The Tobacco Industry

13 January 2017

As we began the New Year many smokers’ contemplated quitting smoking. Those who did not give up smoking in January or failed in their attempts, may again consider quitting on Ash Wednesday.

It is has been widely proven and accepted that smoking is bad for many obvious reasons, however, even with the ever visible anti-smoking campaigns, addiction it is difficult to break away from.

Tobacco Companies

The tobacco industry make huge profits from peddling their wares.  These companies employ large volumes of people, attract plenty of investment and are for all intents and purposes like any other multi-national business. 

But not quite: originally built on slavery while being glamorised by Hollywood in the middle of the last century, the industry managed to hide and deny the truth about the health risks posed by smoking. They targeted developing countries and young people in order to get them hooked while they were vulnerable to peer pressure and the power of advertising.

Eventually the tobacco industry was exposed and nowadays they are at war with most governments, as they fight to reduce smoking and improve the health of their citizens.

The World Health Organisation estimates that 6m people die every year as a result of smoking.

The two main battles waged against tobacco companies have been to educate people about the dangers of smoking and to reduce the marketing power of the tobacco companies. Public health campaigns, banning advertising, putting health warnings on packets and banning smoking in public places all took their toll.

Plain Packaging

The latest victory against the industry came last year when the tobacco giants lost in the European Court of Justice, and the British High Court against the EU’s new regulations for cigarette packaging.

The new tobacco directive means graphic health warnings with photos, text and cessation information must cover 65% of the front and the back of cigarette and roll-your-own tobacco packs. Member states have 12 months to sell old stock, and up to four years to sell menthol and flavoured cigarettes, which were banned outright.

The UK and France went further and followed Australia’s example,  these require all tobacco products to be sold in drab green-brown packaging with large images designed to be health warnings, a move to be followed by other countries such as Ireland, Hungary, Norway, Canada and New Zealand.

Three of the major tobacco companies fought back but were defeated in Court when evidence showed that packaging and branding were crucial to attracting teenagers and even younger children to smoking.

It was proven that branding and attractive packaging are very potent factors in children’s and teenagers’ interest in smoking.

The tobacco industry’s targeting of children was exposed in many documents including a memo written in 1992 stating “The ability to attract new smokers and develop them into a young adult franchise is key to brand development.”

So crucial is the power of advertising that the court cases were seen by many, even within the industry, as a ‘Custer’s Last Stand’.

The future of the tobacco industry

Tobacco companies, having seen the writing on the wall some years ago, have been developing alternatives to cigarettes, such as ecigarettes and other tobacco-based products, which they expect to be a growing market.

Philip Morris International, (Marlboros) the world’s biggest tobacco company has recently changed their tactics (did not join the others in the court cases) and now claim to see a future where they will no longer be selling cigarettes. While still producing more than 870bn cigarettes per annum they have been developing a new IQOS product, which they recently launched in the UK having already introduced it in a dozen other countries including Japan, Switzerland and Italy.

The product heats tobacco enough to produce a vapour without burning it.  The company says the vapour has less than 10% of the amount of harmful chemicals found in cigarette smoke, and claims it will have a more authentic feel than ecigarettes.

The Third World

In the meantime, tobacco companies are up to their old tricks in the developing world. A major new report by WHO claim many low and middle income countries are frightened of the threat and misinformation of  tobacco companies raising the price of cigarettes, even though it would be beneficial to both health and the economy, according to a major new report.

The industry warns of an increase in smuggling and illicit trade in tobacco if prices are raised however, this has not yet been officially proven. Raising tobacco prices raises money for governments while deterring smokers, money that poorer countries badly need to develop services including health services.

The report claims, controlling tobacco does not harm economies. The number of jobs dependent on tobacco has been falling in most countries, when smokers quit they spend their money on other sectors in the economy. Tobacco farmers, infamous for having a low standard of living, can be helped to diversify into other crops or even turn tobacco into biofuel.

WHO has warned that even though the developed world is winning the war against the tobacco companies the number of tobacco related deaths worldwide will rise to 8m by 2030 if governments in developing countries do not implement strong tobacco control policies, especially by raising taxes which could reduce consumption while funding healthcare.

Ireland and the tobacco companies

Ireland has a reputation as a leader in tobacco control and the aim is to have a tobacco free Ireland by 2025.  Ireland was the first country in the world to ban smoking in public places back in March 2004, and the public health (standardised packaging of tobacco) bill 2014 required the removal of all industry marketing from tobacco packaging.

Every year tax on tobacco rises in the budget bringing in around €2bn to the exchequer. Of course looking after people whose health has been damaged by smoking is very costly and roughly the same amount is spent on this.  More than 5,200 people die in Ireland each year from the effects of smoking.

Until recently some of Ireland’s sovereign wealth fund was invested in tobacco companies. Last year the ‘Ireland Strategic Investment Fund’ had €1.5m in equity holdings in three tobacco companies (originally it was €9.6m but some had already been sold). The NTMA held €16.7m in tobacco-related corporate bonds – relatively small amounts but nonetheless they could be seen as a mockery of the objective of a tobacco free Ireland. 

However, in December last the government announced the sale of its shares in tobacco companies which reinforces governments policy on tobacco.

 


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