity, illicit imports can be expected to increase.143
This appears to be borne out by information from the Australian Customs Service
in December 2007, which reported a 14-fold increase in seizures of imported illegal
tobacco compared with 2006.140 About 95 million cigarettes and 236 tonnes of tobacco
were seized during 2007, representing more than $100 million in lost government
revenue. Australian Customs attributed the additional haul to increased vigilance, as
well as reduced opportunities for local leaf to enter the illegal market146 and a global
surge in large scale, organised tobacco smuggling. Sydney and Melbourne ports were
the major destinations for tobacco arriving by sea, the largest seizures of counterfeit
cigarettes being from the United Arab Emirates and loose tobacco originating from
Vietnam.140
10.9.3
Is smuggling advantageous to the international
tobacco industry?
The illicit tobacco trade markedly decreases the public health benefits of tobacco
control action ‘by making cigarettes cheaper, more accessible and more difficult to
regulate.’147 Most illicit trade in tobacco involves large-scale movement of products
through channels which circumvent taxation. (Counterfeiting and bootlegging account
for a much smaller proportion of the illegal market).148 The tobacco companies sell
their products to distributors in the usual way, with the usual profits. Tobacco products
then leak from distributors into the illegal market, where by evading tax, it is sold more
cheaply than taxed goods. The only real losers, financially, are the governments which
miss out on tax revenue.149
Publicly the tobacco companies have claimed to have no knowledge or involvement in
smuggling activities, but internal industry documents reveal that they are complicit in
these activities. Smuggling benefits the international tobacco industry in a number of
ways; including by:148, 150, 151
<< allowing brands to infiltrate otherwise closed markets
<< providing leverage for the tobacco industry to argue that closed markets be opened
(because closed markets don’t work)
<< providing a source of cheap cigarettes to fuel uptake and consumption, particularly
among younger populations and in poorer regions
<< enabling the industry to lobby against tobacco control measures, especially increased
taxation, by arguing that such measures increase smuggling.
Section: 10.9.3
10.10
The tobacco industry exposed: tobacco

industry document repositories
The preceding sections detail the size, scope, and other publicly available vital statistics for the tobacco
industry in Australia. The following sections of Chapter 10 examine the way in which the tobacco
industry operates in Australia and elsewhere, including its interaction with governments, non-
government organisations, commercial enterprises, industry groups, the media and the public.
During the 1990s millions of pages of internal tobacco industry documents were made
public, mostly as an outcome of litigation against the industry. The first tranche of
internal documents, originating from the US firm Brown & Williamson and its parent
company, BAT, was delivered, unsolicited, to Stanton Glantz, a professor of public health
at the University of California (San Francisco). Further documentation was obtained
from Brown & Williamson by US Congress, and more came from the private papers of a
deceased BAT employee.152
Further documents flooded into the public arena as a result of document discovery
associated with tobacco litigation cases such as Cipillone v. Liggett Group.153 As part of the
settlement in 1997 between the State of Minnesota and Blue Cross/Blue Shield against
several tobacco companies (in which the states sued to recover the costs of treating
tobacco-related disease), the companies were obliged to release several million pages
of internal documents and make them available for public viewing. These documents
are stored in the Minnesota Tobacco Document Depository, opened in 1998, and in
the Guildford Document Depository in the UK. The Master Settlement Agreement of
1998 between 46 US states and Brown & Williamson, BAT, Lorillard, Philip Morris,
RJ Reynolds, the Council for Tobacco Research and the Tobacco Institute led to
the discovery of further industry documents.153 Subsequent US-based litigation has
made yet more document collections available.154 Two major gateway sites to industry
documents are the Legacy Tobacco Documents Library hosted by the University of
California and the industry-run tobaccoarchives.com.* However repositories may be
accessed through a number of different websites including those operated by individual
tobacco companies.**
These previously confidential industry documents have allowed scrutiny of the tobacco
industry’s priorities, policies and activities. Marketing practices have been exposed,
including information on targeting young smokers. Lobbying strategies to further the
industry’s interests have been uncovered. The documents also prove that the industry
has long known about the health effects of smoking, the dangers of second-hand smoke
and the addictiveness of nicotine.153
A variety of tobacco industry activities in Australia have come to light through
investigation of documents released as a result of the Master Settlement Agreement.
These have been analysed by Simon Chapman and colleagues at the School of Public
Health in the University of Sydney, with grants from the National Health and Medical
Research Council and the US National Institutes of Health. Chapman et al have
undertaken the research with the dual intentions of revealing industry strategies and
behaviours which may assist tobacco control advocacy elsewhere, and collating material
* See: www.legacy.library.ucsf.edu and http://www.tobaccoarchives.com/default.html

** In Tobacco industry documents: treasure trove or quagmire? Malone and Balbach provide addresses for and evaluate a number of websites
holding tobacco industry documents.154
Section: 10.10
Facts and Issues
on the industry’s conduct in Australia, with a view to providing documentation in

support of prospective litigants.*155
While offering a wellspring of potentially useful information, it has been observed
that accessing the documents—whether in hard copy or online—may be far from
straightforward.154 Further, since the companies pursued policies of document
concealment or destruction in anticipation of legal discovery, the repositories do not
contain complete industry records.155, 156 However the documents have provided rare
and compelling insights into tobacco industry behaviour, and much of the published
research cited in the following sections of this chapter draws on these sources.
10.11
Corporate responsibility and the birth of

good corporate citizenship
The document disclosure discussed in the preceding section brought the tobacco
industry collectively to a point where it could no longer deny that its products were
harmful. The seismic effects of the document revelations, along with continued pressure
for product regulation, legislation and restrictions on smoking, required the companies
to construct and promote a new image to ensure investor confidence. With masterly
recalibration of their moral compasses, the companies began to acknowledge publicly
that tobacco could be harmful, to reiterate that smoking was an ‘adult choice’ and that
tobacco should be ‘sensibly’ regulated.
The tobacco industry’s rebirth has coincided with a much broader move in the
corporate world towards ‘corporate social responsibility’ (CSR), in which transnational
corporations have begun to consider their impact on communities and the
environment, and where necessary to change their ways and make restitution.157 Notions
of what constitutes CSR vary widely, and the extent to which the adoption of CSR
concepts by transnational corporations is more public relations than a true blossoming
of corporate social conscience is a matter of ongoing debate.157
The websites of PMI, BATA and IMG devote countless pages to detailing company
adherence to CSR policies. BATA and IMG provide annual reports benchmarking
their progress, audited for accuracy by third party verification agencies. Philip Morris’s
website explains that it reminds people that smoking is dangerous, that it does what
it can to keep cigarettes away from children, and that it is working to develop less
harmful products (Philip Morris USA even sponsors its own extensive quit smoking
website**). On a wider scale, it pledges to care for its employees, the environment and
farming practices.5 BATA provides an Australasia Area Corporate Social Responsibility
(CSR) Statement, which embraces themes broadly similar to those of Philip Morris.
Imperial Tobacco’s commitment to CSR has a slightly different emphasis, making it
clear that when it comes to CSR, its number one stakeholders are its shareholders, but
likewise outlines its commitment to its employees, the community, responsible sales and
marketing and so on. Further discussion on the various components of the companies’
CSR programs is provided in Sections 10.12–10.18.
* A series of publications reporting on industry documents pertaining to Australia appears in Tobacco Control 2003:12 (Supplement 3).
Industry documents identified by Chapman et al which relate to Australia are available on the Tobacco Control Supersite at http://tobacco.
health.usyd.edu.au/site/gateway/docs/index.htm
** See: http://www2.pmusa.com/en/quitassist/index.asp
Section: 10.11
For the tobacco industry, adherence to CSR depends on their being able to point to
the legality of their products, and that smoking is an ‘adult lifestyle choice’ made by
informed individuals. In their case study of CSR initiatives adopted by the tobacco
industry,158 Palazzo and Richter note that ‘tobacco companies are not in the CSR
business as it is becoming commonplace now across various industries and throughout
academic research. As long as cigarettes kill active and passive users, all that a tobacco
company can achieve is a reputation for transactional integrity.* When tobacco
companies try to link their activities to the common good, they indeed provoke the
legitimate question whether tobacco and CSR are inherently contradictory.’158 p 398
PM’s transition towards CSR from about the mid-1990s has been documented by
Hirschhorn.157 PM management decided to frame the company as an honest and ethical
business, predicated on the fact that they produce legal products for use by informed
adults. As part of this strategy, the company undertook (and publicised) its social and
environmental good works; pledged to operate more openly and voiced support for
reasonable regulation, as well as adopting a consistent approach globally to matters such
as marketing, trade, labour and the environment.
The evolving language used to express PM’s views on tobacco, health, and addictiveness
have been analysed.159 While PM’s website appears to endorse mainstream medical views
on tobacco, its language is non-committal and visitors are referred to external public
health websites (see also Section 10.12). Friedman observes that PM’s motivations are
primarily in the interests of deflecting litigation and that the company is conceding
nothing, while appearing to have changed its ways; a view backed up by internal PM
documents.159 It has also been noted that the emphasis on the individual’s choice to
smoke and offering links to further information is framed to absolve the industry and
shift responsibility to the smoker.160
Can a tobacco company truly claim to operate within a framework of CSR? According
to Hirschhorn, the indisputable facts that:157
<< tobacco has a devastating effect on the health of its users, as well as a subset of non-
users who are exposed to it
<< tobacco is addictive; and the industry knows this
<< numerous studies show that most smokers would like to quit, and
<< mentally ill smokers consume almost one half of tobacco used in the USA
fundamentally preclude the tobacco industry from qualifying as a socially responsible
corporation. Added to this, most smokers become addicted before they have the
opportunity to exercise adult choice.160 How, then, could a tobacco company reasonably
earn CSR credentials? One experienced tobacco control advocate has come up with
a number of suggestions (summarised below) but wryly points out that the industry
would be unlikely to consider this agenda viable:160
<< stop all forms of tobacco advertising and promotion
<< support substantial price rises for tobacco products
<< support youth tobacco prevention programs by increasing funding and placing them
in the hands of an independent non-profit organisation
<< stop interfering with provisions to protect non-smokers from second-hand smoke
<< halt all forms of political donations
<< provide generous financial support to non-profit organisations supporting quitting,
including funding pharmaceutical cessation aids for low income smokers
* Transactional integrity refers to whether the company in question adheres to the legal and moral framework of the society within which it
operates, such as by acting transparently, keeping its promises, and behaving fairly and with consistency. The authors of this paper observe
that many would contend that the tobacco industry does not currently fulfil even this more limited (‘transactional’) definition of CSR.
Section: 10.11
Facts and Issues
<< fund an independent, national tobacco and nicotine research foundation

<< adopt generic packaging with large graphic health warnings
<< comply with regulation of marketing, manufacturing and sales according to conform
to best practice (mandated by government)
<< support effective development of regulation of all nicotine and tobacco products
<< abandon aggressive tactics for growth in less developed countries
<< stop obstructing ratification of the Framework Convention on Tobacco Control.
10.11.1
Corporate makeover—Philip Morris and Altria
—a case study in brief
Of all the international tobacco companies seeking to redefine themselves, Philip Morris
has gone to greatest lengths. In January 2003 Philip Morris Companies, then parent
company to PMI, PM(USA) and Kraft Foods,* changed its name to ‘Altria.’ According
to the company’s website,161 the word Altria is derived from the Latin word ‘altus,’ and
conveys the notion of ‘reaching ever higher.’ It was also intended to clarify its identity as
a parent company to both tobacco and food companies.161
Various commentators have interpreted the name-change as a public relations gesture,
aimed at distancing the parent company and its non-tobacco subsidiaries from the
stigma of association with tobacco manufacturing, and intended to reposition it in
the minds of consumers, employees and investors.162, 163 This view has been confirmed
by internal company documents dating back to the late 1980s that detail concern for
the company’s failing corporate image, and the evolution of plans for its resuscitation,
culminating in eventual name change.164
The corporate structure of Altria has continued to evolve. In March 2008, Altria spun
off PMI to make it a stand-alone company based in Switzerland. While Altria justified
the initiative as motivated by a desire to ‘improve focus on the different market
dynamics, competitive frameworks, challenges and opportunities that Altria and PMI
face,’165 other commentators observe that cordoning off PMI will make the new entity
less vulnerable to US regulators, legislators and litigants, and will reduce public relations
pressure on Altria, which will continue to manage Philip Morris’ US operations.6 US
ownership of PMI restricted PMI’s opportunities for global growth. With the approach
of the split between the companies, a host of innovative product developments that
might have been expected to receive strong opposition in the USA, were announced
for introduction to PMI’s overseas markets.6 Altria retains ownership of PM (USA), the
cigar-manufacturing concern John Middleton Co, a finance and investment company
and a 29% shareholding in SAB Miller, the second largest brewing company in the
world.161
* Kraft Foods, like PMI, now operates separately from Altria and PM(USA).
Section: 10.11.1
10.12
The tobacco industry’s revised stance on

health issues
Corporate admission that smoking causes ill health and death is at the heart of the
tobacco industry’s metamorphosis into socially responsible corporate citizens.
Of course, it was not always so. From the earliest days the tobacco industry robustly
countered any claims that smoking caused disease. Discovery of internal tobacco
industry documents in the wake of several US court cases in the late 1990s (discussed
in Section 10.10 above) proved what health advocates had long suspected—that the
tobacco industry was indeed aware that their product was a major cause of death and
disease, and that several decades had been spent deliberately colluding in covering
up, denying, confusing and questioning the issues of smoking and health.166 Even well
into the 1990s, spokespeople for the tobacco industry in Australia denied that tobacco
use was a cause of disease, citing, for example, a perceived lack of causal proof, and
the vagaries of genetics.* It is highly probable that this legacy of denial, maintained
consistently and persuasively for more than half a century, still has residual effects on
smokers today.167
10.12.1
Smoking, health and addiction
A visit to the websites of PMI,5 BATA19 and ITG3 provides the reader with a number of
carefully crafted statements about the effects of tobacco on health. Perhaps reflecting
the litigation concerns of a company with strong US connections, PMI appears boldly
to states its acceptance of the views of major health authorities with the statement
‘Smoking is dangerous and addictive.’5 BATA states that ‘We believe that with smoking
comes real risks of serious diseases such as lung cancer, respiratory disease and heart
disease, and for many people, smoking is difficult to quit.’ Reading a little further into
their explanation, BATA is unable to resist observing that ‘science has not to date been
able to identify biological mechanisms which can explain with certainty the statistical
findings linking smoking and certain diseases, nor has science to date been able to
clarify the role of particular smoke constituents in these disease processes,’ although the
company explains that it is not mentioning these limitations on science in order to cast
doubt that smoking causes disease.19
Far less forthcoming, ITG makes no overarching statement about smoking and health,
although it does acknowledge that ‘smoking can be characterised as addictive as the
term is commonly used today.’ The company observes that it operates in a controversial
industry because of the health concerns associated with tobacco and smoking, and
notes that public health authorities have concluded that smoking is a cause of lung
cancer and other diseases in smokers (based on ‘statistics’ and ‘questionnaire-based
observations’). Without commenting on the quality of the science, the company
declares that it does not propose to challenge mainstream health messages to the
public.3
* A collection of public statements made by tobacco industry executives and officers from the Tobacco Institute of Australia dismissing the
impact of smoking on health is available at: http://tobacco.health.usyd.edu.au/site/supersite/resources/docs/gallery_leaders.htm and http://
tobacco.health.usyd.edu.au/site/supersite/resources/docs/diary_of_denial.htm
Section: 10.12.1
Facts and Issues
It can safely be assumed that all of the above statements have been thoroughly vetted
by industry lawyers to ensure that they will adequately serve the companies’ needs
in the event of litigation. Meanwhile, it has been observed by some commentators
that in reality, the tobacco companies have not made substantial strides towards a
consensus with public health interests on smoking and health. In her analysis of
evolving language on tobacco, health and addictiveness on PM’s website, Friedman
comments that PM’s wording in fact concedes little and is deliberately constructed to
leave open options for PM’s defence in the event of litigation.159 Henningfield et al have
studied courtroom testimony and other related statements made by tobacco companies
regarding the addictiveness of tobacco.168 This report concludes that industry strategy
has evolved to redefine and trivialise the term ‘addiction,’ likening nicotine to
substances such as caffeine and chocolate but distinguishing it from hard drugs such as
cocaine and heroin.
10.12.2
Second-hand smoke
As with active smoking, each of the tobacco companies operating in Australia addresses
second-hand smoke (SHS) on their websites in different, but equally meticulously
constructed statements. Philip Morris International’s website offers a list of health
consequences declared by ‘public health officials’ to be caused by SHS, and recommends
that the public should be guided by these conclusions (PMI itself neither confirming
nor denying any connection between SHS and disease). PMI also accepts that it is
reasonable to restrict smoking in public places on health grounds.5 Less acquiescent,
BATA cites conclusions by WHO and the NH&MRC on SHS, but goes on to cast doubt
on the strength of the epidemiological research upon which these conclusions are based.
BATA does not comment on smoking bans, but recommends that smokers exercise
courtesy, and avoid exposing infants and children to their smoke.19
Imperial Tobacco takes a different tack, acknowledging that SHS can be an annoyance,
but declaring that ‘it is our view that the scientific evidence, taken as a whole, is
insufficient to establish that other people’s tobacco smoke is a cause of any disease,’ and
asserting that ‘bans on smoking in public places are disproportionate and unnecessary.’
Imperial reiterates the industry’s standard arguments from earlier decades that issues
regarding SHS can be resolved through common sense, courtesy, improved ventilation,
and the introduction of smokefree areas in the workplace, restaurants and other public
places.3
In Australia and internationally, the tobacco industry continues to lobby against
measures to protect non-smokers from tobacco smoke, to dispute and undermine
findings by medical and health bodies169-171 and to fund, directly and indirectly,172-174
research to serve its own ends. Some of these issues are discussed in greater detail in the
following sections.
10.13
Encouraging young people not to smoke

For decades, the tobacco manufacturing industry has publicly stated that it does not
wish young people to start smoking. The health establishment has long regarded these
claims with scepticism on the grounds that it is self evident that if a industry which
kills half of its regular, persistent consumers wishes to stay in business, then it needs
to find a steady stream of recruits. Despite industry protestations to the contrary, there
Section: 10.13
is ample evidence that its promotional activities in Australia175 and internationally176
have in the past, and continue to, target new users* (see also Chapter 11). Initiatives
adopted by the tobacco industry with the stated intention of reducing the appeal of its
products to young people have been designed to forestall government intervention and
to give the impression that the industry is cooperative and responsible. In the words
of a BAT official in 1973, describing a voluntary agreement for the industry in Hong
Kong to withdraw tobacco advertising during children’s television viewing hours: ‘…this
is one of the proposals that we shall initiate to show that we as an industry are doing
something about discouraging young people to smoke. This of course is a phony way of
showing sincerity as we all well know.’178**
As part of the industry strategy to embrace corporate responsibility, youth smoking
prevention programs have been developed worldwide. These have typically taken
the form of programs aimed at retailers, advertising aimed at young people and their
parents, and sponsorship of ‘life skills’ educational programs.179 These activities have
been widely criticised by tobacco control experts for their demonstrated ineffectiveness,
as well as the benefits they may bring the tobacco industry, including:175, 179, 180
<< the appearance of being proactive and responsible, while participating in activities
which they recognise are unlikely to affect uptake of smoking among young people
<< forestalling more effective tobacco control measures which will damage the
industry’s interests, such as advertising bans or taxation increases
<< shifting responsibility for prevention from the industry and placing the onus on
retailers, parents and social groups
<< fostering partnerships with government and non-government health and education
interests which may give the industry political clout as well as credibility
<< strengthening communications with retailers and shoring up support for future
lobbying activities
<< making opponents look like extremists
<< giving the industry an opportunity to communicate directly with young people
<< reinforcing smoking as an ‘adult choice’ (hence enhancing its cache among
teenagers)
<< providing ‘proof ’ if required in a legal setting that the industry has taken action to
discourage youth smoking.
10.13.1
Youth access programs
Access programs address how young people obtain tobacco, and generally focus on
the retail environment. In Australia it is illegal in every state and territory for anyone
aged younger than 18 to purchase tobacco products. Laws regarding sales to minors
have long been a component of a comprehensive tobacco control program and their
role in Australian tobacco control policy remains important as a deterrent to
underage sales.181
However there is debate over how effective access laws are in reducing prevalence in
young people, since it is well known that younger smokers obtain their cigarettes from
* Experimentation with smoking overwhelmingly occurs during the teenage years. Data from the 2007 National Drug Strategy Household
Survey shows that the mean age for initiation of smoking in Australia is 15.8 years.177
** See Knight and Chapman178 for detailed discussion of tobacco industry activities in Hong Kong. This excerpt from minutes of a meeting
between representatives of tobacco manufacturers in Hong Kong may be viewed at: http://legacy.library.ucsf.edu/tid/owq24e00/pdf;jsessioni
d=07C0248832774571CB38B8ED892AB35A
Section: 10.13.1
Facts and Issues
a variety of sources, particularly friends and family.42 This means that although strictly
policed laws might indeed reduce sales to minors, they do not stop young people from
getting cigarettes via their social networks, and do not in themselves appear to influence
prevalence of smoking in young people.182 The industry itself knows this. Investigation
of tobacco industry documents in Australia and overseas has shown that the industry
has co-opted youth access issues as low-risk opportunity for gaining important public
relations benefits.175, 179, 183
Since the early 1980s, the Australian tobacco industry has actively supported access
programs by providing information and signage to tobacco retailers.175 The three
Australian companies currently co-sponsor a program called ‘18+—it’s the law’, which
provides in-store materials and advice to retailers.* For the launch of the 2002 version of
the program, the tobacco industry advertised in both the trade and mainstream press.
In an environment in which discourse between the tobacco industry and the public is
greatly curtailed, this advertising provided a rare opportunity for the industry to spruik
its credentials as a socially responsible corporate citizen.
10.13.2
‘Life skills’ programs
Another component to its activities in youth smoking prevention is sponsorship of life
skills education programs. These programs typically touch on licit and illicit drug use,
and include themes such as personal responsibility, self determination, self esteem, peer
influences and media influences. There is strong evidence that in the USA, the tobacco
industry has actively supported programs known to be ineffective and that in doing
so it has managed to keep at bay the introduction of other, more hard-hitting life skills
programs.**184 A analysis of these programs has found them to be fundamentally deficient
from a public health perspective.185 These programs have also provided the tobacco
industry with leverage against the introduction of stronger tobacco control measures
intended to protect young people.184, 186
Efforts by the Australian tobacco industry to distribute material in schools failed
during the 1980s.187, 188 In the late 1990s PMA funded the development of a program for
Australian teachers to help schoolchildren ‘say no’ to smoking, illicit drugs, drinking
and bullying. PMA wished to conceal its association with the program, ‘I’ve got the
power,’ due to fears that if the connection were exposed, the program would meet with
hostility.175 Their fears proved well founded and the program has not gained acceptance
in Australia.189 However despite criticism, PMA has had involvement with funding
educational materials about substance abuse intended for young Indigenous people,
in collaboration with the NSW Aboriginal Education Consultative Group and the
Victorian Aboriginal Education Association Incorporated.190
The World Health Organization has recommended against the use of tobacco industry-
endorsed youth smoking prevention programs, in recognition that they are intended to
serve industry purposes rather than reduce the uptake of smoking.186
* See: http://www.bata.com.au/OneWeb/sites/BAT_53RF5W.nsf/vwPagesWebLive/DO52ANZV?opendocument&SID=&DTC=&TMP=1
** Such as programs which expose industry tactics, deal graphically with health effects and denormalise smoking. See Chapter 5.
Section: 10.13.2
10.13.3
Anti-smoking advertising
In the USA and other countries tobacco companies have launched extensive television
and magazine advertising campaigns with the stated intention of discouraging smoking
among young people.179 These programs have proliferated, PMI taking its offensive to
more than 70 countries in 2001.179 In the USA, the volume of tobacco-sponsored anti-
smoking advertising has equalled or exceeded that of health interests.191, 192
In 1998, Philip Morris commenced the ‘Think. Don’t Smoke’ campaign in the USA.
This was soon followed by another campaign by US-based company, Lorillard, with
the slogan ‘Tobacco is whacko if you’re a teen’.192 The common message of these
advertisements is that smoking is an adult choice and that young people don’t need to
smoke to fit in socially. The Philip Morris advertisements do not explain exactly why
young people should not smoke, instead repeating the theme that you do not have
smoke to ‘be cool.’192, 193 Philip Morris has also produced advertisements aimed at parents
(‘Talk. They’ll Listen’).
Several studies from the USA show that industry funded programs have not been
effective192-196 and may even have fostered a more positive attitude towards the tobacco
companies.192, 196 A large study conducted over a four-year period found that tobacco
industry campaigns neither reduced smoking nor intention to smoke among the target
audience, and that advertisements advising parents to talk to their children about
smoking might have influenced teenagers in their senior high school years to smoke.194
None of these findings would surprise the tobacco companies, which do not intend
their campaigns to thwart profitability or undermine industry operations.179, 184
10.14
The environmental impact of tobacco

production
As noted in Section 10.8.1, tobacco growing is shifting from developed countries and
becoming concentrated in developing countries. Global tobacco production is forecast
to continue increasing at least until the year 2010, and is expected to be matched by
growing demand for tobacco products in the developing world as population and
income increase.197
For the farmer, tobacco growing often presents an attractive alternative crop to food,
for as well as bringing in a higher income, tobacco growers may also receive practical as
well as financial assistance from the tobacco industry198 (although this is not necessarily
the case199, 200) At the government level, tobacco growing may also be regarded in a
favourable light due to the financial benefits it brings through trade and taxation, at
least in the short term.201 From the point of view of the tobacco industry, production
costs in the developing world are lower and the market is less regulated,197 making for a
more conducive operating environment.
Since the late 1970s, concerns have been registered by a number of environmental
agencies regarding the impact of tobacco growing.201 The tobacco crop itself requires
a high degree of maintenance, including pest and disease control, a regular water
supply and fertilisers to optimise output. Although some tobacco leaf is air or
sun-dried, the majority of varieties grown (particularly in the developing world)
require curing with generated heat, usually fuelled by wood, coal or gas. Beyond the
Section: 10.14
Facts and Issues
primary industry, cigarette companies run manufacturing operations to turn leaf into
various tobacco products ready for distribution, marketing and sale to end users. The
tobacco manufacturing industry generates a number of chemical by-products that
are considered hazardous, including ammonia, nicotine and nicotine by-products,
hydrochloric acid and toluene. In developed countries, appropriate disposal of these
chemicals is strictly regulated; the same may not be true in developing countries where
tobacco manufacturing is becoming more concentrated.202
The environmental impact of tobacco production has been taken up by the major
tobacco companies as part of their portfolio for corporate social responsibility. The
major tobacco companies display their environmental credentials by describing on
their websites their adoption of sustainable and low-impact practices from farm to
factory.3, 5, 19 But no matter how clean or green tobacco production can be, ameliorating
environmental concerns ignores the most obvious environmental impact of tobacco
production—the deaths of almost five million people worldwide each year.203
10.14.1
Land clearing and deforestation
In some countries tobacco growing has lead to extensive land clearance and
deforestation to make room for new crops, and to provide timber to fuel the heaters
used to dry the tobacco leaf following harvest.
Recent, independent information on the status of land maintenance in tobacco farming
areas is lacking. The most authoritative review available examines data from 1990–95.201
This study found that in the early 1990s, 211,000 hectares of forests or woodlands
were cleared each year for the purposes of tobacco farming, more than 90% of this
occurring in the developing world.201 This was equivalent to 1.7% of global net losses
of natural forest each year, or a mean average in tobacco-growing countries of 4.6%
of total national deforestation in the five-year period from 1990-95.201 Overall, around
half of the wood consumed for tobacco farming was gathered from common land and
native forests, rather than from sustainable sources, and in some countries usage of
wood from unmanaged sources was much higher.201 Case reports on farming activity
in specific countries attested to the environmental damage caused by farming, and also
to the ineffectiveness of measures for reforestation, citing instances of inappropriate
plant stock and poorly supported programs.199, 204 Likewise, extravagant tobacco industry
claims of extensive tree planting from the same time period did not stand up to
scrutiny.205
Geist concluded that tobacco’s impact on forest resources had reached ‘high’ or ‘serious’
levels (higher than the national mean average of 4.6%) in almost one third of the 66
developing countries in which tobacco is grown, including South Korea, Uruguay,
Bangladesh, Malawi, Jordan, Pakistan, Syria, China, Zimbabwe, Argentina, Tunisia and
Burundi. In contrast, the impact of tobacco farming on woodland in developed regions
such as Canada and North America, where there was a net increase in forest cover,
was low.201 Reports commissioned by the tobacco industry in the 1980s and 1990s also
signalled alarm at deforestation due to tobacco growing and curing.201, 205
The International Tobacco Growers’ Association (ITGA),* an affiliation of tobacco
growers, claims that preservation of natural resources is a priority and that sustainability
is encouraged in most countries where tobacco farmers use wood for fuel. The ITGA
states that tobacco growers have contributed to the doubling of natural woodland in
regions of southern Brazil.206
* See: http://www.tobaccoleaf.org/index.asp. ITGA is also discussed in Section 10.20.5.
Section: 10.14.1
On their websites, the major international tobacco companies claim adherence to
principals of environment protection and sustainability while pointing out that in
the main, the companies do not own tobacco farms and nor have direct control over
farming practices.* For example, BAT encourages farmers to use non-wood fuels
and sponsors forestry programs, as well as using packaging materials from suppliers
who use sustainable sources.1 Philip Morris International states that it has developed
‘Good Agricultural Practices’ guidelines that include avoidance of deforestation and
establishment of reforestation.5 Independent verification that reforestation programs
such as those publicly supported by the tobacco industry are successful is not available.
10.14.2
Pesticide use
Commercial tobacco growing involves the use of a range of herbicides, fungicides and
insecticides to maximise crop production. In recognition of consumer concern about
chemicals present in tobacco, as well as the environmental sequelae of inappropriate
use of agrichemicals, all three tobacco companies operational in Australia include
reassurances about leaf quality on their websites. Imperial Tobacco states that it
performs tests ‘for the presence of residues of plant protection products’ on the leaf it
uses.**3 Philip Morris and BAT both point to their companies’ leaf growing programs that
aim to promote quality crops without compromising environmental or human safety 5, 8
(at least prior to use).
Until they were banned in the mid-1980s, Australian-grown tobacco was treated
with organochlorines such as DDT and dieldrin,207 chemicals that have the ability to
accumulate in the environment and the body. In 1981 the National Health and Medical
Research Council expressed concern when the Australian Government Analytical
Laboratories determined that Australian cigarettes contained 43 times more DDT
and 30 times more dieldrin than samples of British or American cigarettes.208 Residues
of DDT and dieldren were still evident in soil and river sediments from the tobacco
producing Ovens and King region in Victoria in 1989,209 and may have been implicated
in a higher rate of breast cancer detected between 1982 and 2002 in women living in the
area.210
Research has shown that at least one Australian tobacco manufacturer—Philip
Morris—was aware as recently as 1994 that the leaf it was using still contained
organochlorines from pesticides banned in the preceding decade.207 Australian cigarette
manufacturers are not required to divulge the levels of pesticide residues present in
their tobacco products. Now that all tobacco leaf in Australian cigarettes is acquired on
the international market and much of this leaf is sourced from developing countries,
where use of agrichemicals may be less regulated, the question of pesticide residues
levels in Australian cigarettes remains open, despite the assurances of the tobacco
manufacturers.207 There is evidence from internal industry documents that the tobacco
industry internationally has fought hard to retain the rights to use certain pesticides and
has sought to influence regulatory processes in some countries.211
* Although this may be somewhat disingenuous. For example there is evidence that the tobacco companies may exert influence over farmers
via the leaf dealers.227
** Imperial Tobacco does not manufacture cigarettes in Australia, but does import here. BATA manufactures tobacco products for ITA under
licence. However ITA does import a range of tobacco products. See Section 10.4.3.
Section: 10.14.2
Facts and Issues
10.14.3
Tobacco production and climate change
Climate change (or global warming) is caused by the increased concentration of certain
gases trapped within the earth’s atmosphere. These gases, which include carbon dioxide,
methane, nitrous oxide and manufactured substances such as chlorofluorocarbons, are
heated by and retain warmth from the sun, leading to rises in average temperatures.
These ‘greenhouse gases’ are present in greater quantities due to a range of human
activities, including burning fossil fuels, clearing land, some aspects of farming
(including using fertilisers), and some industrial processes.212
All phases of tobacco production have the potential to contribute to climate change,
from farming to curing the leaf (which for some kinds of tobacco requires the use of
heat generated by wood, oil, coal or gas), and the manufacturing process.
The tobacco industry generally acknowledges issues concerning climate change,
presenting policy statements and evidence of benchmarking towards reducing
greenhouse gas emissions. BAT and ITG dedicate many pages on their international
websites to their engagement with responsible environmental policies. In contrast,
PMI makes only general comment about its aims of reducing factory emissions, and
adhering to world ISO standards.
ITG, BAT and Japan Tobacco are among the 3000-plus signatories to the Carbon
Disclosure Project,* responding to regular questionnaires stating their performance
in reduction of greenhouse emissions and progress towards targets. PMI is not a
participant in this project.
As an aside, the tobacco industry did not always embrace global environmental
concerns. In the early 1990s, lobby groups closely connected with Philip Morris
contributed to the public debate about climate change by denouncing the scientific
evidence upon which arguments for global warming were based—along with other
scientific ‘controversies’ such as the health impacts of second-hand smoke and
radioactive waste from nuclear power reactors.213, 214
10.14.4
Genetically-modified tobacco leaf
Public anxiety about genetically-modified crops has lead to ambivalent attitudes
towards GM tobacco. According to ITG, ‘we do not wish to use genetically-modified
(GM) tobacco, as we believe that our consumers do not wish to purchase products
that may contain GM materials.’3 Other companies are investing substantially in GM
research.
Over the decades the tobacco industry has put considerable effort into altering the
qualities of tobacco leaf through genetic manipulation. From an agricultural viewpoint,
GM technology has offered prospects for maximising crop disease resistance and
output. Tobacco companies have also experimented with genetic engineering as a way
of manipulating nicotine concentrate—both reducing it,215 with the aim of providing
a potentially less hazardous product, and increasing it, with the apparent intention of
boosting addictiveness.216, 217 The most notorious example of tobacco industry efforts
to achieve the latter is the case of BAT’s ‘super-tobacco’, a genetically-engineered
* The Carbon Disclosure Project is an independent, international non-profit institution which encourages publicly listed corporations to
measure, manage and reduce emissions. The CDP website is the largest repository of corporate greenhouse gas emissions data in the world.
See: http://www.cdproject.net/
Section: 10.14.4
plant variant which contained a much higher than usual amount of nicotine and was
intended to make the company’s products more addictive.218
GM science is now being applied in the pursuit of less harmful forms of tobacco. Philip
Morris (USA, Inc) has contributed $17.5 million to fund the mapping of the tobacco
genome by the North Carolina State University,* and has also funded research into
genetically-modified tobacco leaf that produces fewer carcinogens when smoked. RJ
Reynolds, another US-based firm, has also successfully applied for field permits to test
new tobacco strains.219 Vector Tobacco, a company ‘committed to developing products
that significantly reduce the harmful elements found in cigarettes’81, has launched
QUEST, a brand that uses leaf genetically engineered with reduced nicotine.81, 220
10.15
Ethical farming issues

10.15.1
Tobacco farming and child labour
According to the International Labour Organization** (an agency of the United Nations),
about 166 million children aged between 5 and 14 were involved in child labour in
2006. Nearly 70% of these children were active in the agricultural sector.221 Most child
labour occurs in the Asia-Pacific region, sub-Saharan Africa, Latin America and the
Caribbean.221 Child labour is common in many regions in which tobacco is grown,
although the overall number of children involved is not known. Reports of the plight
of child workers in tobacco plantations are available from commentators in Uganda,
Zambia, Kenya and Malawi. These accounts describe the long hours and labour
intensity of tobacco farming, and the economic necessity for children to work.199, 200, 222, 223
Apart from denying children access to education, work in the tobacco fields may also be
hazardous, exposing children to pesticides and other chemicals, and to toxicity due to
nicotine in the leaf (‘green tobacco sickness’—see also Chapter 3, Section 3.20).
Poverty is a major impetus behind child labour, but not the only one: the ILO also
identifies other important influences including social inequality, paucity of educational
opportunities and options for decent adult employment, strongly agrarian economies,
and traditional and cultural norms. Unscrupulous employers may play a part, and
external events such as natural disasters, epidemics (such as HIV/AIDS) and armed
conflict also push children into adopting the role of breadwinner.224
Not surprisingly the tobacco industry states its abhorrence of child labour, and each
of the companies which operate in Australia provides its policies for perusal on its
website.3, 5, 8
In 2002 the International Tobacco Growers’ Association (ITGA)*** established the
Eliminating Child Labour in Tobacco (ELCT) Foundation with a membership
comprising workers’ unions, tobacco manufacturers and the ITGA itself, with the aim of
assessing the extent of child labour in tobacco growing, supporting projects to combat
child labour, and sharing best practice.225 The ELCT Foundation’s 2005–06 Annual
* See: http://www.tobaccogenome.org/
** See: http://www.ilo.org/global/lang--en/index.htm
*** For further discussion about ITGA, refer to Section 10.20.5
Section: 10.15.1
Facts and Issues
Report details activities in several countries in Africa, the Philippines, Indonesia,

Argentina and Kyrgyzstan.226
The effectiveness of these policies and programs remains a matter for debate. Research
by the Center for Tobacco Control Research and Education into the background and
modus operandi of the ELCT Foundation has shown that the primary concern for the
tobacco companies involved was to enhance their corporate image, without initiating
any real change which might undermine the financial benefits presented by child
labour.227 The authors of this study comment that the costs of banning child labour and
introducing decent working conditions and remuneration for adult tobacco workers
in Malawi would be about US$10 million a year, a sum easily affordable given the
enormous revenues of the tobacco companies.227
10.15.2
Tobacco farming and ‘fair trade’
‘Fair trade’ describes commercial transactions in which farmers and labourers who
produce a commodity are paid a fair price, allowing for decent wages, living conditions
and community sustainability.* Fair trade is most often associated with tea, coffee,
cotton and cocoa grown in the developing world and sold to more wealthy countries.
A noted in Section 10.8.1, most tobacco is sourced from the developing world where
farming conditions are often harsh. Acknowledging this, the concept of fair trade in
tobacco has been launched with 1st-Nation cigarettes, a brand produced by a small
company led by and employing Mohawk Natives on the Akwesasne Reservation close to
the border of New York and Ontario, using tobacco sourced from selected independent
tobacco farmers in Malawi. At the time of writing, these cigarettes could only be
purchased in the UK.94
While the good intentions of the individuals involved are not in doubt, the concept
of a ‘fair trade’ cigarette has raised eyebrows. If the touchstone of fair trade products
is ethical trading practices, what are the implications if the product itself is inherently
dangerous when used as the manufacturer intended?228 Ironically, the very people
which 1st-Nation wishes to support—poor tobacco farmers in the developing world
and First Nation peoples of North America—are especially affected by the burden of
tobacco-caused death and disease.** To date, 1st-Nation has not been accredited by any
international fair trade organisation, since none of these organisations has endorsed
standards which cover tobacco production.94
10.16
The environmental impact of tobacco

use
Cigarette butts are common litter items. An estimated 60% of Australian smokers do
not dispose of their butts in a proper manner when smoking outside.229, 230 Tobacco
packages consisting of cardboard, foil and plastic wrappers, and matches, match boxes
and lighters also contribute to the volume of smoking related litter in Australia.
* See the international website for Fairtrade for further information: http://www.fairtrade.net/about_fairtrade.html
** Like some other Indigenous peoples, First Nation people have a higher prevalence of smoking than the rest of their country’s population and
hence bear greater health consequences (see Chapter 8, Section 8.3.4). The burden of death and disease due to smoking is shifting to the
developing world, where prevalence of smoking has not declined and in some regions continues to increase (see Chapter 3, Section 3.36).
Section: 10.16
According to Keep Australia Beautiful’s* National Litter Index for 2006-07, cigarette butts are
the mostly frequently occurring form of litter, with an average of 35 butts per 1000m2
across national sites surveyed, and cigarette packets are found at an average rate of one
per 1000m2.231 Clean Up Australia’s** annual Rubbish Report 2007232 similarly rates cigarette
butts as by far the most common type of litter found in Australia, accounting by their
reckoning for 12% of all items collected, compared to broken glass (7%) and chip and
confectionery bags (6%). The Butt Littering Trust*** estimates that about seven billion
cigarette butts are littered in Australia every year.229
Discarded cigarette butts have serious effects for the environment. Cigarette filters are
made of plastic and are not readily biodegradable, taking from two months to 12 years
to break down.229, 230 Chemicals in tobacco remnants in cigarette butts and toxic residue
within the filters leach into soil and water, directly polluting these environments and
having a measurable effect on wildlife.230, 233 In addition, discarded cigarettes and matches
are an important cause of fires in Australia.102 The littering of cigarette butts is illegal in
every state and territory.233
Various agencies around Australia have identified butt littering as an important
environmental problem and are working to encourage other agencies and the public
to address the issue. During 2007 the Federal Department of the Environment, Water,
Heritage and the Arts announced a ‘National day of action on cigarette butt litter’ to be
promoted through local councils.234 The Victorian Litter Action Alliance**** has compiled
a Litter Prevention Kit and encourages local municipalities to take action on butt litter.230
In 2007, Sustainability Victoria***** launched a campaign to reduce butt litter timed to
coincide with the banning of smoking in licensed premises.235 Through its National Litter
Index, Keep Australia Beautiful gives prominence to the butt littering problem. 231
The Butt Littering Trust, an initiative of the tobacco industry also runs programs
in partnership with local government and other agencies.229 This is discussed in the
following section.
10.17
The tobacco industry’s response to

tobacco litter
The issue of tobacco-related litter has registered on the corporate responsibility agenda
of the tobacco companies operating in Australia, but all distance themselves to some
degree from the problem, making it clear that appropriate disposal of waste resulting
from their products is not fundamentally their responsibility. Imperial Tobacco’s
Corporate Responsibility Review 2007,236 declares that ‘Consumers have a responsibility to
properly dispose of their litter, whether this is cigarette butts, chewing gum, drinks’
cans, fast food containers or any other items. We believe the best approach to tackling
cigarette litter is for key stakeholders, such as the tobacco industry, government,
environmental bodies, business and local communities, to work together to educate
and to encourage this.’ On its international website, British American Tobacco likewise
observes that ‘people cause litter,’ but adds that it continues to research improved
* See http://www.kab.org.au/
** See http://cleanup.org.au/au/
*** A tobacco industry funded organisation; see http://www.buttlitteringtrust.org/. The BLT is described in the following section.
**** An alliance comprising state and local government, industry and the community – see http://www.litter.vic.gov.au/www/html/20-home-
page.asp
***** An organisation within the Government of Victoria. See http://www.sustainability.vic.gov.au/www/html/1722-who-we-are.asp
Section: 10.17
Facts and Issues
biodegradability of its products.8 Philip Morris engages less directly still, but does note
on its international corporate website that out of concern for ‘the reduction of waste and
of the environmental impact of our packaging,’ it has reduced the weight of its cigarette
packaging in Australia.5
In Australia, each of the tobacco companies has directly participated in anti-litter
campaigns. In 2003, British American Tobacco Australia developed the Butt Littering
Trust (BLT), and BATA remains its sole source of funding. The stated intention of the
BLT is ‘to be Australia’s recognised leading organisation on butt littering reduction
and provider of Butt-Free Solutions to reduce cigarette butt littering.’ Over the 60-plus
programs it has funded, chiefly in partnership with local government authorities and
the ‘Keep Australia Beautiful’ organisation, the BLT claims to have reduced butt litter
by about 26%.229 Imperial Tobacco Australia236, 237 and Philip Morris Australia238 have also
jointly sponsored other butt littering reduction programs with ‘Keep Australia Beautiful’
in some states. Typically, support is in the form of providing funding and publicity
materials including butt bins, posters, stickers and personal ashtrays.
The activities of the Butt Littering Trust have come under some scrutiny. Observers
have pondered how an organisation which is entirely funded by a tobacco company can
claim to be independent.239, 240 Other factors leading to cynicism about the activities of
the BLT and BATA’s motivation for funding it concern the Trust’s concentration of effort
on community education about butt disposal, rather than taking a broader view about
reducing tobacco use itself. Added to this, there is evidence that the Trust has acted to
further tobacco industry interests by lobbying against the ban of smoking in outdoor
eating areas attached to cafés in at least one local government area.239 Funding anti-litter
campaigns such as the BLT gives the tobacco industry the opportunity to gain some
positive publicity, while keeping strict control of the messages smokers receive, and
making useful local government connections along the way.
The BLT’s programs do not appear to have been effective. The New South Wales
Department of Environment and Conservation commented in 2006 that ‘Cigarette
manufacturers have largely limited their product stewardship activities to funding
community education. They appear to consider that such funding fulfils their product
stewardship obligations. However, the activities and projects funded have not translated
into widespread reduction of cigarette butt litter. The impact of current activities funded
by cigarette manufacturers has not delivered a reduction in butt littering.’238 p 21
While urging smokers to ‘do the right thing’ with their cigarette butts and packets is
laudable, it is only a partial solution to the litter problem.239 Actions such as reducing
smoking rates, thereby improving public health and eliminating the product ‘at source’
is an obvious solution but not one likely to be embraced by the tobacco industry.
Other initiatives for reducing tobacco-related littering that could be expected to
have greater effectiveness include increasing penalties for and enforcement of butt
littering regulations, placing a financial levy on tobacco products that is then directed
towards litter education and clean up, requiring the tobacco manufacturers to improve
biodegradability and reduce packaging of their products, ensuring the installation of
proper butt disposal bins at litter ‘black spots’ such as building entrances,202 and placing
obligations on the tobacco companies to meet independently audited litter reduction
targets.241
Section: 10.17
10.18
Corporate links with charities and social

causes
Corporate sponsorship of sporting and cultural events was an important and highly
effective source of tobacco advertising in Australia before it was banned by a number
of states during the late 1980s and finally by federal legislation in 1992.* As well as
enhancing their corporate image, sponsorship provided endless hours of visual and
verbal brand exposure, linked cigarette brands with positive imagery and iconic events,
bought considerable support for the industry when it needed friends, and effectively
gagged potential anti-smoking advocates (such as sportsmen and women whose sport
benefited from tobacco funds).
Termination of these sponsorships has caused Australian tobacco companies to look
elsewhere for ways in which to promote themselves. The advent of an agenda in
corporate responsibility has lead to a focus on charities and groups with impeccable
credentials, including aid for sick children, combating domestic violence and
environmental stewardship.
During 1999, PMA claimed credit in publicity material for supporting a number of
charities in Australia, including Jeans for Genes Day, Red Nose Day,** the Lions Club
and Ronald McDonald children’s charities. None of these charities had knowingly
accepted funding from Philip Morris, since the money had either been received via a
corporate entity related to PMA (Kraft—which owns Vegemite and other iconic food
brands) or because donations had been made through employees of PMA apparently
acting on their own behalf, rather than at the behest of the company. The revelation that
donations could be attributable to a tobacco company caused consternation among the
beneficiaries.242 In February of 2003, PMA co-sponsored a high-profile conference on
domestic violence. The conference, ‘Breaking Point: A Corporate Conference on Work
and Family Conflict,’ was organised by the Federal Government’s Office for the Status
of Women.243, 244 Along with Senator Amanda Vanstone, then Minister for Family and
Community Services, Philip Morris representatives from Australia and the USA spoke
at the event.245
The Office for the Status of Women was strongly criticised by representatives from the
Australian Medical Association243, 244 the Federal Opposition244 and the public health
sector245 on the grounds that tobacco is a major killer of women, and that acceptance of
tobacco sponsorship detracted from the importance of the issue of domestic violence,
while enhancing the corporate image of PMA.
More recent industry efforts by PMA to take the stage in Australia have failed. At a
conference in 2004 a company representative was scheduled to deliver an address
on public relations and corporate communications. After being made aware of PMA
involvement, other speakers threatened to withdraw, and the conference organisers
removed PMA from the program.246 The following year, an attempt by BATA to be
associated with a conference on corporate social responsibility precipitated the exodus
of other companies, including McDonald’s, Pfizer and the mental health group Beyond
Blue.247 In the international arena, at least one similar ‘ethical’ event has been shunned
by non-tobacco companies once tobacco industry involvement has been exposed.246
* Exceptions were made for some events. See Chapter 11 for further information.
** Ironically, funds raised by Red Nose Day support counselling services, research and education into Sudden Infant Death Syndrome. See:
http://www.rednoseday.com.au/. Exposure to cigarette smoke, before and after birth, is a cause of SIDS. See Chapter 3, Section 3.8.2.
Section: 10.18
Facts and Issues
Nevertheless BATA appears to have had some success in forging connections with
several ‘charity partners.’ The logos and web links for these organisations* appear on the
BATA website.1 Employees may choose to make donations to BATA’s charity scheme,
and BATA pledges to match donations dollar-for-dollar. One of the charities to receive
BATA support is Guide Dogs Australia, which provides services to the blind. Noting the
well-established connection between smoking and blindness, ** one commentator has
described this as an especially cynically calculated partnership.248 As part of its corporate
responsibility strategy for the environment, BATA also supports the Butt Littering Trust
(see Section 10.17).
On its international website, Philip Morris pledges its support for ‘five defined
areas: hunger and extreme poverty; education; environmental sustainability and
living conditions in rural communities; disaster relief and domestic violence.’ In
2006, Conservation Volunteers Australia received $75,000*** from PMA.5 PMA has
also supported Keep Australia Beautiful,238 along with ITA236, 237 (see Section 10.17).
Imperial Tobacco makes no other specific mention of its activities in Australia, but
states a preference for supporting charities or not-for-profit organisations in which its
employees are actively involved and matching funds raised by employee activities.3
Corporate philanthropy is unapologetically connected with corporate advertising in
the USA. There, Philip Morris has run television advertising campaigns informing the
public of its good works, such as funding shelters for the homeless, food donations
for the needy and programs against domestic violence.249 In fact Philip Morris spends
millions more dollars on publicising its charitable works in the USA (US$150 million)
than it actually donates ($US115 million).245 This advertising has also allowed Philip
Morris to generate its own positive publicity in mainstream media although direct
tobacco advertising is banned on television in the USA.249
10.19
Tobacco industry lobbying—overview

While in the market place the tobacco companies are fiercely competitive, when it
comes to protecting their collective patch—preserving corporate viability—they have
demonstrated strategic and financial collaboration at the highest level. In Australia and
internationally, the tobacco industry has developed a comprehensive, multifaceted,
multi-level approach to defending its interests. These have included creating ways
to undermine the credibility of the medico-scientific community and public health
interests, the development of networks of influence throughout the business community
and the political world, permeating community interest groups and charities, and the
mobilisation of smokers, retailers, hoteliers, trade organisations and other potential
supporters of tobacco industry objectives.
The capacity of the tobacco industry to wreak havoc with tobacco control legislation
has been identified as a major barrier to the introduction of health measures. In
the Framework Convention on Tobacco Control, Article 5.3 (which outlines the general
obligations of members) states that ‘In setting and implementing their public health
policies with respect to tobacco control, Parties shall act to protect these policies from
* The following organisations are listed: Mission Australia, Conservation Volunteers Australia, Guide Dogs Australia, The Benevolent Society,
Lifeline, Barnados, The Northcott Society, Life Saver Rescue Helicopter and The Abused Child Trust.
** Smoking is a cause of cataract and is a major risk factor for developing age-related macular degeneration, both of which may result in
blindness. See Chapter 3, Section 3.10.
*** It is not clear from the PMI website whether this amount is in US or Australian dollars.
Section: 10.19
commercial and other vested interests of the tobacco industry in accordance with Table 10.21
national law.’250* Industry tactics used to counter
Analyses of tobacco industry tobacco control measures
tactics based on many
years of observation been
published, such as those Including by: influencing content, pre-empting by devising voluntary codes of conduct, political
Lobbying and legislative
1 donations, activation of wider lobby of supporters, promoting legislation likely to be ineffective,
by Sweda and Daynard,251 strategy
using delaying tactics
Saloojee and Dagli252 and Including by: funding, or threatening to withdraw funding, from supporting organisations,
most recently, Trochim et Legal and economic
2 engaging in expensive legal proceedings, infiltrating official regulatory organisations, adopting
intimidation
al.253 Trochim et al categorise an overt legal stance to intimidate, cutting the price of tobacco to undermine taxation policy
industry strategies into eight Including by: creating their own programs (such as youth prevention campaigns) to avoid
broad bands of activity.** 3 Usurping the agenda stricter regulation, limiting tobacco control issues to youth smoking, shifting blame from the
These are presented in Table industry to third parties (such as retailers, young people)
10.21. Creating the illusion of Including by: using the law to counter regulatory initiatives, using independent ‘experts’ to
4
support argue against measures, creating pro-tobacco lobby groups in the community
The following sections Including by: intimidation through the courts, silencing industry whistleblowers, overwhelming
5 Harassment
discuss some of the ways opposition with financial resources, infiltration of tobacco control groups
in which the industry has Including by: supporting research and paying scientists to counter mainstream medical views,
worked towards its goals. 6 Undermining science fostering confusion, creating scientific forums as a vehicle for disseminating industry views,
infiltration of scientific literature
The subject has been
Including by: influencing content, taking advantage of ‘equal time’ to promote its own science,
extensively explored in the 7 Media manipulation ghost-writing material for the media, misrepresenting facts when there is no time to verify,
medical and public health acknowledging that tobacco causes harm but minimising the magnitude
literature and references Including by: charitable works, embracing concepts of corporate responsibility, arguing that the
cited in the following pages 8 Public relations industry is economically vital, casting tobacco control measures as victimisation of smokers,
provide the interested reader overcomplicating issues
with a wealth of further
information.
Source: Summarised from Table 1 in Trochim
et al.253 p 142–3
10.20
Tobacco industry lobbying—the tools

10.20.1
Tobacco industry sponsored consultants
The tobacco industry has long seen the advantage in financing and helping promote
publicity for outspoken, media-savvy scientists who are prepared to challenge accepted
views on smoking and health or various aspects of tobacco control, while appearing
to be independent. Cooperation between the tobacco companies on a global scale
has ensured that competent tobacco industry spokespeople have been shared.254-256
In Australia, it has been documented that at least nine visiting industry-sponsored
scientists gained substantial publicity between 1969–1979, promoting a range of
industry-friendly views debunking the health evidence about smoking. Over the years
the views of these individuals were widely reported, often uncritically, by the news
media. It is probable, given the timing and content of some of these publicity initiatives,
* Of course, the FCTC has itself been the object of intense tobacco industry lobbying. See Section 10.21.2.3 below.
** The study by Trochim et al conceptualises a model for tobacco industry strategies to undermine tobacco control programs, based on the
experiences of a number of US-based tobacco control efforts and ranked in importance. Generally, the industry seems to engage in public
relations and usurping the agenda on an ongoing basis, moving towards the more covert realms of harassment and legal and economic
intimidation as required. Readers are referred to Trochim et al 253 for further information.
Section: 10.20.1
Facts and Issues
that tobacco industry consultants adversely influenced the course of tobacco control
initiatives in those early days.254
In the late 1970s and into the 1980s, the Australian tobacco industry cultivated a home-
grown dissenter, Sydney general practitioner Dr William Whitby, who self-published
two books (Smoking is good for you and The smoking scare de-bunked). Although there is
evidence that the industry recognised that Dr Whitby’s particular brand of pro-smoking
fanaticism might pose a liability, it nonethless provided the means for his views to be
widely disseminated and Whitby’s works were retained in the armoury of international
tobacco circles well into the 1990s.255
The tobacco industry adopted similar techniques in efforts to subvert the accumulating
medical evidence on second-hand smoke, as well as deflecting attempts to introduce
bans on tobacco advertising and other forms of regulation of tobacco products in
Australia and internationally. For example Philip Morris and other international
companies collaborated to promote the views of scientists holding views on SHS
counter to those of mainstream health authorities throughout Asia, Europe and the
USA during the 1980s and 1990s.172, 173, 256–258 During the 1980s BAT ‘ghost-wrote’ reports
for JJ Boddewyn published by the International Advertising Association and designed
to counter bans on tobacco advertising.259 The Boddewyn reports on advertising were
widely circulated internationally (including in Australia260) and formed the basis of
industry campaigns to oppose advertising bans.
10.20.2
Tobacco industry affiliated research foundations
The industry has established pseudo-scientific research foundations designed to give
credibility to the notion that there remains controversy about the medical evidence
on smoking on health. Funding research organisations has also allowed the tobacco
industry to:173, 261-263
<< reap a public relations advantage from financing (apparently) independent research
on smoking
<< demonstrate its dissention that smoking causes disease while appearing committed
to finding ‘solutions’
<< support research likely to produce outcomes advantageous to industry objectives,
(including ‘inconclusive’ research showing that yet more research is needed)
<< suppress negative research
<< provide an excuse for ongoing delays in regulation or legislation
<< locate and foster credible public spokespeople with the appearance of independence
<< offer smokers reassurance
<< keep in the public eye ‘distraction’ or ‘diversionary’ research (which, for example,
places emphasis on air pollution or sick buildings) to deflect attention from tobacco.
Generally, research foundations of this nature have been given official sounding names
that betray no connection between the organisation and its financial backers. The
organisations have funded in-house research, and acted as funding agencies which
provide grants to other groups, with or without obvious tobacco connections.
The first industry research group, established in the USA in 1954, was the Tobacco
Industry Research Council (later the Council for Tobacco Research—CTR), which
promoted the industry’s ends for more than 40 years until its closure under the terms
of the Master Settlement Agreement in 1998.262 As an antidote to concerns regarding
Section: 10.20.2
second-hand smoke, the industry established the Center for Indoor Air Research to
fund projects which would support industry resistance to smokefree regulations.173
The Master Settlement Agreement-mandated closure of multi-company cooperative
research and lobbying organisations has lead to the sprouting of a new crop of
organisations post-Settlement, including the Institute for Science and Health (funded
by BAT and Brown & Williamson), the Philip Morris-connected Life Sciences Research
Office,264 and the Philip Morris External Research Program (PMERP). A critical analysis
of the first round of projects funded by the PMERP shows that foci of the Program’s
interest were projects which would deliver findings likely to support Philip Morris’
corporate aims. An added bonus was using the program as a vehicle for identifying
cooperative scientists, as well as gaining credibility and goodwill.262
Other groups have been established to divert attention and trivialise smoking in ways
appealing to the popular media. In the early 1990s the Advancement of Sound Science
Coalition (TASSC), funded by Philip Morris, purported to be a grassroots coalition of
people fed up with health scares and ‘junk science.’214 Associates for Research into the
Science of Enjoyment (ARISE) claimed to be an affiliation of independent scientists but
was actually substantially funded by several tobacco companies. ARISE’s brief was to
show how ‘everyday pleasures, such as eating chocolate, smoking, drinking tea, coffee
and alcohol, contribute to the quality of life.’265
10.20.3
Australian-based organisations
The Australian Tobacco Research Foundation (ATRF) opened for business in
1970, the joint creation of the three major tobacco companies operating at the time
(WD & HO Wills, Rothmans and Philip Morris), which shared its funding and
oversaw its governance. Although criticised from the start for its overt mission of
forestalling tobacco regulation and widespread cynicism that it would contribute to
robust, impartial research, the ATRF fulfilled a useful PR function for the following
two decades, chiefly by providing evidence that the Australian tobacco companies
supported independent medical research.261 The ATRF entered terminal decline in
1988, when, in response to building criticism from health interests about the shared
interests of and blurred organisational boundaries between the ATRF and the tobacco
companies, the entire scientific advisory committee of the ATRF wrote to the Medical
Journal of Australia declaring its unanimous agreement that smoking caused disease.266
Negative publicity, compounded by increasing rejection of tobacco research money by
the medico-scientific community, lead to the scaling down and eventual closure of the
ATRF in 1994.261
Meanwhile the industry was engaged against second-hand smoke (SHS) through
the offices of another organisation. In 1987 the Tobacco Institute of Australia (TIA)
facilitated the establishment of a local offshoot of the US-based Air Conditioning and
Ventilation Associates (ACVA) Atlantic, which came to be known as Healthy Buildings
International (HBI).267 HBI’s brief was to promote the tobacco industry view that
the evidence about SHS was inconclusive; that SHS is a minor issue in the context of
overall indoor air quality, and concerns about smoking indoors could be adequately
met with appropriate ventilation and by providing smoking areas.* HBI gained a high
public profile, achieving extensive media coverage and a wide professional audience
for its views, while always asserting its status as an independent organisation.267 During
the 1990s HBI gained membership on an advisory committee charged with revising
* The tobacco industry’s response to SHS is discussed further in Chapter 3, Section 3.25.
Section: 10.20.3
Facts and Issues
Australian Standards for indoor air, a position which allowed it to influence the
committee’s recommendations, as well as keep Philip Morris abreast of developments,
until HBI was exposed and its position on the committee terminated in 2002.267*
10.20.4
Tobacco industry funded research in institutions
As discussed in Section 10.20.2 above, the industry has used its own funding bodies,
their connection with the industry often obscured, as a conduit for distributing money
into mainstream universities and other research institutes.
Over the years, acceptance of tobacco industry funding has been widespread in
Australia268 and globally,263 generating rafts of studies with findings beneficial to the
tobacco industry. In turn, this research has permeated the peer-reviewed medical
press. For example Philip Morris provided the funding for an Israeli study into the
determinants of uptake of smoking in young women,269 which examined the influences
of genetics, environment and psychological characteristics. Critics have pointed out
that the study neglected to include the possible impact of tobacco advertising.270 The
successful infiltration by the tobacco industry of reporting of published research in
Germany has been credited with serving the industry’s interests of increasing the social
acceptability of smoking and undermining tobacco control initiatives in that country.271
Prominent researchers at New York’s Weill Cornell Medical College caused controversy
in 2008 when it became public that they had earlier accepted grants channelled through
a tobacco-funded organisation called the Foundation for Lung Cancer: Early Detection,
Prevention and Treatment, and that findings from this research272 had been published in
mainstream medical press without disclosure of tobacco funding.273
As well as providing funding to individual scientists or departments, in some cases
tobacco companies have established entire programs within universities. For example,
Philip Morris has funded the Center for Nicotine and Smoking Cessation Research,
within Duke University’s Nicotine Research Project (in Richmond, Virginia).274 In 2002,
in an audacious move which might be funny were it not so cynical, the University
of Nottingham accepted funding from BAT to establish the International Centre for
Corporate Social Responsibility,** invoking, according to one observer, ‘the ethics of
the cash register’275(see Section 10.11 for more discussion on the tobacco industry and
corporate social responsibility).
To accept or refuse tobacco funding clearly raises important ethical questions.
Arguments against accepting tobacco grants include that:174, 263, 276
<< it is unethical that profits earned by the companies manufacturing and marketing
tobacco, the cause of many of the conditions against which medical and health
workers are fighting, should be used for medical research
<< even in an environment of limited funding for research, scientists must ask whether
the value of their research outweighs its utility in furthering the corporate interests
of the tobacco industry
<< it lends credibility to industry claims that there is insufficient evidence to conclude
that smoking (or second-hand smoke) is a cause of disease, and bolsters the industry
furphy that ‘more research is needed’
* However HBI remains a commercial entity and on its website it continues to downplay the contribution of SHS to indoor pollution. See:
http://www.hbi.com.au/smokepol.html
** See: http://www.nottingham.ac.uk/business/ICCSR/about/FoundationofTheICCSR.html
Section: 10.20.4
<< it improves the corporate image of the industry to be seen to be involved in
apparently altruistic activities and associated with respected scientists and
institutions, and can provide leverage in wider policy-setting scenarios
<< those in receipt of tobacco money may feel constrained about what they say publicly
about health and smoking; so tobacco funding may therefore silence a potentially
influential and articulate opponent
<< accepting money from a source with so clear a vested interest may lead to a biased
research program, biased results and biased reporting
<< even the requirement for researchers to divulge the sources of their funding may not
expose underlying tobacco finance, which is often well-concealed
<< reliance on funds of tobacco origin leads to ‘institutional addiction’, in which
organisations dependent on tobacco money become unwilling to bite the hand
which feeds them.
On the other hand, those who argue in favour of accepting research funding from
tobacco companies contend that:263, 277
<< what is at issue is the quality of the work; not the origins of the funding
<< appropriate firewalls and safeguards will ensure that the research is conducted
without bias
<< any benefits the tobacco industry might gain in corporate image are minor
compared to the potential public health benefits which may accrue from the research
<< the peer review process ensures validity
<< requirements for disclosure alerts the reader to any conflict of interest and makes the
findings even more subject to scrutiny
<< funding research is a useful purpose for industry profits.
In June 2004, Cancer Research UK and Universities UK agreed to a protocol which
contains guidelines for institutions considering accepting tobacco funding.278 Cancer
Research UK is the leading provider of research funding into cancer in the UK, and
has a strict policy of avoiding any direct or indirect links with the tobacco industry.279
Cancer Research UK has stated that it will not fund research in a university where there
is the possibility that there could be any association with work funded by a tobacco
company. The cancer charity also states that it considers it has a duty to publicly criticise
a university which accepts tobacco donations. For its part, Universities UK has stated
that while it is up to individual universities to decide which funding they should
accept, they ‘should normally reveal the source of funds for research and should satisfy
themselves that their reputation for impartiality, integrity and disinterested inquiry will
not be compromised by any particular source of funds.’279 p 6 In the USA, several schools
of public health and of medicine (including Harvard University, Emory University,
the University of California and Johns Hopkins University) have policies prohibiting
acceptance of tobacco funding.280 In Australia, there is no over-arching agreement
between universities but many have adopted policies governing or prohibiting the
acceptance of tobacco money.281*
* This article by Chapman includes further information regarding the policies of Australian universities in this article supplement weblink:
http://jech.bmj.com/cgi/data/58/5/361/DC1/3
Section: 10.20.4
Facts and Issues
10.20.5
Establishment of international manufacturers’ and
growers’ organisations
For many years the tobacco industry has recognised that it needs to present a unified
front against the enemy posed by health organisations. In the late 1970s, at the
instigation of Imperial Tobacco in the UK and Philip Morris International, a coalition
of tobacco company executives from major companies operating in the UK, the USA
and Europe was formed with the shared purpose of defending the tobacco industry
against attack and to champion the ‘social acceptability’ of smoking. To this end, the
manufacturers agreed to cooperate in perpetuating the ‘controversy’ over smoking and
health and to maintain that there was no proven causal link between smoking and lung
cancer.166 This industry group, which operated under conditions of utmost secrecy, was
to become known as the International Committee on Smoking Issues (ICOSI) and
in 1981, INFOTAB. Its brief soon extended beyond orchestrating the international
smoking and health controversy. INFOTAB acted as a ‘hub’ for the industry’s national
manufacturing organisations, tobacco companies and leaf dealers, facilitating the
exchange of information and expertise. Up until it ceased operation in 1990‒91,
INFOTAB provided its membership (including the Australian national manufacturing
organisation—the Tobacco Institute of Australia)—with: 282
<< up-to-date information databases
<< media monitoring
<< relevant publications and reports
<< pro-industry scientific findings
<< resources and programs ready to implement
<< reports on tobacco control activities
<< responses to public health activities
<< litigation updates.
In 1992, a new organisation—the Tobacco Documentation Centre (now operating
under the name International Tobacco Documentation Centre)—was established and
continues to fulfil some of the former roles of INFOTAB, chiefly information sharing.283
A second organisation, Agro-Tobacco Services (ATS), was set up in the same year to
coordinate and support the International Tobacco Growers’ Association (discussed
below). ATS was subsequently replaced by a UK-based public relations firm called
Hallmark Marketing Services.283*
The International Tobacco Growers’ Association (ITGA) was founded in 1984, ‘with the
objective of presenting the cause of millions of tobacco farmers to the world.’** Among
its activities, ITGA facilitates contact among its membership, shares non-competitive
information, represents its membership to national and international policy-makers,
and defends tobacco farmers against national and international anti-tobacco growing
campaigns.
Despite its claims of independence from the manufacturing industry, internal industry
documents show that ITGA has been used very much as a lobbying front for the
international tobacco companies, representing its combined interests and ‘managing’
tobacco issues in representations to WHO, the Food and Agriculture Organisation and
other bodies.10, 227, 283
* McDaniel et al provide a detailed account of the activities of ICOSI, INFOTAB, ATS and Hallmark Services.283
** See: www.tobaccoleaf.org
Section: 10.20.5
ITGA’s website stoutly defends tobacco farmers against environmentalists’ claims that
tobacco farming has caused deforestation (see Section 10.14.1).
ITGA also discusses its connection with the Eliminating Child Labour in Tobacco
(ECLT) Foundation and its commitment to combating child labour. (see Section
10.15.1).
10.20.6
Australian manufacturers’ organisations
10.20.6.1
The Tobacco Institute of Australia Ltd
The now inactive Tobacco Institute of Australia Ltd (TIA) was the main locus for
tobacco industry lobbying in Australia from its inception in 1978 until the late 1990s.282*
Established as a national manufacturers’ association in response to growing negative
publicity about smoking, the TIA was jointly funded by the tobacco companies
operating in Australia at the time with a charter to ‘promote understanding of the
tobacco industry in Australia’.284 This the TIA did chiefly by representing its member
companies to the public, the government and other authorities and through negotiating
policy issues on behalf of its constituency. In effect, the TIA’s major roles were to lobby
against tobacco control measures, to present a united public face of the Australian
tobacco industry wherever needed, and to sow seeds of doubt and denial about the
health effects of smoking and other matters of ‘controversy’.** Through its alliance
with INFOTAB and other national manufacturers’ organisations (particularly the US
Tobacco Institute),282 the TIA and its membership were also kept abreast of tobacco
issues worldwide.
In her analysis of the workings of the TIA, Carter has divided the TIA’s 20 years of
activity into four distinct chapters.282 In its first six years, the TIA’s work was primarily
involved with networking and promoting tobacco industry views on smoking and
health, advertising and children, second-hand smoke, and the tobacco industry’s
financial importance. Its second phase, from 1983 until 1989, was marked by aggressive
advocacy mostly under the stewardship of chief executive officer John Dollisson.
The TIA’s court case (and eventual bruising loss) against the Australian Federation
of Consumer Organisations brought this chapter to a close, after which the TIA
entered five difficult years of transient leadership, fractured support and apparent
demoralisation. In the TIA’s final phase, from 1994 to 1997, it was staffed by lawyers and
its approach to public affairs became more disciplined and proactive.
In its heyday, the TIA ran high-profile media campaigns to promote its views, the main
focus being second-hand smoke. In 1985 the TIA lodged a four page ‘advertorial’ spread
in the Australian Women’s Weekly. The advertisement purported to represent the facts
about SHS and in layout it appeared to be a feature article typical of the Weekly. The TIA’s
association with the advertorial appeared in small print at the end of the piece, ‘inserted
in the interests of fair and open discussion by the Tobacco Institute of Australia Ltd.’
The information on SHS provided in the advertisement was at odds with mainstream
medical and scientific findings reported at the time. In response to complaints, the
* For a detailed account of the activities of the TIA over its 20 year lifespan, refer to Carter.282
** To read, view and hear a collation of public statements made by tobacco industry executives and officers from the TIA dismissing the impact
of smoking on health, visit http://tobacco.health.usyd.edu.au/site/supersite/resources/docs/gallery_leaders.htm and http://tobacco.health.
usyd.edu.au/site/supersite/resources/docs/diary_of_denial.htm
Section: 10.20.6.1
Facts and Issues
TIA’s advertisement was deemed by the Advertising Standards Council (ASC) to be

misleading in presentation (in that it was inadequately identified as paid advertising
material) but no ruling was made on its content, this being outside the ASC’s remit.
Two half-page newspaper advertisements were devised and lodged by the TIA in July
of the following year, again defending the industry against claims regarding SHS.
The advertisements appeared in 14 newspapers across Australia. The advertisements
selectively quoted a number of sources, including the World Health Organization and
the American Cancer Society, giving the impression that these bodies did not support
the view that SHS is harmful to health. Among other things, one of the advertisements
declared that ‘there is little evidence and nothing which proves scientifically that
cigarette smoke causes disease in non-smokers.’285 Again, in response to complaints
made to the ASC and the Trade Practices Commission, the TIA was reprimanded.
The issue was subsequently taken up by the Australian Federation of Consumer
Organisations (AFCO), which brought a case against the TIA in the Federal Court, on
the grounds that the newspaper advertising was misleading or deceptive and therefore
in contravention of Section 52 of the Trade Practices Act (1974). In a groundbreaking
decision handed down by Justice Morling, the AFCO won the case, and the TIA lost an
appeal it subsequently brought against the decision. AFCO v TIA resulted in a landmark
decision of international significance, in which a link between SHS and disease among
non-smokers was accepted by a court of law.* And in an outcome which could hardly
have been worse for the TIA, the Morling decision gave legal impetus to the surge
towards smokefree workplaces.
10.20.6.2
The Tobacco Information Centre Inc
The Sydney-based Tobacco Information Centre was established in December 1996
by Rothmans of Pall Mall (Australia) Ltd, WD & HO Wills (Australia) Ltd and Philip
Morris (Australia) Ltd, ‘as a library of tobacco and smoking-related information.’ 286
According to its publicly stated brief, the TIC’s function was to ‘provide current, timely
and high-quality tobacco-related information to Australia’s three tobacco companies,’
as well as to government bodies, politicians, industry and trade organisations, special
interest groups and members of the public. The TIC categorically denied that it had any
role in undertaking political lobbying, public affairs work or media liaison on behalf of
its funding members.286
The TIC published a tobacco industry fact newsletter, another newsletter (Peace Pipe)
that reported on ‘current smoking issues’, and a number of fact sheets.286 The TIC no
longer appears to be active.
10.20.7
Smokers’ rights groups
Smokers’ rights groups provide a further conduit for tobacco industry lobbying by
claiming to represent the views of the smoker. They are intended to mobilise smokers,
offering them reassurance, and providing a vehicle by which they may voice opposition
to tobacco control measures.287 Primarily arising in response to moves to restrict
smoking in public places, smokers’ rights groups also address issues such as tobacco
taxes. Smokers’ rights groups typically portray their membership as the beset-upon
* For a full account of this court case a well as transcripts of the judgement, see Everingham and Woodward.285
Section: 10.20.7
smoker, indulging in a legal behaviour, being unreasonably harassed by over-zealous
‘anti’s.’
Early Australian examples of smokers’ rights groups include the Smokers’ Rights League
in the late 1970s,287 and FOREST (Freedom Organisation for the Right to Enjoy Smoking
Tobacco), which was established in Victoria during the mid-1980s in response to
concerns about SHS. Smokers were told that ‘by supporting FOREST you can support
the interests of all smokers in Australia. You can have your say with State and Federal
Governments, transport operators, advertisers, newspapers, radio and television and,
through FOREST, you can let them all know you are tired of being pushed around…’288
Fair Go began in NSW in the late 1980s with the brief of countering bans on smoking
in NSW trains, before moving on to a broader canvas of smokers’ concerns.289 The
Tobacco Smokers Freedom Movement Inc emerged in Western Australia in 1993,
offering cigarettes at discount prices and stating its intention to lobby on behalf of
smokers’ rights.290 The extent of the relationship between the tobacco industry and these
Australian groups was never clarified, but overseas experience demonstrates that the
tobacco industry was directly involved in the establishment of and ongoing practical
support for smokers’ rights organisations.287
Internationally, smokers’ rights groups are deemed to have offered little in the way of
lasting assistance to the tobacco industry, never capturing the membership or even
the interest of smokers on a significant scale. Only a small number of groups appear to
remain active, none of these in Australia.287
10.20.8
Tobacco retailers as a lobby base
Tobacco retailers constitute an obvious and ready-made lobbying base for the industry
to use to promote the industry view. Firstly, they have a clear interest in protecting their
income stream against potential threat. Secondly, in their front-line position selling
tobacco, they are able to provide information and promote industry views within the
community. Thirdly, their business profile gives the tobacco industry access to all levels
of government.
From the earliest days of the smoking and health ‘controversy,’ tobacco traders have
been armed with the means to pacify nervous smokers. An investigation of trade
journals (The Australian Retail Tobacconist and its state-specific predecessors) dating back
to 1950 shows that these magazines included articles providing industry guidance on
how retailers could reassure their customers. Retailers were also advised how to keep
their products attractive to the ‘youthful novice’ smoker and young women smokers.291
The authors of this research contend that today’s tobacco trade journals may continue
to perform the role of promoting industry views and providing counter arguments to
tobacco control measures.291
Prior to bans on advertising at point of sale, it was usual for tobacco companies to
provide retailers with display cabinets, advertising material, support merchandise,
and functional fittings such as outdoor awnings, hours of opening signs and so forth.
With increased restrictions on advertising in the media, the function of ‘point of sale’
advertising at retail outlets became ever more critical. The tobacco companies compete
for dominance on the shop floor and in display units by offering financial and other
incentives to retailers to give prominence to their brands.292 The central importance
of the retail outlet as a conduit for communication with customers in the wake of
advertising bans is discussed in Chapter 11, Section 11.6.2.
Section: 10.20.8
Facts and Issues
Tobacco retailers have been rallied to support the industry against the encroachment of
tobacco control regulation in regard to tobacco advertising, smoking restrictions and
tax increases on tobacco products.291 In 2008, Philip Morris canvassed retailers in NSW
to solicit their support in opposing bans on tobacco displays at point of sale. As well as
providing information (in several languages) about why retailers should feel concerned
about further restrictions, Philip Morris urged retailers to express their views to relevant
state politicians and offered further information and assistance if needed.293
10.20.9
Marshalling opposition to smoking bans in
entertainment and social venues
The tobacco industry has vigorously opposed restrictions on smoking because it
limits opportunities to smoke, so reducing consumption, and further denormalises
smoking behaviour, so discouraging uptake and influencing smokers to quit.294-297
The introduction of smoking restrictions in most Australian workplaces during the
1980s and 1990s was a major blow for the tobacco industry. In recent years, attention
has moved to thwarting smoking restrictions in entertainment venues such as bars,
restaurants, nightclubs and other licensed venues, and gambling environments. The
tobacco industry has made strong allies of the hospitality industry in Australia169, 298 and
internationally299, 300 chiefly through fostering fear that smoking bans will adversely affect
their profitability if not their survival (an industry argument which is not supported by
the evidence300).
During the 1990s a former chief executive officer of the Tobacco Institute of Australia
(TIA) became the national executive director of the Australian Hotels Association
(AHA), and since that time the AHA has actively supported the tobacco industry in
opposing smoking restrictions and bans and challenging the scientific evidence on
second-hand smoke.169 The Australian Hotels Association website* provides a range of
resources for its members, including materials designed for distribution to government.
Key points made by the AHA include arguments claiming that smoking bans:
<< cause the mass closure of licensed premises leading to economic downturn and job
losses
<< do not reduce prevalence of smoking
<< lead to increased smoking at home around children, and the risk of house fires
<< contribute to increased domestic violence
<< cause community nuisances including more cigarette butt litter, neighbourhood
noise and footpath congestion
<< increase the risk of drink spiking (if people leave their drink unattended to go
outside to smoke)
<< make more work for door security staff (managing traffic in and out of the venue)
<< will reduce government revenues as well as increase problem gambling
<< trample on civil liberties
<< offer no health benefit.
In preparation for strict smoking restrictions introduced in Victoria in 2007, all three
tobacco companies operating in Australia struck financial deals with several individual
Melbourne hoteliers to assist with development of open-air facilities where smoking
could be permitted, in exchange for the exclusive right to sell their own brands.301
* See http://www.aha.org.au/resources.html
Section: 10.20.9
10.21
Tobacco industry lobbying—the

targets
10.21.1
Major scientific reviews
The findings published in authoritative scientific reviews about smoking and health, the
publicity they generate and the impetus they give to governments to introduce tobacco
control policies inflict huge damage to the tobacco industry. Consequently the industry
engages vigorously with scientific process using many of the tools described in the
preceding sections, such as countering mainstream science with its own research and
employing apparently independent third parties to argue on their behalf.
The industry has also directly engaged in attempting to disrupt the review process.
For example, in Australia, the industry mounted a concerted effort to undermine
and derail the National Health and Medical Research Council’s scientific review on
passive smoking, finally published in 1997.169 The Tobacco Institute of Australia (TIA)
launched legal challenges regarding the procedure of the review, attempted to discredit
individuals on the Council’s Working Party, and commissioned several consultants to
make submissions to the Working Party expressing pro-industry views. The industry
also primed allies to speak to the media in its support. The TIA had a fair measure of
success, in that publication of the recommendations of the final report was prevented on
procedural grounds (but not because the actual science of the report, or the content of
the recommendations, was in question). Nonetheless this provided enough ammunition
for the industry to dismiss the report and its findings widely in the media.169
In the USA, the tobacco industry launched a similar offensive170 against California’s
Environment Protection Authority which issued a report on Environmental
Tobacco smoke in 1997.302 The industry exerted pressure on the EPA and related
instrumentalities, attacked procedural issues, and directly lobbied politicians. The
industry also courted the news media in an effort to promote its views; Philip Morris
went so far as to provide financial support for the National Journalism Centre (a school
of journalism).303 As in Australia, the tobacco industry was successful in delaying the
process and eventual release of the report, and took every opportunity along the way
to gain positive publicity by discrediting the report and the procedures followed in its
development.170 The International Agency for Research on Cancer was also targeted by
Philip Morris with strategies intended to undermine its work on SHS by disputing the
research, influencing media coverage and countering government attempts to introduce
smoking restrictions.171
10.21.2
Countering tobacco control legislation
Influencing the direction of government decision making in Australia and elsewhere
is an abiding concern for the tobacco industry and in the light of the health evidence
against its products, necessary for its survival. Once legislation is in place, it is difficult
to overturn. If shown to be effective in one part of the world, tobacco control legislation
is often replicated in other jurisdictions.
Section: 10.21.2
Facts and Issues
It is a general rule of thumb in tobacco control advocacy that the more effective a
particular initiative is going to be, the more aggressively the industry will oppose it.
Regulation which gains industry support is not likely to be any serious threat to the
industry.
The extent of industry influence is not to be underestimated, especially in regions where
tobacco is grown and government and industry share economic concerns. Speaking of
its lobbying activities in Kenya, for example, BAT has boasted that ‘the law was actually
drafted by us but the Government is to be congratulated on its wise actions.’304
The history of industry opposition and lobbying in regard to legislation initiatives in
Australia has been well-documented. The earliest battlefields related to the introduction
of restrictions on advertising305-307 and later, health warnings on tobacco packages.308
Regulatory initiatives to introduce of restrictions on smoking298 and increase tobacco
taxation309 have also provoked vigorous response.
Since the 1990s and the industry’s new regard for corporate social responsibility,
the tobacco companies, to varying degrees, espouse ‘appropriate’ regulation of their
products. For example, the PMI website5 assures its visitors that ‘We’re working with
governments and the public health community to help create strong and effective
tobacco regulation,’ an assertion which doubtless astonishes the public health
community worldwide in the light of Philip Morris’s activities to ensure that precisely
the opposite occurs.
Table 10.21 in Section 10.19 lists the industry tactics used most often to counter tobacco
control regulation.253*
10.21.2.1
Case study: pre-emptive self regulation
Arguing for self regulation is a tried and true industry tactic. It provides the industry
with a means of avoiding strong and effective governmental regulation by taking
the initiative to introduce its own voluntary code of conduct. The industry reaps
the dual benefits of appearing responsive to government and public concerns, while
simultaneously ensuring that any such voluntary code is harmless to industry interests.
In contrast, legislation carries penalties for non-compliance, is difficult to rescind, and
closes the door on further negotiation.
Philip Morris has introduced its own system of placing ineffective health warnings on
its packaging for use in countries (particularly the developing world) where regulation
was weak or not in place. Internal documents show that Philip Morris deliberately gave
the appearance of responding to public health concerns (while doing so very much on
its own terms) and simultaneously earned positive publicity for its responsible stance.310
Until superseded by state and federal legislation, tobacco advertising in Australia was
in large part subject to a series of voluntary agreements struck between the tobacco
companies and the federal government. The elasticity of the voluntary agreements and
the many and varied ways in which they were flouted by the tobacco companies have
been well documented175, 311 (see Chapter 11 for further discussion).
* Subsections 10.21.2.1–10.21.2.3 briefly describe some of the ways in which the industry has put its strategies into action.
Section: 10.21.2.1
10.21.2.2
Case study: opposing the introduction of reduced fire risk cigarettes
During the 1980s and 1990s the US tobacco industry countered demands for the
introduction of RFR technology (despite having the ability to do so) by arguing that it
was technically impractical, that no testing system could be failsafe, and that people,
not cigarettes, caused fires. The industry also complained that the enforcement of RFR
regulations would result in higher cigarette prices, increase cigarette toxicity, meet
consumer resistance, and lead to reduced sales and fewer brands on the market.106, 109, 110*
However it is probable that the real reason that the tobacco industry did not wish to
adopt RFR technology was out of fear of product liability:108, 109 that victims (or insurance
companies) would be able to make claims for damages from fires started by cigarettes.
Added to this, the industry would incur expenses in adapting its processing,109 and the
corporate philosophy within the tobacco industry is described as being resistant to
change if it can be avoided.108
In lobbying against RFR the industry courted the support of firefighting organisations;
groups which one might assume on first principles likely to be in favour of RFR
cigarettes. The industry achieved this by funding education campaigns and encouraging
volunteerism, supporting the introduction and maintenance of smoke alarms, by
supporting improved firefighting recruitment and training, and lobbying for the
introduction of regulations for fire retardant furniture. During the 1980s the tobacco
industry successfully withstood the pressure for RFT cigarettes, with the assistance of its
new found allies.109, 313 Continued dedication to seeing the introduction of legislation by
a single congressman (John Joseph Moakley) and later his supporters ultimately gained
the support of firefighters, probably crucial to the final success313 of the legislation now
in place in many states of the USA and nationally in Canada.104
10.21.2.3
Case study: undermining the Framework Convention on Tobacco
Control
The Framework Convention on Tobacco Control (FCTC) initiated in 1999 by the World
Health Organization and signed by 168 countries (as of September 2008), represents an
orchestrated threat to the industry on a global scale. It is therefore not surprising that
the industry has attempted to thwart the development and subsequent ratification of the
FCTC.314
Between 1999 and 2001, British American Tobacco, Philip Morris and Japan Tobacco
International worked together on ‘Project Cerberus’, an initiative intended to devise an
alternative voluntary code for advertising and other industry conduct, which it hoped
governments could be persuaded to accept instead of signing up to the FCTC.315
Companies have also conducted their own offensives against the FCTC. For example
Philip Morris employed a public policy and issues management firm (Mongoven,
Biscoe and Duchin) in 1997 to advise on the processes for formulating and ratifying
the FCTC and how these might be subverted. Carter’s analysis of industry documents
shows that MBD gained high level access to the process within WHO. Among its
recommendations, MBD advised PM to delay the process; to attempt to steer the
convention towards a focus on children (thereby leaving the rest of the market open
* Research undertaken in New York State since the introduction of RFR regulations has shown that none of negative outcomes predicted by the
tobacco industry subsequently occurred.110, 312
Section: 10.21.2.3
Facts and Issues
for ‘adult choice’) and to seek allies among non-government organisations. It was
deemed especially important to influence content of the convention, and to engage with
individual member states with a view to nurturing wider regional support.314 Carter
observes that there is no reason to believe that MBD is not still working on PM’s behalf
against the FCTC.314
There is strong evidence that the industry has engaged in lobbying on a regional
basis, attempting to influence governments to comply with the least stringent options
stipulated in the FCTC.316-319 The FCTC is discussed in detail in Chapter 17.
10.21.3
Subverting public health initiatives and tobacco
control organisations
It is not surprising that the tobacco industry should keep a watching brief on the
activities of public health organisations which promote views inimical to their own.
Cooperative efforts within the industry to keep abreast of developments in tobacco
control go back at least as far as the World Conference on Smoking and Health in the
late 1970s.166
Probably the most detailed account of how the tobacco industry has responded to
tobacco control initiatives is contained in the 260 page report published by the World
Health Organization (WHO) in 2000.320 This report examined the internal tobacco
industry documents which were made public as a result of the Master Settlement
Agreement of 1998 with a view to determining how the industry had sought to counter
the objectives of WHO. The documents revealed that multiple strategies had been used,
including:
<< establishing connections with WHO employees, consultants and advisors, and
infiltrating the organisation with its own consultants in order to influence policy
issues
<< attempting to shift financial priority away from tobacco control activities
<< engaging with other UN agencies (such as the Food and Agricultural Organisation
and the World Bank) to undermine WHO policy
<< using ‘independent’ individuals and organisations to discredit WHO’s policies and
officers
<< using apparently unrelated organisations to lobby on its behalf against WHO
policies
<< discrediting or distorting WHO research
<< monitoring, at times secretly, WHO meetings and other activities.
The industry was especially keen to place a wedge between developing and developed
countries by characterising WHO as an organisation with ‘first world’ priorities,
unfairly endangering the economic opportunities provided by tobacco industry in
developing countries. The report concludes:
‘At the most fundamental level, this inquiry confirms that tobacco
use is unlike other threats to global health. Infectious diseases
do not employ multinational public relations firms. There are no
front groups to promote the spread of cholera. Mosquitoes have no
lobbyists. The evidence presented here suggests that tobacco is a
case unto itself, and that reversing its burden on global health will
be not only about understanding addiction and curing disease, but,
Section: 10.21.3
just as importantly, about overcoming a determined and powerful
industry.’320 p 244
In the USA during the 1990s, the tobacco industry countered major National Cancer
Institute initiatives promoting community-based tobacco cessation projects. The
program, American Stop Smoking Intervention Study (ASSIST) was the largest and
most comprehensive tobacco control program launched in the USA, and was strongly
oriented to interventions and activities at a local level.321 The tobacco industry response
was thorough. The industry monitored the projects, attempted to infiltrate them,
obstructed them in some communities, and seeded negative media stories. A network
of allies to assist in lobbying was organised. The industry attempted to have pre-emptive
legislation introduced to protect tobacco advertising. The industry also attacked the
basis of the project as a misuse of taxpayers’ money to unfairly target the tobacco
industry and launched a number of lawsuits which disrupted and delayed program
implementation.321, 322 Litigation has also been used by the industry as a weapon against
other tobacco control campaigns in the media, such as those run by the American
Legacy Foundation and the California Tobacco Education Media Campaign.323
As well as targeting interventions, the industry pays attention to the organisations
which work against its interests. Evidence from internal tobacco industry documents in
the USA shows that tobacco companies attempted to infiltrate at least two organisations.
STAT (Stop Teenage Addiction to Tobacco) and INFACT (formerly the Infant Formula
Action Coalition) were active and effective during the 1990s and pursued agendas
antithetical to industry interests.324 In their efforts to gain intelligence on the activities
of these groups, the tobacco industry used intermediaries to access materials on their
behalf and to attend conferences, planted public relations consultants as spies to attend
and report on meetings, and illegally tape recorded meetings.324 The industry has also
made it its business to publicly discredit key individuals working in tobacco control.156, 314
The evidence for tobacco industry infiltration of health interests in Australia is sparse
but it is probable that it has been attempted. According to a former CEO of the Tobacco
Institute of Australia, at one stage the TIA engaged a private investigations agency to
arrange for rubbish bins belonging to certain health organisations, such as the NSW
Cancer Council and the National Heart Foundation, to be searched in an effort to
discover the health lobby’s forward planning and funding details.325
Philip Morris USA took a different tack in 1995, undermining public health initiatives
by appearing to offer them its support.156 As part of ‘Project Sunrise,’ Philip Morris
identified and then actively sought dialogue with public health advocates which it
deemed to be ‘moderate’ in view and likely to be persuaded to see advantages in
forming cooperative policies on tobacco control (such as concentrating on harm
reduction strategies rather than on policies which would impact more negatively on
industry profitability and survival). The benefits of any alliances would be multiple: they
would buy PM social credibility; they could act as a conduit for PM’s views in arena in
which PM would normally be excluded; and they might help ensure that any programs
supported or regulations developed were acceptable to PM. But above all, PM could
argue that people who did not wish to associate with them were ‘prohibitionists’ or
‘extremists,’ establishing useful schisms between tobacco control advocates and diluting
their effectiveness.156
Section: 10.21.3
Facts and Issues
10.22
Donations to political parties

In Australia it is a legal requirement that donations made by individuals or entities to
registered political parties to the value of or greater than $10,000* are declared to the
Australian Electoral Commission (AEC). The AEC posts on its website** donor annual
returns dating back to the financial year 1998‒99. Table 10.22 shows the total amounts
of tobacco money received by the three major political parties in Australia since then.
In February 2004, the then leader of the Australian Labor Party (ALP) opposition, Mr
Mark Latham, announced that the ALP would no longer accept donations from tobacco
companies.326 The Liberal Party of Australia (LPA)327 and the Australian National Party
(ANP)328 have continued to receive donations from PMA and BATA on an ongoing
basis, and have publicly stated that they see no reason to stop doing so. Neither the
Australian Democrats329 nor the Australian Greens330 take tobacco company donations
as a matter of policy.
Soon after Mr Latham’s announcement in 2004, a Private Members’ Bill was proposed
by ALP MP Mr Duncan Kerr and seconded by LPA MP Dr Mal Washer. If passed, the
Commonwealth Electoral Amendment (Preventing Smoking Related Deaths) Bill (2004-05)*** would
have prevented political parties and individual candidates from accepting donations
from tobacco companies. The Bill was first read in the House of Representatives on 16
February 2004331 but was to founder quietly the following year in the absence of support
from the then Liberal-National Coalition government.
Prior to the ALP’s refusal of donations from tobacco companies, all three major political
parties received significant contributions from PMA and BATA. ITA does not appear
to have made political donations. In general, substantially larger amounts of funding
have been directed by both tobacco companies towards the conservative parties
(LPA and ANP) even prior to the ALP ban, which is likely to reflect preference by the
tobacco companies for conservative politics, as well as the fact that the Liberal/National
Coalition was in power for the entire period shown in Table 10.22.
Australian political parties have received in total about $1.46 million in donations
from BATA, and $1.16 million from PMA since 1989–99. Since the ALP’s rejection of
tobacco donations in 2004, the Liberals and the Nationals have jointly received between
$200,000–$300,000 annually.
In December 2005, under the Coalition federal government led by Mr John Howard,
rules concerning the minimum value of donations requiring disclosure were changed
and the reportable limit increased from $1500 to $10,000. According to The Age
newspaper, this has simultaneously led to an increase in political donations from all
sources as well as opacity in tracing their origins.326 For example, investigations by the
The Age showed that although the donor annual return filed by the LPA for the financial
year 2005–06 detailed income directly received by the party from tobacco companies;
it could not be ascertained from the return that some of the LPA’s closely-allied fund-
raising organisations such as The 500 Club and the Bayside Forum were also in receipt
of tobacco money.326 Although these donations were declared by the tobacco companies
in their own annual returns to the AEC, the current system of reporting does not
guarantee clear, one-stop disclosure of funding sources.
* Previously the limit was $1,500 – see discussion later in this section.
** http://fadar.aec.gov.au/
*** http://parlinfoweb.aph.gov.au/piweb/Repository/Legis/Bills/Linked/30050501.pdf
Section: 10.22
In February 2008, ALP Prime Minister Mr Kevin Rudd announced his
intention to reform political donation laws.332 Inquiries are currently
underway federally* and at the state level in Victoria** and New South Table 10.22
Wales.*** Political donations declared by
tobacco companies in Australia to
registered political parties; financial
10.23 years 1998/99–2006/07
Public attitudes to the tobacco

industry
Labor Liberals Nationals
(ALP) (LPA) (ANP)
Financial Year $ (unadjusted)
1998–99* (Oct)
There is no doubt that the tobacco companies in Australia and in many
Philip Morris 41,610 62,800 25,000
other parts of the world have suffered devastating blows to their public
BATA 61,000 45,000 10,000
image in recent decades. In the wake of litigation cases during the 1990s 1999–00
that revealed duplicitous industry conspiracies to mislead and reassure Philip Morris 50,000 124,960 30,000
smokers about the effects of tobacco use,166 to encourage children to start BATA 19,815 33,123 –
smoking175 and to undermine public health policy,253, 320 the companies 2000–01
have embarked upon a multifaceted public relations offensive designed to Philip Morris 64,520 63,000 32,500
persuade the general public that they have turned over a new corporate BATA 122,025 131,655 –
leaf. 2001–02* (Nov)
Philip Morris 74,800 84,815 37,500
Several studies have examined Australian attitudes to tobacco companies.
BATA 60,450 146,423 27,500
One of the earliest was undertaken in Western Australia in 1988, at a time
2002–03
when the tobacco companies were still publicly denying that smoking
Philip Morris 9000 41,620 10,000
caused disease, were challenging the mounting evidence on second-hand
BATA 26,150 114,200 15,000
smoke, and contending with an increased demand for tobacco control
2003–04
measures from a growing number of Australian health concerns. This Philip Morris 5950 10,100 2200
research found that on the basis of public credibility, 75% of respondents BATA 31,040 148,739 15,400
felt that tobacco industry representatives were ‘not at all believable,’ rating 2004–05* (Oct)
them lower than used car salesmen (69%).334 Philip Morris – 103,700 35,500
Industry attempts to resuscitate their image appear not to have been BATA – 159,267 –
of much influence. South Australian research in the late 1990s found 2005–06
that 80% of respondents (and 74% of smokers) thought that tobacco Philip Morris – 94,940 34,275
BATA – 114,311 16,600
companies mostly did not, or never, told the truth about smoking and
2006–07
health;335 and Victorian research undertaken in 2004 reported similar
Philip Morris – 92,050 30,100
findings.336 International research studying opinions in Canada, the USA,
BATA – 161,409 3300
the UK and Australia shows that overall, 80% of smokers do not believe
that tobacco companies can be trusted to tell the truth.337 Distrusting the
tobacco industry is associated with an increased likelihood of cessation * Denotes a financial year in which a federal
election was held; month of the election is
in brackets.
* The Commonwealth Electoral Amendment (Political Donations and other Measures) Bill 2008 has been referred by the Note: Total funds donated by Philip Morris Ltd
Senate to the Joint Standing Committee on Electoral Matters for inquiry and report (as part of its inquiry into the to the Liberal Party also include gifts
to The 500 Club** and Bayside Forum,
2007 Federal Election). The Bill reduces the donations disclosure threshold to $1000 and strengthens the disclosure
organisations which support the Liberal
obligations of candidates and political parties. See http://www.aph.gov.au/house/committee/em/elect07/index.htm. Party of Australia.326 Donations to the
** In Victoria, the Electoral Matters Committee is conducting an inquiry into whether the Electoral Act 2002 should be Labor Party include those to Progressive
amended to create a system of political donations disclosure and/or restrictions on political donations. For more Business, a satellite group of the Victorian
information, see http://www.parliament.vic.gov.au/emc/Inquiry%20into%20Political%20Donations%20and%20 ALP.***
Disclosure/default.htm Source: Australian Electoral Commission.333
*** Following a similar inquiry in NSW, the Election Funding Agreement (Political Donations and Expenditure) Bill 2008
was tabled in the Legislative Council in June 2008. The purpose of the Bill is to strengthen disclosure obligations and
reduce the disclosure threshold to $1000 (consistent with the Commonwealth proposal). See: http://www.parliament. ** http://www.500club.com.au/home/index.php
nsw.gov.au/prod/PARLMENT/nswbills.nsf/131a07fa4b8a041cca256e610012de17/7205a32a93be2d78ca25745f0028 *** http://www.alpvictoria.com.au/Events/Corporate-
0b78!OpenDocument Events/About-Progressive-Business.html
Section: 10.23
Facts and Issues
behaviours among smokers,337 and negative attitudes to the industry have been
harnessed by tobacco control advocates as a way of encouraging quitting.
Other research has investigated just how far people believe that the tobacco industry
may reasonably be regulated. A survey of Australian smokers in 2004 showed that
69% of respondents felt that tobacco products should be more tightly regulated, and
49% agreed that tobacco companies should take responsibility for the harms caused
by tobacco.338 Interestingly, 77% of smokers surveyed also believed the government
does not really care about reducing the prevalence of smoking because of the revenue
it receives from tobacco taxes. The authors of this study conclude that ‘stronger
government action to control tobacco products and the tobacco industry is likely to be
supported by the majority of Australian smokers and that failure of governments to act
is associated with cynicism about in whose interests governments operate.’338 p 169
10.23.1
‘Denormalisation’ of tobacco use and the tobacco
industry
The changing public attitudes to the tobacco industry are a marker of the growing
‘denormalisation’ of tobacco use. Denormalisation refers to the transition in status of
smoking from a widely practiced and socially acceptable behaviour to one which is
increasingly typified as destructive, dirty and anti-social. Denormalisation does not
only apply to smoking. It has increasingly applied to the tobacco industry, which (as
shown in the preceding section) has not enjoyed a particularly positive public profile in
recent years. Public recognition that the industry has for many decades lied to smokers
and the wider community about the health effects of tobacco use has been heightened
by high-profile legal cases and the public release of previously confidential industry
documents. The industry has been cast as the villain in popular culture (such as John
Grisham’s novel The Runaway Jury and movies The Insider 339 and Thank you for Smoking). The
industry’s adoption of corporate social responsibility programs has been a major public
relations campaign to regain corporate credibility (see Section 10.11 above).
Chapman and Freeman detail many markers of denormalisation of smoking in
Australia that demonstrate just how marginalised smoking—and its champion, the
tobacco industry—has become.339 These include prevailing attitudes in the community,
as evidenced through an array of media reports, environmental and health campaigns
and advertising for items such as insurance, accommodation and cessation aids.
Increasing limits on where smoking may occur means that smokers are for the most
part defined as a group whose unwelcome behaviour entails segregation. Provision of
smoking accessories such as cigarette lighters and ashtrays is no longer standard in cars
of Australian manufacture and some imported European vehicles; once elegant tobacco
packets are now disfigured by graphic health warnings.339
In that denormalisation of smoking contributes to continued downward pressure on
smoking rates by encouraging quitting and discouraging uptake of smoking, it can
be seen as a marker of progress. However it is important to consider whether the
denormalisation of smoking might lead to the marginalisation of those people who
continue to smoke. There is a risk that as smoking becomes more concentrated among
populations which are already disadvantaged (such as lower SES groups and the
mentally ill), these individuals may have less motivation to quit or access to programs
which might assist them.340 Stigmatisation of smokers could also lead to discrimination
(for example in the workplace) and ‘victim blaming’ if smokers are regarded as
responsible for their own illness.339
Section: 10.23.1
10.24
The future of the tobacco industry

10.24.1
In Australia and other mature markets
Australia is regarded in tobacco industry parlance as a ‘mature’ market, meaning that
consumption is in decline, and that the best the tobacco companies can hope for is
to gain a larger slice of a shrinking market, and for reductions in volume of cigarettes
smoked and the numbers of people smoking them to be gradual. Euromonitor, an
international organisation which compiles business intelligence and industry data,341
anticipates that the total value of tobacco retail sales in Australia will be in decline by
the end of the decade. Nonetheless this does not mean that the industry, perhaps in a
more consolidated form, will not continue to be profitable in Australia, and the industry
can be expected to continue defending its interests with the usual vigour.
In the substantially mature markets of Western Europe, an analysis from 2005
examining prospects for investment in tobacco in the region enthused that ‘almost
everything about this industry is the opposite to what you might expect,’ and that
‘underlying economics are unique and attractive.’ It helps, of course, that tobacco is
addictive. The report points out that where countries tax tobacco on an ad valorem
basis*, tax increases deliver higher profits to the companies as well and price rises have,
historically, more than offset declines in sales volume and lower profitability due to
smokers choosing cheaper brands. According to this analysis, these factors make the
tobacco sector in Western Europe extremely resilient.342
In Australia and other developed countries, smoking will continue to become
concentrated among the most disadvantaged sectors of the community and the industry
will doubtless seek new ways to keep tobacco products as affordable as possible. In the
USA, the industry has reached its more ‘downscale’ customers by making donations to
key groups supporting the homeless and the mentally ill, thereby giving them access to
an important market, while permitting the industry a nod in the direction of corporate
responsibility.343
All the companies acknowledge the reality that their markets are likely to become
yet more tightly controlled. Regulatory constraints which have been debated in the
tobacco control arena include prescriptive controls on emissions and ingredients,344
deletion of brand names and imagery and the introduction of generic packaging,345 and,
most extreme, government controlled non-profit tobacco distribution and sale.346 But
Philip Morris Inc, for one, is sanguine about the regulatory environment it confronts.
PMI notes that ‘These matters constitute largely unchartered territory for regulators,’
therefore raising the prospect that the company can influence the process (or, as they
put it, offering ‘a good opportunity for PMI to provide expertise and comprehensive
solutions as a result of our transparent and supportive approach to reasonable
regulation.’)92 In the USA, Philip Morris has stated that it supports legislation which
would grant the Food and Drug Administration (FDA) regulatory authority over
tobacco products.347 Presumably Philip Morris feels well positioned to compete in the
potentially reduced exposure products (PREP) market (see Section 10.7.5), but more
importantly, it has been observed that submitting to FDA authority is likely to be a
* Or have an ad valorem component to the tax regime. Australia no longer taxes in this way but many countries do. See Chapter 13 for
discussion.
Section: 10.24.1
Facts and Issues
shrewdly calculated manoeuvre to ensure long term viability and protection for the
company.348
Litigation remains a real concern for the tobacco industry, in the USA and elsewhere.
While acknowledging that the litigation environment may be unpredictable, the
companies state on their respective websites that they will vigorously contest any cases
brought against them and that they have every confidence that they will prevail.3, 5, 8
Litigation against the tobacco industry is discussed in detail in Chapter 16.
10.24.2
… and elsewhere
The global outlook for the tobacco industry is far from pessimistic. As noted, the
developing world is home to 80% of the world’s smokers349 and still offering major
prospects for growth.2 The websites of the major tobacco companies are universally
bullish about their prospects. Each catalogues its expansion into new markets
through takeovers or partnerships (the most effective way of increasing market share,
particularly if sales of the more profitable ‘international’ brands increase4) and points to
the high return offered to shareholders.
The comparative lack of tobacco regulation in many countries and government
willingness to embrace tobacco growing and manufacturing in return for substantial
financial inducements makes these markets ripe for industry exploitation and there is
every sign that this is occurring.10 Investment by the international tobacco companies
in foreign markets is typically associated with increased per capita consumption,
particularly in low and middle income countries.350-352 Coupled with this is the
doubtless heartening news for the industry that in many countries smoking prevalence
among young teenage girls is catching up with that of boys, that use of cigarettes and
other tobacco products is widespread among children, and that many children are
contemplating taking up smoking.353 In countries where few women smoke, the female
market is being aggressively targeted and the prevalence of female smoking is rising.354
And as BATA itself points out, even if ‘smaller percentages of populations will smoke
... the number of adults in the world over the age of 20 is forecast to grow by 11% by
2015.’19
It is likely that the industry already has strategies in place to protect their interests in
developing markets, having learned from experience in mature markets. According to
an RJR executive, ‘we feel very strongly that there are opportunities around the world
for the industry to head off issues that were not handled in the US as effectively as they
might have been.’355
10.24.3
Alternative uses for tobacco crops?
The question of whether tobacco has potential commercial uses beyond addicting and
satisfying the addiction of tobacco users remains open.
Over the years there has been speculation that nicotine may have some pharmaceutical
benefits. For example a small number of disease processes are known to be slowed down
or averted in smokers, possibly due to the protective effects of nicotine (see Chapter 3,
Section 3.28). In the USA a pharmaceutical company called Targacept, formerly a
subsidiary of the tobacco company RJ Reynolds, is continuing research into a class of
drugs described as neuronal nicotinic receptor therapeutics.356 Other researchers are
Section: 10.24.3
investigating the potential for tobacco to be used as a host plant for genetic and other
biomedical purposes, including the production of vaccines and other chemicals to treat
and prevent disease.357-360
Even if tobacco plants are found to be a suitable source for production of biomedical
products, the amount of land needed for tobacco production for these purposes would
be very small compared to that required to supply the traditional tobacco market.361
Acknowledgements
We are grateful to Ms Becky Freeman, of the School of Public Health, University of
Sydney, for her thoughtful review of this Chapter. Ms Nicole Antonopoulos, Legal
Policy Adviser in the VicHealth Centre for Tobacco Control, also provided helpful
comment.
Section: 10.24.3
Facts and Issues
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Tobacco in Australia: Facts and Issues. Third Edition

10.2 The manufacturing industry in Australia.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

10.3 Retail value and volume of the market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

10.4 The tobacco companies operating in Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

10.5 Major importers operating in the Australian market.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

10.6 Market share and brand share.. . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

10.7 Trends in products and packaging.. . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

10.7.4 Countering second-hand smoke.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 20

10.8 The tobacco growing industry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 26

10.9 The tobacco industry and the illegal tobacco market.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

10.10 The tobacco industry exposed: tobacco industry document

10.11 Corporate responsibility and the birth of good corporate

10.12 The tobacco industry’s revised stance on health issues.. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 35

10.13 Encouraging young people not to smoke.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 36

10.14 The environmental impact of tobacco production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 39

10.16 The environmental impact of tobacco use.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

10.17 The tobacco industry’s response to tobacco litter.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

10.18 Corporate links with charities and social causes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

10.19 Tobacco industry lobbying—overview. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

10.20 Tobacco industry lobbying—the tools.. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

10.21 Tobacco industry lobbying—the targets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

10.22 Donations to political parties.. . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

10.23 Public attitudes to the tobacco industry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

10.24 The future of the tobacco industry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Table 10.2 Value of retail sales of tobacco products, and percentage of

Table 10.3 Ranking by sales value of leading product categories in

Table 10.4 Ranking by % of sales value of leading product categories in

Table 10.5 Ranking of tobacco products and manufacturers in the top

Table 10.6 Tobacco companies operating in Australia: summary table

Table 10.7 British American Tobacco (Australasia Holdings), 2002–06. . . . . . . . . . . . . . . . . 12

Table 10.8 Products and brands manufactured or imported by British

Table 10.9 Philip Morris (Australia), 2002–06. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Table 10.10 Products and brands manufactured or imported by Philip

Table 10.11 Imperial Tobacco Australia Ltd, 2002–06.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Table 10.12 Products and brands sold or imported by Imperial Tobacco

Table 10.15 Market share by retail sector, Australian tobacco companies,

Table 10.16 Top 10 cigarette brands (and their manufacturers) sold by

Table 10.17 Top 10 cigarette brands among Australian secondary school

Table 10.18 Leading roll-your-own tobacco brands (and their

Table 10.19 Leading cigar brands (and their importers) sold by

Table 10.20 Cigarette sales in the supermarket and grocery sector

Table 10.21 Industry tactics used to counter tobacco control measures.. . . . . . . . . . . . . .. . . . 49

Table 10.22 Political donations declared by tobacco companies in

The global tobacco manufacturing

British American Tobacco ranks as second largest transnational tobacco company

The manufacturing industry in Australia

Retail value and volume of the market

Table 10.3 10.3.1

The tobacco companies operating 7

The tobacco market in Australia is dominated by three major companies,

Rank (out Retail sales BATA PMA ITA

Source: The NSW Retail Tobacco Traders’

On the basis of market share, PMA is the second largest

PMA’s brands are

Source: The NSW Retail Tobacco Traders’

Source: The NSW Retail Tobacco Traders’

Major importers operating in the

RYO tobacco Old Holborn

Swedish Match Australia is the Australian operating division of the Stockholm-based,