Marlboro Unethical Advertising

A
Marlboro marketing campaign aimed at
young people, anti-tobacco report says
Marlboro cigarette maker Philip Morris 'breaching its ethical
code' with adverts that try to 'persuade the young to smoke'

An advert in Switzerland shows a barefoot young woman on a high parapet

overlooking a city as the sun sets. "A Maybe never reached the top", says the
caption.

"Maybe never wrote a song", runs the caption on another billboard in

Germany, beside the picture of a laughing young woman performer, hair
dishevelled, cigarette in hand. Other posters show young men riding stunt
bikes and motorbikes.

Each advert in the "Don't be a Maybe" campaign ends with the command: "Be
Marlboro".

Anti-tobacco campaigners on Wednesday published a report accusing Philip

Morris International, the makers of Marboro cigarettes, of breaching its own
ethical code in embarking on a high-profile global advertising and marketing
campaign intended to recruit new young smokers.

The campaign has been introduced across 50 countries, featuring billboards,

adverts and promotional events including music concerts. The posters show
young people apparently acting in radical, decisive and adventurous ways.
"Maybe never fell in love – Be Marlboro" runs the banner on a poster of two
young people kissing in a dark street.

That advert ran in Germany in 2011. In October 2013, Germany banned the
promotional images, ruling they were designed to encourage children as young
as 14 to smoke. PMI has said it will appeal. Meanwhile the campaign has taken
off in other countries, such as Indonesia, Brazil and the Philippines, where the
laws on cigarette advertising are not as stringent as in some European nations,
including Britain.
In a joint report, seven anti-tobacco organisations said PMI is trying to recruit
a new generation of youngsters, many of whom risk becoming hooked on
tobacco for life. The report, "You're the Target", was issued by Corporate
Accountability International, Campaign for Tobacco-Free Kids, Alliance for
the Control of Tobacco Use, Tobacco Control Alliance, Framework Convention
Alliance, InterAmerican Heart Foundation, and Southeast Asia Tobacco
Control Alliance.

The campaign "exploits adolescents' search for identity by suggesting

that – in the face of uncertainty – they should be a Marlboro smoker",
says the report. "Although PMI claims that 'Be Marlboro' only targets
legal-age smokers, campaign advertisements from around the world
clearly focus on youth-oriented images and themes that appeal to
teenagers and feature young, attractive models partying, falling in love,
adventure travelling and generally being 'cool'".

Anti-tobacco campaigners have filed complaints in Brazil, Colombia and

Switzerland, as well as Germany, claiming the adverts breach local laws. It also
says that PMI is violating its own ethical code, which states: "We do not and
will not market our products to minors, including the use of images and
content with particular appeal to minors."

The organisations call on PMI to end the campaign immediately and urge
governments to implement tougher anti-tobacco advertising laws. "Not only is
Philip Morris International likely violating tobacco control laws in many of the
countries it operates this campaign, it is doing so in conjunction with its global
campaign of litigation and intimidation aimed at stopping, watering down and
delaying life-saving public health measures," said John Stewart, Challenge Big
Tobacco campaign director at Corporate Accountability International.

He added: "This report shines a light on the often illegal and always unethical
tactics PMI uses to continue to addict people to its deadly products."

A spokesman for PMI said: "Our Marlboro campaign, like all of our marketing
and advertising, is aimed exclusively at adult smokers and is conducted in
compliance with local regulations and internal marketing policies. Allegations
to the contrary are unfounded and based on a subjective interpretation."
(A) https://www.theguardian.com/society/2014/mar/12/marlboro-
marketing-campaign-aimed-young-people-cigarettes-report

The Marlboro Man is dead, but the Campaign for Tobacco-Free Kids and
other anti-smoking advocacy groups released a report Wednesday that says
that the cigarette brand , owned by Philip Morris International, is actively
targeting minors in an international ad campaign that has been banned in
at least one abroad market .

The campaign, which the report says cost close to $7 million, shows
various seductive images with a similar trope: a young woman pressing
against a man in an alley (“Maybe never fell in love”), a guy hopping a chain
link fence (“Maybe never found a way”), and a musician in a smokey haze
laughing and playing a guitar (“Maybe never wrote a song.”) The message of
the ads? Shake off inhibitions. “Don’t be a maybe… Be Marlboro.”

While the ad campaign hasn’t been used in the United States, which has
very strict laws against gearing tobacco ads to children , it has appeared in
more than 50 countries.

“These ads use images that directly link Marlboro with the exact
attributes adolescents across the globe seek,” Matthew L. Myers,
President of the Campaign for Tobacco-Free Kids which helmed the
report, told TIME. “Sexual and social success, independence and
rebellion against authority, risk taking.” He equated the cool persona
embodied in the ad campaign to that of the Marlboro man — although
these images appeal to a more current, hipster-friendly young audience.

Marlboro denied the ad campaign directly targets minors. “Our Marlboro

campaign, like all of our marketing and advertising, is aimed exclusively
at adult smokers and is conducted in compliance with local regulations
and internal marketing policies,” Philip Morris International
spokesperson Iro Antoniadou told TIME in an email. “Allegations to the
contrary are unfounded and based on a subjective interpretation.”
A German court found otherwise. The “Be Marlboro” ad campaign was
banned throughout the country in October for targeting teenagers and
adolescents.

“In Germany, regional authorities in Munich have issued an order that

lacks any basis in law and fact banning our Marlboro campaign,”
Antoniadou said. “As a result, Philip Morris Germany (PMG) is
challenging it before the Munich Administrative Court.”

According to the report, titled You’re the Target: “While tobacco

companies claim publicly that they do not market to youth or design
marketing campaigns that target them, a 2013 study conducted in low-
and middle-income countries showed that 22% of five- and six-year-olds
surveyed were able to correctly identify Marlboro cigarettes, the world’s
best-selling cigarette brand.”

“The real tragedy of this entire campaign is that it’s running in countries
with the weakest laws, the most vulnerable populations where the
governments haven’t stepped in to protect their children,” Myers said,
citing Indonesia, the Philippines, China, and Russia as examples. “As an
industry it reminds me of a 2-year-old before their moral compass
develops.”

While Myers doesn’t expect the report to change Philip Morris

International’s marketing strategy, he does hope it will encourage other
countries to have stricter advertising laws for cigarette companies.

Marlboro reiterated that its marketing policy strictly prohibits using

images “that are aimed at or have particular appeal to minors.” In a June
21, 2012 investor’s day meeting , Philip Morris International senior vice
president of marketing and sales told an audience that the controversial
campaign— which launched in 2011 but is ongoing—was aimed at young
adults:

We know, for example, that young adults feel overwhelmed by the flood of information and
options that new technologies offer. In this time of uncertainty, they have very few life compasses
that can provide them with guidance. With the new campaign, Marlboro encourages them to be
decisive, trust themselves and follow their inspiration. The concept is very simple: there are three
ways to react when faced with a decision: Yes, No, or Maybe. Marlboro does not believe in
Maybes.
(B) http://time.com/23820/marlboro-says-these-ads-definitely-dont-target-
kids/

(C) REPORT SLAMS

MARLBORO FOR
MARKETING TO
TEENS GLOBALLY
Consortium of Health Groups Calls for Philip Morris to End
Campaign, Asks Countries to Enforce Ad Bans

A cohort of consumer advocacy groups are calling for Philip Morris

International to end its global "Be Marlboro" campaign, charging that it
knowingly targets kids and teenagers. The cohort is also calling for countries to
enforce stricter tobacco-marketing regulations.
In a report released today called "You're the Target," the groups said that the
global campaign, launched in 2011 and created by Publicis Groupe's Leo
Burnett, has been found to target teens. That, the report says, violates laws
restricting tobacco marketing in several countries, but it is calling for all
countries to adopt stricter regulations that would in effect ban all marketing,
promotion and sponsorship from tobacco companies.
According to the report, Philip Morris International spent $6.97 billion on
marketing and related expenses in 2012 on all its products. It said at least $62
million of that was spent on new brands and the rollout of "Be Marlboro," citing
PMI's 10-K. The report comes from Corporate Accountability International,
Campaign for Tobacco-Free Kids, Alliance for the Control of Tobacco Use,
Tobacco Control Alliance, Framework Convention Alliance, InterAmerican
Heart Foundation and Southeast Asia Tobacco Control Alliance.

The "Be Marlboro" campaign originally launched in 2011 in Germany, though

it has expanded to more than 50 countries, according to the report, which said
it's intent is to revamp Marlboro's image among "young adult smokers" and
replace the Marlboro Man. But what it really does, the report charges, is target
kids and teenagers and get them hooked on cigarettes early.
According to the report: "While tobacco companies claim publicly that they do
not market to youth or design marketing campaigns that target them, a 2013
study conducted in low- and middle-income countries showed that 22% of five-
and six-year-olds surveyed were able to correctly identify Marlboro cigarettes,
the world's best-selling cigarette brand."
The report said that the company is using strategies that can be found in
documents that were previously undisclosed but have since been made public,
thanks to the massive tobacco settlement in the '90s among tobacco companies
and many U.S. states. According to the report, these documents show that
tobacco companies targeted kids as young as 13 and that such targeting
increased youth smoking rates.
It points specifically to the Archetype Project, which the report said outlines
how to market to teens: "Using concepts and imagery consistent with the
recommendations of findings from previous Philip Morris internal research on
marketing to teens, the 'Be Marlboro' campaign draws on youth-oriented images
and themes that suggest to young people that they should be a Marlboro
smoker."
John Stewart, the Challenge Big Tobacco campaign director at Corporate
Accountability International, said that "the tactics to get teens to smoke in the
U.S. were being exported to low- and middle- income countries where
regulations had yet to take root."
In response, Philip Morris said in a statement, "Our Marlboro campaign, like all
of our marketing and advertising, is aimed exclusively at adult smokers and is
conducted in compliance with local regulations and internal marketing policies.
Allegations to the contrary are unfounded and based on a subjective
interpretation." Leo Burnett declined to comment.
The report calls for countries to enforce strict bans on all tobacco advertising in
accordance with the World Health Organization's Framework Convention on
Tobacco Control -- a treaty originally from 2003 that now has some 177
countries signed on -- which seeks to regulate tobacco consumption and policy,
including a comprehensive ban on all advertising in the countries that are part of
the treaty.

Mr. Stewart said that many of the countries that are part of the WHO treaty may
not have enforced their advertising bans yet because "there's a latency period
where countries have to bring their laws up to speed. Some are adopting stricter
bans, but it's taking time."
He added: "Wherever there are holes in the marketing restrictions, the tobacco
industry will use these loopholes and create campaigns accordingly."
"Complete bans or restrictive regulation limiting tobacco advertising are
common in both developed and developing countries around the world today,"
said Philip Morris in its statement. "In those places where marketing and
advertising is permitted, our campaigns are intended to inform current
consumers of our brands in their choice and encourage smokers of competing
brands to switch to our products."
In addition to asking Marlboro to ban the campaign altogether, the cohort of
consumer advocacy groups ask that Philip Morris publish "a detailed
description of the 'Be Marlboro' marketing activities by country on its website
so that governments and public health organizations can make an assessment of
the damage caused by PMI's activities."
Philip Morris said that it supports rational restrictions on advertising. The
company's standards on marketing can be found on its website.
CAI has had success in the past with tobacco. In the '90s, when it was known as
Infact, it led the charge to ban Joe Camel from RJ Reynolds' ads, and after
President Bill Clinton and the American Medical Association followed suit, the
tobacco mascot was permanently discharged.

(C) https://adage.com/article/news/report-slams-marlboro-marketing-teens-globally/292115/
(D) Marlboro: Targeting Minors Worldwide in their Ads (2012)
Case Controversy

In 2011 the advertising campaign started in Germany kicking off a series of campaigns that would
spread worldwide. Some of the many slogans included “No More Maybe’’, "Maybe Never Fell in
Love”, Maybe Never Wrote a Song”. All these billboards ended with Be Marlboro. Marlboro started
targeting teenagers with a variety of ads. The fact of the matter is that they are deliberately putting
their advertisements in strategic places where many youths can see them easily and recognize the
product. Millions on top of millions children use public transportation mainly buses for transportation
to school and wherever else they need to go. Bus stops and train stops have become one of the most
advertised locations in these countries. Every day they are looking at Be Marlboro posters and
different ads in their daily life. This campaign is being run in mainly impoverished nations that do not
have strict regulations at all Most of Marlboro advertising to youths have come in third world and
second world Nations.

Stakeholders
The stakeholders are the people effected by targeting of minors from Marlboro and their
advertisement campaigns. The main stakeholder is Phillip Morris International the Parent company of
Marlboro and also the children that became victims of the ads. Marlboro spent over $200 million on
the "Be Marlboro" campaign. They sent these ads on 6 different continents and over 75 countries
world wide. There were many resources invested to make this work. Also the children and
Adolescents , they had no idea what the health effects of cigarettes were but Marlboro created a
marketing strategy that exploited this age range. They lured them in by showing Marlboro as the "it"
thing to do and 'Cool Kid' image.

Individualism
The Main goal in the individualism theory is to maximize profits for the owners, which in this case is
the stockholders of Phillip Morris. In addition to do correct business with in the law and look out for
their shareholders best interest. “Marlboro global growth is due in large part to PMIs aggressive
marketing” (Kids, 2014). The company has shown great profits internationally regardless of how they
are marketing the campaign has been maximizing the shareholders profits. All of the countries have
relatively weak law restriction so therefore Marlboro is technically running the operation under the
law. Marlboro has seen over $8.6 Billion dollars in profits in 2013. Even though they are targeting
minors since the fact is that they are maximizing profit under the law then it is considered ethical.

Utilitarianism
For many teenagers around the world they are lost and are looking for a direction. They want to be the
cool kid and they want to fit in and be “that” kid. For Example in 2012 in Tunisia Marlboro ran
campaigns in which showed videos of attractive teenagers having the time of their life. Everyone was
dancing laughing looking good and being the “cool” kids you can say. Now most kids looking for
direction would see that video and be like I want to be a part of that atmosphere I want to be like
them. At the end of the Ad it said don’t be a Maybe Be Marlboro. At the end of the day kids instantly
recognized with smoking Marlboro Cigarettes will bring them that joy and sense of “ being cool”. The
campaigns have brought millions of adolescent’s short time – happiness, and under the Utilitarianism
theory that is considered Ethical.

Kantianism
Kantianism states that people/business should be motivated by goodwill in their actions and be
rational in their decisions. They should inform the people they are interacting with and allow them to
make rational decisions. A Kantian does not deceive or take advantage of people that are vulnerable.
These minors are vulnerable, to begin with they are working every day to get by and PMI is preying
on them. PMI is showing them a false image of what a cigarette can do, PMI knows that their target
market is looking for a brighter life and they strategically lie and false advertise allow their consumers
to make very irrational decisions. There is absolutely no goodwill from the side of PMI in their
business practices it is pretty much a cancer stick and they are cashing on vulnerable people. A
Kantian would considered their practices extremely unethical.

Virtue Theory

The Virtue Theory is based on four main characteristics, which consist of courage, honesty,
temperance, and justice/fairness. These four main characteristics are virtues. In order for a business to
be virtuous they must meet these virtues.They lack courage because they are not standing up for what
is right. PMI has been through many government hearings especially in the US regarding children
advertising. They have seen all the research and to still turn a blind eye to the facts. They continue to
advertise in these nations where they are able to and don’t bother to stand up for what’s right. They
are completely not honest. PMI Provides a false image of how cigarette can improve a teenager’s life.
They never once mentioned the life threatening conditions that come along with smoking.For the
virtue of temperance a business must have reasonable expectations and desires. PMI has always been
a company with high expectations in terms of profits but whether or not their desires are reasonable
I’d beg to differ. PMI is selling cancer sticks to kids, these kids haven’t even fully developed. A Fair
business is one of hard work, quality product, good ideas, and good practices. Marlboro has unfair and
unreasonable expectations because they advertise in areas where many youths are present. They
cannot reasonably expect children to not be influenced when they are marketing near candy stores and
bus stations. The result of all these virtues is that Marlboro is unethical.

Justified Ethics Evaluation

The way by which PMI has marketed to minors internationally is completely wrong. I believe that
they are complete mistaken of their actions. They have managed to face little resistance from
governments in nations that are hurting for money. These campaigns are occurring in countries where
starvation, poverty, crime, and disease are main issues. The have been allowed to feast on these
people and specifically minors. Most of the minors are children that are working and not even going
to school in order to survive and help their family survive. These are extremely vulnerable people and
they are just kids looking for a sense of direction. PMI believe that by their Marlboro cigarette will
show these kids a life full of great things in fact they are selling them cancer sticks that are doing
absolute nothing but harming them. They are traces of deceiving, lying, and manipulating in PMI
practices, which are all being done in order to get extreme profits. What has been done here by
Marlboro is wrong.
(D) http://businessethicscases.blogspot.com/2015/11/marlboro-targeting-minors-worldwide-
in.html

(E)11 Ads Marlboro Swears Don’t

Target Teenagers
The world’s best-selling cigarette brand is under fire for allegedly targeting
teens.

A new study released by the Campaign for Tobacco-Free Kids, an anti-

smoking advocacy organization, accuses Marlboro, which is owned by
Philip Morris, of aggressively targeting youth with flashy images of young
people partying, hooking up and traveling.

“Philip Morris International claims it doesn’t market to kids, but the evidence
in this report shows otherwise,” Matthew L. Myers, president of Campaign
for Tobacco-Free Kids, writes in the report.

The report specifically calls out the brand’s “Be Marlboro” campaign, which
is running in more than 50 countries.

Marlboro denies that its ads target teens.

“Our Marlboro campaign, like all of our marketing and advertising, is aimed
exclusively at adult smokers and is conducted in compliance with local
regulations and internal marketing policies,” Iro Antoniadou, a
spokesperson for Phillip Morris International, wrote in an email to HuffPost.

Astonishingly, 68 percent of five and six-year-olds in developing countries

are able to correctly identify a cigarette brand, according to a 2013 study in
Pediatrics, the journal of the American Academy of Pediatrics.

Tobacco is responsible for 6 million deaths every year and critics accuse
tobacco companies like Phillip Morris of targeting young “replacement
smokers” to make up for their customers that either quit or die.

Here are 11 ads that pretty explicitly target young people:

 (E) https://www.huffingtonpost.com/2014/03/12/marlboro-teens-ads_n_4949300.html

(F) Marlboro accused of encouraging

teenagers to smoke with global ad
campaign 'drawing on youth images of
freedom, risk-taking and falling in love'
 Marlboro accused of targeting teenagers in its 'Don't Be
A Maybe' campaign
 Adverts feature young people partying, snowboarding
and playing guitar
 Allegedly draw on youth images of 'freedom, risk-taking
and falling in love'
 Cigarette firm Philip Morris International accused of
'breaching ethical code'
 Campaign has been introduced across 50 countries, but
banned in Germany
 Every day, up to 100,000 young people globally become
addicted to tobacco

The world's largest-selling brand of cigarette is under fire for allegedly

encouraging teenagers to smoke.

Marlboro, which is owned by Philip Morris International (PMI), is

accused of targeting youngsters across the globe through its 'Don't Be
A Maybe' campaign.

Each advert in the campaign features young people - with some

pictured partying, snowboarding and playing the guitar.
Other adverts see young people travelling, jumping over a fence and
even crowd surfing at a gig.

The posters - which have been introduced across more than 50

countries - all end with the command: 'Be Marlboro'.

Now, international public health bodies have accused PMI of 'drawing

on youth-oriented images and themes that suggest to young people
that they should BE a Marlboro smoker'.

In a report, the organisations state that PMI is 'breaching its ethical

code' by using themes of freedom, risk-taking and falling in love to
encourage teenagers to take up smoking.
'Philip Morris International claims it doesn't market to kids, but the
evidence in this report shows otherwise,' said Matthew L. Myers,
president of Campaign for Tobacco-Free Kids.

But Marlboro has denied targeting teenagers - and claims its campaign
is 'aimed exclusively at adult smokers'.

The report, titled 'You're the Target', was issued by Campaign for
Tobacco-Free Kids, Alliance for the Control of Tobacco Use Brazil,
Corporate Accountability International, Framework Convention
Alliance, InterAmerican Heart Foundation, and Southeast Asia
Tobacco Control Alliance.

It calls on governments worldwide to enforce 'comprehensive bans' on

tobacco advertising, promotion and sponsorship that appeal to
teenagers.

Since its launch, the 'Don't be a Maybe' campaign has seen the
introduction of advertisements, billboards, and other promotional
events, such as music concerts, beach tours and interactive booths, in
countries across the world.
However, it was banned in Germany in October last year for targeting
teenagers as young as 14 - while similar complaints have been
generated elsewhere.

Today, PMI spokesman, Iro Antoniadoum, told MailOnline the

campaign was 'conducted in compliance with local regulations and
internal marketing policies'.

'Allegations to the contrary are unfounded and based on a subjective

interpretation,' the spokesman wrote in an email.

'Complete bans or restrictive regulation limiting tobacco advertising are

common in both developed and developing countries around the world
today.

'In those places where marketing and advertising is permitted, our

campaigns are intended to inform current consumers of our brands in
their choice and encourage smokers of competing brands to switch to
our products.'

Every day, a staggering 80,000 to 100,000 young people around the

world become addicted to tobacco, according to the report.

The substance is the world’s leading cause of preventable death -

killing nearly six million people worldwide each year.

Alarmingly, it is predicted to kill one billion people this century if current

trends continue.

(F) https://www.dailymail.co.uk/news/article-2579830/Marlboro-forced-deny-targeting-teenagers-
report-accuses-brand-drawing-youth-images-freedom-risk-taking-falling-love.html

TARGETING KIDS
(G) The Beginning
In 1492, Christopher Columbus discovered North America during
a major exploration sponsored by Spain. Upon his arrival,
Columbus was offered dried tobacco leaves as a gift from the
American Indians that he encountered. While strange for
Columbus, the American Indians had been using tobacco leaves
since about 6,000 BC for mostly religious and medicinal
practices. Soon after this encounter, the Spanish sailors
brought tobacco back to Europe, where the plant quickly gained
widespread popularity. The increasing demand for tobacco in
Europe at the time can be attributed to the fact that
Europeans believed it could cure almost anything – from bad
breath to cancer. In 1571, a Spanish doctor named Nicolas
Monardes wrote a book about the history of medicinal plants of
the new world, in which he claimed that tobacco could cure 36
different health problems.

In 1612, John Rolfe cultivated the first tobacco crop in

Virginia. By 1619, it was the colonies’ biggest export and
fueled economic growth in America. By 1760, a major tobacco
company called P. Lorillard was established by Pierre
Lorillard in New York City to process tobacco, cigars, and
snuff. Soon after, more large tobacco companies began selling
products all over America. With a high demand for tobacco all
over America and an increase in the development of technology,
by 1913, RJ Reynolds introduced the Camel brand, bringing with
it the era of the modern cigarette.

Philip Morris
In 1847, a man named Philip Morris founded a small cigarette
company in London. Cigarettes were becoming very popular in
England at the time, as British soldiers were bringing large
amounts of tobacco back from the Russian and Turkish
soldiers. In effect, Philip Morris specialized in selling hand
rolled Turkish cigarettes, and continued this until the
1900’s.

In 1902, the company set up headquarters in New York to market

its cigarettes. However, it wasn’t until about 1960 when
Philip Morris gained popularity in the United States because
of their iconic Marlboro Man advertising campaign (See Figure 1).
This campaign aided the company’s rapid growth from the sixth
largest tobacco company in the United States to the leading
manufacturer of cigarettes in the United States by 1983.
During this period of rapid success, the company decided to
grow further by expanding into other businesses. In 1970,
Philip Morris made the first of several acquisitions with the
purchase of Miller Brewing Company. In 1985, Philip Morris
Companies became a holding company and the parent of Philip
Morris Inc. They then bought General Foods Corp. that same
year. The company continued their expansion with the
acquisition of Kraft Foods in 1988 and then a merger between
Miller Brewing and South African Breweries in 2002. The
following year, Philip Morris Companies changed its name to
Altria Group, Inc. and Philip Morris USA moved its
headquarters from New York City to Richmond, Virginia. Altria
then divested the international business of Philip Morris as a
separate company, and acquired U.S. Smokeless Tobacco Company
and premium wine manufacturer Ste. Michelle Wine Estates. The
holding company currently owns Philip Morris USA, U.S.
Smokeless Tobacco Company, John Middleton, Ste. Michelle Wine
Estates, Philip Morris Capital Corp., and Nu Mark, a new
company that produces Nicotine Lozenges.

Rapid Growth & The Marlboro Man

Today, now headquartered in Richmond, Virginia, Philip Morris
is still at the top of the cigarette market. The company’s
cigarette brands have about half of the cigarette market share
and its leading brand, Marlboro, has a 39.9% share of the
market. Other popular Philip Morris brands include Parliament,
Virginia Slims, Merit, Benson & Hedges, L&M, Chesterfield,
Cambridge, and Basic.

The majority of Philip Morris’ rapid success stems from their

marketing in the 1950s. What might come as a surprise to many
is that Marlboro, along with most of the filtered cigarette
brands before the 1950s, were targeted towards women. The
feminine image behind the brand was initially built to market
Marlboro cigarettes as “safer” and “lighter” due to the
filter. The original “Mild As May” cigarettes sold in sleek
white boxes and featured red cellulose around the filter to
hide lipstick stains (See Figure 2). However, in the late
1950s, in an attempt to avoid remaining stagnant in the
market, Philip Morris decided to change this feminine image
and target a more financially attractive group at the time –
young males.

With the help of Leo Burnett, a Chicago based advertising

agency, Philip Morris decided to reach out to this new target
audience through archetypal masculine characters. The cowboy
character was the first in the lineup and by far the most
successful one. In addition, Leo Burnett did not appeal to the
“health benefits” of the filter, but rather ignored any health
concerns in the campaign, which was in the opposition to other
brands.

Since the beginning, the Marlboro Man was an incredibly

successful campaign with a direct and huge impact on sales.
Within only a year, Marlboro went from being a niche brand
with 1% market share to a top 4 position in the U.S. market.
By 1972, after expanding the campaign into other “manly”
professions, Marlboro became the most popular cigarette brand
in the U.S. and has held the position since then. The Marlboro
Man now remains a part of popular culture even long after the
ban on tobacco advertising.

Tobacco Industry Today

Through the 60s, smoking cigarettes was a lifestyle in the
United States. Practically everyone smoked because it was
associated with a life of glamour. It was endorsed by many
icons and famous figures at the time, most famously Audrey
Hepburn and Steve McQueen, who were both rarely photographed
without a cigarette in hand. Up until 1963, American adults
were smoking an average of 12 cigarettes a day and weren’t too
concerned about the negative effects on their health. However,
in 1964, the surgeon general released a publication claiming
that there is a link between cigarette smoking and cancer.
That same year, the cigarette labeling and advertising act was
passed which required all cigarettes sold to carry the surgeon
general’s warning. Following the passing of this act, the
tobacco industry was immediately hit with a number of other
regulations including the 1971 ban on cigarette ads and the
1990 ban on smoking on interstate buses and domestic flights.

On top of the regulations, the tobacco industry was

successfully sued by several U.S. states in the mid-1990s.
Since then, the industry has suffered greatly. The lawsuits
claimed that tobacco causes cancer, and that companies in the
industry knew this but deliberately understated the
significance of their findings, contributing to the illness
and death of many citizens in those states. The industry was
found to have multiple internal memos confirming in detail
that tobacco is both addictive and carcinogenic, which were
used as evidence in court. These lawsuits caused a lot of
problems for the tobacco industry and negatively changed its
perception by people in the United States. However, in 1998,
tobacco companies settled to gain immunity from future
lawsuits from government groups in return for $246 billion to
be paid out over the course of 25 years. This payment was
agreed upon by state governments to compensate for the
expenses placed on their Medicaid programs from treating
tobacco related conditions.

In addition to the multiple lawsuits and regulations, tobacco

companies were greatly affected by a constantly increasing
tobacco tax. Today, the U.S. government directly taxes
cigarettes with an excise tax and additionally, all state
governments tax cigarettes by the pack. This obviously led to
drastic increases in cigarette prices in an attempt to deter
people from buying them. However, despite these changes and a
now public understanding of the negative health risks, there
are still millions of addicted smokers. In addition, Philip
Morris remains profitable with a large market share and
continues to make money off a product that is addictive and
damaging to its customers.

Targeting Kids & Ethical Perspectives

Philip Morris is perceived as “evil” by the general public.
This is not surprising considering the company sells products
that kill almost 20% of Americans every year. Recently,
however, the company has been attempting to convince the
public that it is not the enemy by spending large sums of
money on advertisements intended to prevent the youth from
smoking cigarettes. This effort presents a very interesting
ethical dilemma. Should Philip Morris be considered an
unethical company regardless of its “good deeds” because of
its harmful products? Or could the company be considered
ethical because of its efforts to decrease youth smoking
rates? In order to answer these questions, we will analyze
Philip Morris’ anti-youth-smoking campaigns using the three
major approaches to normative ethics: deontology,
consequentialism, and virtue ethics.

Deontology
Looking at this issue through a deontological lens, one needs
to focus on the motives of the action. In this case, the
action is Philip Morris’ decision to produce and participate
in anti-youth-smoking campaigns. Recently, Philip Morris
announced that it was actively involved in more than 130
programs in more than 70 countries. Also, the company has
spent more than $300 million on youth anti-smoking programs
and campaigns, including the widely known “Think. Don’t
Smoke.” campaign. Furthermore, it is actively seeking new
“anti-youth-smoking” partnerships with youth service
organizations, state school systems, and major universities.

According to Immanuel Kant, a philosopher whose theory of

ethics is considered deontological, “to act in the morally
right way, people must act from duty.” Kant also insists “it
is not the consequences of actions that make them right or
wrong but the motives of the person who carries out the
action.” Looking at the roots of the campaign, it began mainly
because as part of a $206 billion settlement, major tobacco
companies like Philip Morris agreed to pay for advertising
campaigns to educate consumers about the dangers of tobacco.
Therefore, Philip Morris produced these advertisements out of
“respect” for the law, or because it is its duty to do so. In
effect, based on Kant’s theory, Philip Morris’ campaign should
be considered moral. However, looking at this issue through a
deontological perspective disregards the consequences of, or
what actually happened, following the campaign.

Consequentialism
A consequentialist believes that a “morally right act is one
that will produce a good outcome, or consequence.” So, in
order to analyze this action through a consequentialist
perspective, it is important to focus on the actual outcome of
the anti-youth-smoking campaign rather than Philip Morris’
motives behind it. In a study published in The American
Journal of Public Health, respected academic researchers
concluded that the advertisements aimed directly at young
people had no beneficial effect, while those aimed at parents
were actually harmful to young people exposed to them. The
researchers claimed that the ads are “fuzzy-warm,” which could
actually generate favorable feelings for the tobacco industry
and its products. In addition, their theme – that adults
should tell young people not to smoke mostly because they are
young people – is exactly the sort of message that would make
many teenagers feel like lighting up.

In effect, while good intentioned, the counter-productive

nature of the campaign would mean it is ultimately unethical
through a consequentialist lens. Marlboro is the most popular
brand among kids with 60 percent of the underage market
(Parliament, another Philip Morris brand, is number four).
Research suggests that roughly 2,000 kids become regular
Marlboro smokers every day with more than 600 of them likely
to die prematurely because of their smoking. If current trends
continue, roughly five million kids alive today will die from
smoking – and about three million of them will have started
their smoking habit with Marlboro cigarettes.
Virtue Ethics
According to deontology, Philip Morris’ campaign is ethical
because it was their duty to educate consumers about the
dangers of tobacco. On the other hand, consequentialism
suggests that the campaign is unethical because, regardless of
the company’s intentions, young people continue to smoke their
products. Therefore, in order to truly analyze the morality
behind the campaign, one needs to use the third major approach
to normative ethics: Virtue Ethics. This perspective
emphasizes the role of character and virtue in moral
philosophy rather than either doing one’s duty or acting in
order to bring about good consequences.

While Philip Morris’ intentions may seem moral in the public

eye, recent research indicates that the youth smoking
prevention programs were not really designed to effectively
prevent youth smoking but rather to head off a government
crackdown. According to Judge Gladys Kessler of the Federal
District Court for the District of Columbia, “[The youth
smoking prevention programs] are minimally financed compared
with the vast sums spent on cigarette marketing and promotion;
they are understaffed and run by people with no expertise; and
they ignore the strategies that have proved effective in
preventing adolescent smoking.” One example of this is that
the television ads do not stress the deadly and addictive
impacts of smoking, an emphasis that has been shown to work in
other anti-tobacco campaigns. Considering that Philip Morris
is widely known for its marketing savvy, this information
should raise concerns. In addition, an internal Philip Morris
document from 1992 states that “the ability to attract new
smokers and develop them into a young adult franchise is key
to brand development.” Based on this information, it is quite
clear that Philip Morris used the campaigns for its own
personal gain. In effect, using the theory of Virtue Ethics,
the company’s campaigns should be considered unethical or
immoral because of their ulterior motive of brand development
rather than “acting as a virtuous person would act in [their]
situation.”

Conclusion
There are so many different ways to judge a tobacco company in
terms of ethics as their sole purpose as a company is already
considered unethical. For this reason, I decided to use
ethical theories to analyze only one aspect of Philip Morris
Inc.: their anti-youth-smoking campaigns. Using deontology,
consequentialism, and virtue ethics, it became clear that
judging the morality of Philip Morris’ campaigns is not as
straightforward as one would think. Deontology, or Kantianism,
suggests that Philip Morris’ efforts should be considered
ethical because it was the company’s duty to produce the
campaigns. However, Consequentialism and Virtue Ethics suggest
otherwise. After delving further into the details of the
campaigns, the issue presented itself as more unethical than
ethical. Through a number of studies conducted by known
researchers, it became clear that the campaigns were actually
counterproductive and were implemented in an effort to
increase growth and brand development.

Philip Morris, or any other tobacco company, is a very

interesting case when it comes to company ethics. Tobacco has
been a very large of western culture for around 500 years. It
greatly assisted the economic growth of the United States
since the beginning. Today, tobacco is frowned upon by society
and the companies that were once so well respected in the
country are now hated by many. They sell a product that is
responsible for about 440,000 deaths a year. While they can
continue to pursue “healthier” forms of smoking or even put
more funds and effort into their anti-smoking campaigns, there
is no way for the company to operate without harming anyone.
To ask Philip Morris to act completely ethically would be
asking them to shut down operations completely.

https://stakeholderorgwed.wordpress.com/2016/04/14/philip-morris-targeting-kids/

In Philippines
(H) Philip Morris set to
introduce heated tobacco
products in PH
Hong Kong—Philip Morris International is preparing to introduce in the Philippines a
cutting-edge technology for smokers using heated tobacco products that have fewer
health risks, pending the creation of regulatory measures for these products.
PMI Asia Ltd. director for regulatory strategy and engagement James Arnold said
that while some markets had no regulation yet on these new tobacco products,
consumers in these countries were ready to embrace the new technology.
“What we are doing is for those people who cannot and won’t quit smoking. Based
on a study, there are millions of Filipinos who are still smoking and there more than a
billion smokers across the world. Twenty years after, there will still be a billion
smokers globally. What do we want to do with them? At least provide them with
better alternatives,” he said.
Iqos, PMI’s first advanced heated tobacco product, is available in limited quantity in
the Philippines. Despite the absence of laws for these products, a few people were
using the product acquired from other countries or from the black market in Manila.
Iqos has a growing following in the Philippines despite the lack of regulatory
measures that should be in place.
“What is the most important here is the minimum age law. We don’t want children
dipping their hands into something that should be regulated,” Arnold said.
Quality and safety standards and health warning labels, though not as graphic as
those seen on conventional or combustion cigarette packs, are also critical.
PMI said the governments of different markets, including the Philippines, should
open communication focused on adult smokers.
Another measure that will help improve the regulatory scheme is the scientific
substantiation of the product and regular monitoring and surveillance.
“Products that don’t burn should be regulated differently than cigarettes. This is
totally a different category that should be regulated differently than cigarettes,
although the same principles will apply,” Arnold said.
Within the PMI Science Hub in Hong Kong, four new smoking platforms were being
developed, the most advanced of which is Iqos.
Iqos is an electronic cigarette gadget that uses heat to create an aerosol that
smokers can inhale for their nicotine fix without the carcinogenic factor of burning or
combustion. It is sold in 40 countries worldwide.
The Science Hub or Center in Hong Kong was the first formal and biggest research
and development facility the company established with researches on smoking and
cigarettes.
The ongoing switch of smokers from conventional cigarettes to heated tobacco
products resulted in a 3.1-percent increase in net revenues for PMI to $29.6 billion in
2018.
The company said in an investor report that for 2019 to 2021, it was expecting at
least 5 percent annual currency-neutral growth in terms of net revenue.
“We are in the cigarette business today and we anticipate to be in the cigarette
business in the future. But that is not our ambition. Our ambition is to give smokers
what they want, give them better alternatives. We don’t take that ambition lightly. We
are seriously in transforming ourselves so that we are quick to develop a wide range
of products from a company that lasted 150 years.
We’re committed to helping create that spot in the future,” said Arnold.

http://manilastandard.net/business/corporate/288037/philip-morris-set-to-introduce-heated-
tobacco-products-in-ph.html

(I) Cigarette companies skirt

advertising ban
They engage in subtle but more effective promotional activities

2nd of 2 parts

Now prohibited from advertising their products in the so-called “paid media”—television, radio,
and newspapers—tobacco companies have found ways to defeat the ban through subtle but
potentially more effective promotional activities.

Their activities range from donating to community projects to influencing the content of movies
or shows to being the subject of positive news reports.

Advertising specialists told Newsbreak that these new approaches taken by tobacco companies
may be “more expensive,” but they sure “built relationships” with consumers and can therefore
help maintain, if not expand, the tobacco market.

The Tobacco Regulation Act of 2003 stopped the elaborate marketing strategy of tobacco
companies in the “paid media.” Anti-tobacco advocates have reported violations of the ad ban in
province-based television and radio stations, but noted that the national media have generally
heeded the law.

The law, however, has been unable to prevent the invasion of “free media”—the very content of
news and entertainment media—by tobacco products and brands.

Under the Radar

“In the first place, in promoting their cigarettes, tobacco companies never really limited
themselves to media advertising,” said an advertiser who used to be involved in creating ads for
an international cigarette brand.

Another advertiser warned that, outside the broadcast and print media, tobacco companies engage
in skillfully planned promotional activities that could even be stronger in pulling consumers.

“We were even joking that cigarette companies may have invented below-the-line advertising,”
the advertiser said.

“Below-the-line” advertising refers to any form of promotions outside television, radio, and print
media (the so-called “above-the-line” advertising).

“Cigarette advertising is so advanced. Unlike above-the-line, they are under the radar and are
hard to monitor,” the advertiser said. “TV, radio, and print are one-way—I tell you, you decide.
Below-the-line advertising is interactive. It’s stronger because it builds relationships. There is
feedback. But it’s more expensive. The cost-per-person is higher.”

Invading Movies

For decades, tobacco companies have paid hefty sums to promote their products in the movies.
Hollywood has played a big role in portraying cigarette smoking as glamorous.

Philip Morris appeared in at least two James Bond movies—A Licencse to Kill in 1989 and Die
Another Day in 2002. The company reportedly paid US$350,000 the first time.

Philippine movies adopted the same strategy. The country's biggest tobacco player, Fortune
Tobacco, once appointed actor and sportsman Richard Gomez as its spokesman. Bowler Paeng
Nepomuceno also endorsed cigarette brand Champion, obviously to rub his athletic prowess onto
the brand.

However, the Tobacco Regulation Act has since banned tobacco companies from hiring
celebrities to endorse their products.

To get around this, tobacco companies try to influence the content of films, said Anna Leah
Sarabia of the Women's Media Circle, which is helping in the anti-tobacco advocacy in the
Philippines.

Tobacco companies, without necessarily asking for direct endorsement of their particular brands,
offer to help independent filmmakers produce their movies in exchange for showing their
cigarettes in any of the scenes, no matter how briefly, Sarabia explained.
Since “it’s hard [to find] sponsors now, many filmmakers can be easily influenced. They might
not see anything wrong with it,” Sarabia said.

She said these forms of “soft advertising” should also be banned. “We don't need another law. It's
just another interpretation of the Tobacco Regulation Act,” she said.

CSR in the News

Tobacco companies have also maintained their presence in newspapers, particularly through their
Corporate Social Responsibility (CSR) activities.

CSR activities of Fortune Tobacco made it in the news last year, for example. Major newspapers
and at least one television network featured stories on the efforts of Lucio Tan, Fortune Tobacco
owner, to help the tobacco farmers in the Ilocos region, where the bulk of his raw materials come
from.

He spent P4 million to rehabilitate the Silag-Pacang diversion dam to help the farmers irrigate the
tobacco fields.

But among tobacco companies, Philip Morris is appears to be the most generous. It is known for
its donations to local government units, charities, and government agencies, most, if not all, of
which are reported in newspapers.

Last year, anti-tobacco advocates were alarmed by a photo of Philip Morris Philippines
Manufacturing Inc. managing director Chris Nelson with Philippine National Red Cross chairman
Senator Richard Gordon published in newspapers.

Newspapers ran a story on Philip Morris’s P2-million donation to Red Cross, which was given on
Gordon’s 63rd birthday in August 2008.

Problems in Monitoring

The tobacco ad ban covers below-the-line promotional and sponsorship activities, but the
government doesn’t seem to have enough capabilities and resources to monitor violations of this
ban.

“Promotion” is defined as any activity organized by tobacco companies or any display of tobacco
products or manufacturer’s name, trademark, or logo. “Sponsorship,” on the other hand, is
defined as any contribution to a third party in relation to any event with the aim of promoting a
brand of tobacco product.

Promotions must be directed to persons at least 18 years of age and limited in point of sale. The
name, logo, and indicia of cigarette brands may appear in smoking-related promotional materials
such as cigarette lighters and ashtrays, but not in other merchandise such as T-shirts caps,
sweatshirts, visors, backpacks, sunglasses, writing implements, and umbrellas.

It cannot pay for sports teams to promote the product, or build infrastructure like stadiums under
its name. The law also tasks tobacco companies to “take all available measures to prevent third
parties from using the company’s brand names and logo.”
Cigarette and tobacco companies are prohibited from sponsoring any sport, concert, cultural, or
art event, as well as individual and team athletes, artists, or performers where such sponsorship
shall require or involve the advertisement or promotion of any tobacco company or brand. The
attribution only to the name of the company in the roster of sponsors shall be allowed.

“Promo girls” are most common in the Philippines. Pretty girls are recruited to distribute
cigarettes in parties sponsored by the tobacco companies. This is the lowest level of promotional
activity.

“Promotion girls that will continue. They are much hotter now. I think for as long as Hollywood
and the glamorous people in entertainment are puffing away we will continue to puff away,” an
advertising specialist told Newsbreak.

The Framework Convention on Tobacco Control Alliance of the Philippines (FCAP) laments that
TV and radio stations in the provinces still carry cigarette ads, but the most common and frequent
violation of the ban is through outdoor advertisings, like billboard or sari-sari store signboards.
(“Images: Tobacco ad ban defied—every day”)

Concert Sponsorships

Anti-tobacco advocates are fighting a protracted battle, but there have been successes here and
there.

Philip Morris tried in 2008 to sponsor the reunion concert of popular '90s band Eraserheads, but
strong and sustained protests against the activity forced Phillip Morris to bow down and back out.

It was a skillfully prepared activity. Philip Morris did not immediately reveal that they were
organizing the concert for its Marlboro brand.

Eraserheads fans got excited when word spread that Eraserheads would reunite. But while the
sponsor remained a mystery, searches in the Internet led fans to a certain site—the web site of
Marlboro.

It took an anti-tobacco advocate in the United States to uncover the mystery. Campaign for
Tobacco-Free Kids (CTFK) president Matthew Myers wrote Philip Morris CEO Louis Camilleri
to demand that the company withdraw its sponsorship of the concert.

In his response to Myers, Camilleri confirmed the company's hand in the concert, but he said the
activity was well within the limits of the law.

“The promotional event you refer to is an invitation-only event, not open to the general public. It
is restricted to our trade partners and to adult smokers who can obtain an invitation by registering
to our adult-only-access Web site, where they must provide proof of age through a government
issued ID.

“Invitations cannot be purchased and are not transferable. Controls are in place at entry points to
the event to ensure that only persons with invitations are allowed to enter and to verify that they
are adults by double checking their government issued ID,” he explained in a letter to Myers.
Philip Morris was eventually pressured to drop the project The Eraserheads reunion concert
pushed through and was opened to all paying fans.

CTFK was also instrumental in persuading international R&B star Alicia Keys to demand the
withdrawal of Philip Morris’s sponsorship of her concert in Jakarta, Indonesia, that same year.

Lawyer Josefina Buenaseda of FCAP said they have learned of various other instances when
tobacco companies sponsored events such as fiestas. Sometimes, these activities entail illegal
promotional activities, such as using parasols bearing the tobacco brand, putting up billboards,
and distributing prohibited give-away merchandise. (Newsbreak)

1st of 2 parts: Effects of tobacco ad ban not yet felt

https://news.abs-cbn.com/nation/07/08/09/cigarette-companies-skirt-advertising-ban

(J) Anti-tobacco group files

advertising complaint vs Philip
Morris
(Updated 9:11 p.m., November 22) A health advocacy group has filed a
complaint against Philip Morris Philippines Manufacturing, Inc. (PMPMI)
and Fortune Tobacco Corporation (FTC) for a newspaper feature on the
tobacco giant that, it says, is in breach of the law against tobacco
advertising. HealthJustice filed the complaint with the Inter-Agency
Committee on Tobacco (IAC-T) on Wednesday afternoon, the group said in
an emailed statement on Thursday. Reached for comment, PMPMI staff
said the company would send a statement to GMA News Online but had
not done so as of updated posting time. The complaint stems from a
feature on PMFTC president Chris Nelson and the tobacco company’s
corporate social responsibility that appeared in the January 22 issue of
Starweek, a special section of the Philippine Star’s Sunday edition.
According to HealthJustice, the feature violates Section 22 of the Tobacco
Regulation Act of 2003, which prohibits all forms of tobacco advertising in
mass media. “By filing the complaint with them [IAC-T], HealthJustice
hopes that this practice of circumventing the ban on advertising through
media features will be put to an end,” the statement read. The IAC-T is the
multi-agency body tasked with the implementation of Republic Act No.
9211, or the Tobacco Regulation Act of 2003. The body is composed of the
Trade Secretary as the chairman and the Heath Secretary as the vice
chairman. Members include the Secretaries of Agriculture, Justice,
Finance, and the Environment. "Big Tobacco, as usual, is pushing the
envelope and trying to get away with it. This write-up on PMFTC's so-called
CSR project is advertising and insidious advertising,” Theodore Te, a public
interest lawyer working with the anti-tobacco group, said in the
HealthJustice statement. “Articles like this perpetuates that 'normalcy' and
make our kids think it’s okay to make and sell this lethal stuff,” added Ipat
Luna, senior legal adviser of HealthJustice. — BM, GMA News

https://www.gmanetwork.com/news/money/companies/283416/anti-tobacco-group-files-
advertising-complaint-vs-philip-morris/story/

(K) Philip Morris International

forms new company with 90% of
Philippines cigarette market

PMI’s deal with Fortune Tobacco Corp looks an excellent move both to
optimize its brand portfolio in the Philippines and to consolidate and
strengthen its position in the vital Asian market.

The Philippines subsidiary of Philip Morris International and the current

market leader Fortune Tobacco Corp (FTC) are to merge to form a new
company with a dominant 90% share of the Philippines cigarette market.

The new company will have the logical but unwieldy name of PMFTC. No
financial details of the deal have been released other than a statement that
the parties will hold ‘an equal economic interest’ in PMFTC. Philip Morris
will retain its export business which ships cigarettes mainly to Thailand.
Fortune Tobacco will maintain its interest in the distribution of the Winston
brand owned (outside the US) by Japan Tobacco Inc,

The private company – Fortune Tobacco – is owned by Lucio Tan and was
formed over 50 years ago during the presidency of Ferdinand Marcos. Prior
to the merger, Philip Morris was second in the market to FTC. The
Philippines is important to PMI, being its 12th biggest market.

The deal makes strategic sense, bringing PMI better coverage of the local
market including the profitable medium- to low-priced segments where FTC
is strong. PMI, through second brand in the market Marlboro, dominates
the premium end of the Philippines cigarette market.

The Philippines is the 15th-largest cigarette market in the world, and the
second-largest in Southeast Asia after Indonesia. According to Euromonitor
International, retail sales of cigarettes in the Philippines in 2008 stood at
81.4 bn sticks, having grown by some 13% since 2003, with 56% of retail
sales of cigarettes accounted for by FTC and 28% by PMI. Penetration of
illicit trade was estimated as 22% in 2008 at some 21 billion sticks.

Key change in Philippines market

The key change in the Philippines tobacco market over the last decade has
been the growth in share of PMI’s subsidiary Philip Morris Philippines
Manufacturing Inc (PMPMI). When PMI first sought to gain a foothold in the
large Philippines market, about a decade ago, it was, essentially, a
monopoly, and global players had to settle for licensing agreements and
Philip Morris concluded such an agreement with La Suerte.

At the dawn of the new millennium, Western-based tobacco companies

faced growing anti-tobacco groups in the Philippines leading to many court
cases. In response Philip Morris decided, in 2002, to end its relationship
with La Suerte, and established PMPMI to take full control of its Philippines
business.

In 2003, PMPMI opened a P1.6 billion factory in Batangas, followed in

January 2010, P1-billion-worth. Realising that it has no products able to
compete with FTC’s and La Suerte’s low-priced brands, PMI acquired 4
low-priced brands marketed by Sterling Corp which has a licensing
agreement with an Indonesian partner in which PMI has a stake. In 2003,
PMPMI also introduced L&M, the second most popular brand in the world,
to strengthen its portfolio in the mid-priced brand segment.

Pall Mall fails to become a competitor

Meanwhile BAT was also trying to grow in the Philippines market. The
company made a licensing agreement with La Suerte, and planned to
position Pall Mall, one of the company’s global drive brands, as a mid-
priced brand. But, in 2004, BAT fell foul of changes in the tax regime.

The company appealed but a ruling stated that Pall Mall was a super-
premium brand, subject to a huge P27.16 per pack ‘sin tax’ in 2009 and
P28.30 in 2011. This meant the equivalent of a 200% premium to Marlboro
and made the Pall Mall price over 4 times the price of Fortune – FTC’s
leading brand in the mass market. As a result BAT pulled Pall Mall from the
Philippine market.

The 2004 tax scheme also affected PMPMI’s L&M brand (introduced in
2003), which was re-classified from mid-priced to a premium bracket, but if
it meant losing Pall Mall as a competitor the company would certainly have
viewed it as a price worth paying.

PMI’s Asian strategy

According to analysts, a key motivation for PMI’s decision to invest in the
Philippines is a free trade agreement among ASEAN countries which
reduced the import duty rate for selected products to 5% or less compared
with previous import duty rates as high as 60%.

Tobacco products are included under this scheme by Thailand, Philippines,

Singapore, Malaysia and Indonesia – hence PMI’s exports from Philippines
to Thailand. (PMI has manufacturing operations in the Philippines,
Indonesia, and Malaysia but not Thailand.) PMPMI uses its facilities in the
Philippines to consolidating tobacco leaves from suppliers and
manufacturers elsewhere in Asia.
The Philippines deal may thus be seen in the context of PMI’s wider Asian
expansion and consolidation strategy. The company acquired the
Indonesian cigarette company, Sampoerna, in 2003. In the Philippines,
Sampoerna’s trademark brands were being manufactured and sold by
Sterling Tobacco Corp. PMI acquired Sterling’s brands, including Bowling
Gold, Stork, Miller, and Bowling Green in the low-priced cigarette segment
where PMPMI had no presence in order to compete with Fortune Tobacco
Corp, which dominated the low-priced segment.

Why this is a good move for PMI

The Sterling brands completed PMPMI’s portfolio with flagship brands,
Marlboro and Philip Morris King size in the premium segment and L&M in
the mid price segment.

But, it was not enough: despite PMPMI’s aggressive marketing, the

company made little impression on FTC’s leadership in the mid price sector
where economic downturn was tending to push premium brand smokers to
down-trade. This, and the way it strengthens the company’s strategic
presence in Asia, is why the merger looks a very good move for PMI.

https://blog.euromonitor.com/philip-morris-international-forms-new-company-with-90-of-
philippines-cigarette-market/

(K)

Statement by John Stewart Director, Challenge Big Tobacco Campaign Corporate Accountability
International Big Tobacco CSR Violates Ad Ban 3 December 2012 On Wednesday November 28th,
members of HealthJustice, a Philippine public health policy group, filed a legal complaint against
Philip Morris Philippines Manufacturing, Inc. (PMPMI) and Fortune Tobacco Corporation (FTC) for
circumvention of a law requiring a comprehensive ban on tobacco advertising, promotion, and
sponsorship. The tobacco corporation, which has a stranglehold on the Philippines’ tobacco market,
represented, falsely, an advertisement in the February edition of “Starweek Magazine,” as a news
article touting Philip Morris Fortune Tobacco Corporation (PMFTC)’s latest corporate social
responsibility (CSR) schemes. This deception and misrepresentation is a PR scheme for a corporation
that sells a product that kills half its customers, and, more importantly, is unlawful. Corporate
Accountability International and the Network for the Accountability of Tobacco Transnationals
(NATT) sent a letter to the Philippine Star editorial board in February of 2012 exposing this violation
of Philippine law and journalistic integrity and received no response. The advertisement,
misrepresented as a legitimate news article, features PMFTC president Chris Nelson, part of Big
Tobacco’s efforts to re-brand itself as a “socially responsible” industry, particularly in the developing
world, a target market for expansion where 80% of tobacco-related deaths already occur. This Big
Tobacco CSR, recognized by the World Health Organization as nothing more than a form of
advertising, is actually a sophisticated public relations effort aimed at influencing policy makers and
the public and defeating effective tobacco control measures. What this brazen PR piece fails to
mention is that the tobacco industry profits from selling a deadly product with tremendous
economic costs, and the dollars that it drains from economies reduce budgets for essential public
services like the ones PMFTC now offers to support: hunger and poverty eradication, education, and
disaster relief.

PMFTC is an affiliate of Philip Morris International (PMI), the world’s largest, deadliest, and most
profitable publicly traded transnational tobacco corporation. PMI currently operates in 180 countries
and holds more than 27% of the international tobacco products market (excluding China and the
US). In 2010, PMI reported revenues, excluding taxes, of over $27 billion and an operating income of
US $11.2 billion. Another way to look at it: That’s $1,866 in profits for every person who will die this
year from tobacco-related disease. We applaud HealthJustice for taking this legal action, which
comes on the heels of the Fifth Conference of the Parties (COP5) of the World Health Organization
Framework Convention on Tobacco Control (WHO FCTC). It sends a clear message to PMI and its
subsidiaries that the public health community will continue to hold tobacco corporations
accountable for their unlawful and unethical practices. We urge the Philippines’ government and
legal authorities to take the appropriate action to take PMFTC to account for this unlawful act. For
more on the dark truth behind PMI and its interference in public health policy, see Corporate
Accountability International’s reports: “Cutting Through the Smoke,” and “Philip Morris International
Exposed: Alternative Annual Report.”

http://www.healthjustice.ph/wp-content/uploads/2014/10/Statement-on-HealthJustice-Complaint-
for-Circumvention-of-Ad-Ban-FINAL.pdf