Addicted to Profit: Big Tobacco's Expanding Global Reach
For the cigarette companies, the Chinese market represents the proverbial mother lode, a potential savior from declining sales at home. One out of every three cigarettes smoked in the world today is smoked in China. One third of all Chinese adults (67 percent of men and 4 percent of women), or close to 350 million people, already smoke an estimated 1.7 trillion cigarettes per year.1 As one multinational cigarette company executive puts it, "Thinking about Chinese smoking statistics is like trying to think about the limits of space."2
The human toll in China from smoking is staggering. Lung cancer and other smoking-related diseases are the most common causes of death in China, accounting for some 700,000 fatalities per year, which is projected to rise to 3 million by the year 2025.3 A recent study of middle-aged men in Shanghai showed that 21 percent of deaths were attributed to cigarette smoking.4 Another study in the Journal of the American Medical Association stated that smoking-related illnesses could eventually kill 150 million current smokers in China.5 Since smoking rates among women and youth are comparatively low, they are sure to be a target of the foreign tobacco companies. As tobacco control expert Judith Mackay notes, "the greatest single opportunity for prevention of non-communicable diseases in the world would be to prevent a rise in smoking among girls and women in China."6
China's huge market has made it the prime target of the multinational tobacco companies.
Historically, China's cigarette market has been highly protected, with foreign multinationals barred
from operating in the country. Over the past 15 years, however, as China's economy has begun to
open up, the tobacco sector has been transformed. Hungry for technology, marketing strategies
and capital, the state-owned China National Tobacco Corporation (CNTC) has begun to form
joint ventures and other unprecedented partnerships with foreign tobacco companies. Having
signed these agreements, "CNTC is eventually doomed to go the way of all the Eastern European
and South American monopolies, taken over by the transnationals," says Mackay.7 Although
CNTC's primary concern is making money for the state, it used to be known for its willingness to
acknowledge the dangers of smoking, and CNTC officials met often with health workers to
discuss anti-smoking education programs. That all began to change in 1988, health workers say,
when it signed its first joint venture with RJ Reynolds.8
Smuggling is also helping foreign cigarette manufacturers enter the Chinese market (see "Smuggling: Developing Brand Loyalty" above). Many observers believe that the multinational companies are involved in smuggling as a way for them to develop brand loyalty prior to the full opening of the Chinese market. Smuggling also encourages more people, especially young people, to smoke, since smuggled cigarettes are cheaper, often selling at one third the cost of legal cigarettes.
China accounts for about 37 percent of the world's tobacco leaf production and generates about 31 percent of the world's cigarettes.11 Although Chinese tobacco exports currently represent only about 6 percent of the world total, analysts say the country is rapidly emerging as a major exporter. In 1997, tobacco exports reached 76,000 tons, valued at a record $480 million.12 With increasing exports to the mainland, meanwhile, Hong Kong has become the region's largest exporter of cigarettes.
Smoking in most public areas in China is restricted, including in schools, theaters, department stores, museums and stadiums, and on public transportation and all domestic flights. Unfortunately, the ban is often ignored. The fine for smoking in public places is just 10 yuan (about $1), or less than the cost of a pack of imported cigarettes.13 The week prior to the 10th World Conference on Tobacco or Health in Beijing in August 1997, a group of 138 ministerial-level officials signed a highly publicized pledge not to smoke in public places and promised to persuade their aides and children to quit. This was considered an important accomplishment, since many leaders have reached a ripe old age and continue to smoke, sending a false message that smoking is not necessarily bad for your health.
China has passed laws banning tobacco ads on television, radio, and in the print media, and requiring that all tobacco advertisements include the warning: "Smoking is hazardous to your health." Cigarette advertisements are forbidden from encouraging youth smoking and health warnings must cover a minimum of 10 percent of the advertisement's space.14 By 1997, 300 cities, including Beijing, had become "Tobacco Advertisement-Free Cities." According to a Ministry of Public Health spokesman, "Our aim is drive out tobacco advertising from our cities one by one, until all the advertising is eradicated from China." In legislation adopted in the early 1990s, Hong Kong banned tobacco ads on TV and radio and in cinemas. In 1999, the ban will be extended to print media and billboard advertising. These actions notwithstanding, cigarette makers have little trouble skirting the ad restrictions.
Historically, CNTC has done very little advertising. Yet with the growing presence of multinational tobacco companies, cigarette advertising has increased dramatically (see "Advertising Ill-Health" above). By simply leaving the word "cigarette" out of their ads, foreign companies have circumvented China's advertising laws, leading to a slew of billboards promoting the pleasures of the "Marlboro World" and similar sentiments.15 Philip Morris (which is the biggest single source of advertising revenue in China16), RJ Reynolds and BAT have also spent millions of dollars in recent years on other forms of advertising, including promotional giveaways, and sponsorship of music and sports events. Cash-strapped soccer, basketball, or tennis associations will take the money where they can get it, and the foreign tobacco companies have plenty to give. Such sponsorship of sporting events is of great concern to tobacco control activists, since it is so widespread and makes the link between cigarettes and healthy activities.
The tobacco industry accounts for approximately 10 percent of all government tax revenues, representing the largest single industrial tax source.17 Even so, cigarettes continue to be relatively cheap in China. Legally imported foreign cigarettes cost a little over $1 per pack, and many local brands are significantly cheaper. A 1993 study showed that an additional penny tax on each pack of cigarettes sold would generate about $964 million in revenues, or the equivalent of the government's annual health budget.18 Tobacco control activists are pushing for higher taxes in order to discourage smokers. Unfortunately, proposals to raise the cigarette tax by half a cent have been defeated in the national parliament on at least two occasions.19
As is often the case, the government is torn between the desire to conserve its biggest single source of tax revenue and an obligation to protect the population's health. Studies have shown, however, that in the long term it is in the country's health and economic interest to control tobacco use, since the revenues raised from the tobacco industry do not cover the economic and health related costs of smoking. The WHO estimates, for example, that in 1993 China gained $4.9 billion in cigarette taxes, but lost $7.8 billion in productivity and additional healthcare costs.20 On a household level, the economic costs of cigarette smoking are equally astounding. A study of smoking habits in the Minhang District in 1993 showed that smokers spent an average of 60 percent of their personal income and 17 percent of household income on cigarettes.21 A study of peasants outside Shanghai found that the average farmer spent more on tobacco and rice wine than on grain, pork and fruit.22
There is still a great need in China for public education regarding the risks of smoking. Recent studies have found that few people know that smoking can cause lung cancer. One study showed that 35 percent of school students actually thought that smoking was good for your health.23 It doesn't help that role models continue to smoke in public. For example, about 55 percent of male medical workers continue to smoke.24
Nowhere are the stakes for tobacco control efforts higher. As Mackay notes, "If multinational tobacco companies could capture the China market, it wouldn't make a difference if every American stopped smoking tomorrow."25
In July 1997, Philip Morris and British American Tobacco paid a combined $2.1 billion to purchase Mexico's two cigarette companies. These acquisitions will irrevocably change the cigarette business in Mexico and have dire implications for the health of the Mexican people as well as tobacco control efforts in the United States.
Both companies were eager to return to Mexico, where they had operated before government restrictions caused them to leave in the 1980s. Now, with the opening of the economy to foreign investment, they have captured the world's fifteenth largest cigarette market, where 13 million smokers -- 39 percent of men and 19 percent of women -- consume 60 billion cigarettes a year.1 Aside from increasing cigarette sales to Mexicans, the acquisitions are aimed at "making Mexico an important cigarette exporter to other Third World countries, particularly in Asia," says financial analyst Rolando Calderon. Philip Morris and BAT were attracted by Mexico's low-cost labor, cheap supply of tobacco and special trade privileges with the United States.2 Former Surgeon General C. Everett Koop believes that the purchases may be part of company preparations to flood the United States with black market cigarettes should cigarette taxes in the United States rise dramatically.3
Philip Morris paid $400 million for a 50 percent stake in Mexico's second largest cigarette maker, Cigatam, which has been producing Philip Morris brands under license since 1975. Cigatam will remain in charge of production, while Philip Morris has taken over Cigatam's marketing operations.4 In 1996, Cigatam controlled 45 percent of the Mexican market, with sales of $641million.5 It produces 32 billion cigarettes a year, and has recently increased its overseas sales.6
BAT paid $1.7 billion to purchase Mexico's biggest cigarette company, Cigarrera La Moderna (CLM). This was one of the largest foreign investments ever made in Mexico7 and BAT's biggest purchase ever.8 CLM controls 55 percent of the Mexican cigarette market. It manufactures 27 different brands -- including some under licensing agreements with BAT competitors -- such as Camel, Winston, Dunhill and Salem.9 CLM produces 40 billion cigarettes annually, but could increase that by 15 billion with existing plants and equipment. The company made $80 million in profits in 1996 on sales of $794 million, and has three of the top five brands in the Mexican market -- Raleigh, Boots and Montana. In 1996, CLM's exports increased by 81 percent, earning the company $49 million in profits, while domestic sales increased only 3 percent.10
BAT plans to use its strengthened presence in Mexico to boost exports to the United States, Latin America and Asia. BAT already controls 60 percent of the Latin American market, with manufacturing facilities in Argentina, Brazil, Chile, Costa Rica, El Salvador, Guatemala, Guyana, Honduras, Nicaragua, Panama, Surinam and Venezuela. BAT sold more than 174 billion cigarettes in Latin America in 1996, taking in a profit of $410 million.11 In addition, CLM already sells its cigarettes in Burma, Cambodia, Hong Kong and Laos and will soon sell to China. It also manufactures Montanas in Vietnam through a joint-venture with the government,12 and exports to the Persian Gulf and Russia.13
A major reason that Philip Morris and BAT invested so heavily in Mexico is because the country has a large supply of inexpensive, high-quality tobacco leaf. Over the past few years, Mexico has increased the amount of land devoted to tobacco cultivation -- in 1997, 61,530 acres was devoted to tobacco, a 20 percent increase from 1995.14 Almost 90 percent of Mexico's tobacco crop is grown in the state of Nyarit, although production in Chiapas, Jalisco and Veracruz has increased in recent years.15 In 1996, Mexico exported $23.9 million worth of tobacco to the United States in 1996, up from $3.5 million in 1995.16 By contrast, the U.S. only exported $163,000 worth of tobacco to Mexico.17
Most tobacco in Mexico is grown under a "forward contracts" system. Under this arrangement, Cigatam and CLM provide inputs like fertilizers, insecticides, machinery and curing barns, deducting the cost from the payments to the farmers. Although some are organized into growers associations, the near monopoly of CLM and Cigatam means that farmers have little influence over the sale price. Most of the tobacco that is not used in Mexican factories is shipped to the United States. 18
Cigatam and CLM have invested heavily in tobacco research. CLM has hired foreign technicians to develop higher yielding and pest-resistant tobacco strains in its research stations in Chiapas, resulting in dramatic increases in the quality and yield of Mexican tobacco. "Mexico has the potential to produce the same quality of tobacco leaf as Cuba," claims financial analyst Calderon.19
The economic crisis which has enveloped Mexico since December 1994 has caused widespread unemployment and inflation, and led the cigarette companies to revamp their marketing strategies. In the United States, smoking rates tend to decrease as people's income and education levels rise. In Mexico, increases in disposable income among the poor and middle classes has tended to push up cigarette consumption. As wages have declined and unemployment increased, Mexicans have had less money to spend on non-food items like cigarettes. To avoid a decline in smoking, the companies have increased their advertising budgets and engaged in price-cutting.
In November 1997, Cigatam cut the price of Marlboros to $.80 a pack, down 65 percent from the beginning of the year.20 CLM followed suit, slashing the price of some of it most popular brands between 7 percent and 20 percent. The largest cut (20.5 percent) was on the high-selling, low-cost Boots brand, which were reduced to $.65 a pack, making them among the cheapest brands on the market.21 In February 1998, the companies reversed the cuts. (By occasionally making cigarettes cheaper, analysts believe, the cigarette companies hope to addict new customers who will then keep buying their product, even in the face of rising prices.) Advertising is another method to hook new customers. Between 1994 and 1995, both Cigatam and CLM doubled their advertising budgets. By 1995, Grupo Carso (Cigatam's parent company) was the seventh biggest advertiser in Mexico, while La Moderna (the parent company of CLM) came in eighth. Close to 90 percent of the tobacco companies' advertising budgets is devoted to television.
Cigarette advertising in Mexico attempts to link smoking with such attributes as glamor, sophistication, rebellion, individuality and sex. Kent ads show young people cavorting on a jet ski: with Kent, "The World Becomes Suave," it declares. An ad for Raleighs shows a romantic young couple, dressed in outdoors gear, saving wild animals in distress: "Raleigh is the Cigarette" it proclaims. The Montana brand is promoted as the only cigarette which is successfully sold overseas: "My cigarette with international flavor" the ads declare. Marlboro ads show images of the American west, where virile cattle herders rule the land. "Come to the Marlboro World" say the ads. The ads do work. A survey showed that Marlboro came in fourth place as the name brand most remembered by Mexican TV viewers.22
According to the Los Angeles Times, Mexico is "attractive to cigarette producers because of its young population and few restrictions on tobacco. With one in four Mexicans smoking, cigarettes are as ubiquitous as in Hollywood movies of the 1950s."23
Tobacco control regulations in Mexico are poorly developed. The only mandated health warning label says: "This product may be harmful to your health." There are no restrictions on sales to minors, and no laws against single-stick sales. Advertising on television is permitted, although they are only supposed to be shown during evening hours. Cigarette advertisements are prohibited from using models younger than 25, and are not supposed to associate smoking with sporting, religious or civic activities. However the cigarette companies sponsor sports teams and cultural events.24 There are some restrictions on smoking in public places in Mexico City, and other states are expected to follow suit. It is illegal to smoke in poorly ventilated public buildings (including some government offices), classrooms, auditoriums, etc. Smoking sections in some restaurants have been established.25 Under pressure from the companies, cigarette taxes were reduced in the late 1980s.
Health problems in Mexico associated with smoking have been on the increase in recent years. According to the WHO, deaths from lung cancer, coronary heart disease and other smoking-related cancers increased substantially between 1970 and 1990, with lung cancer deaths rising 220 percent.26 According to one estimate, cigarette consumption costs the country some $4.5 billion annually in health care expenses, disability, decreased productivity and fires, among other things.27
The complete takeover of the Mexican cigarette industry by Philip Morris and BAT will likely lead to more aggressive advertising targeting children and other non-smoking populations, further corrupt the political system, and increase death and disease. It also gives these companies a base from which to expand exports while evading U.S. regulations. It is one of the clearest examples of why restrictions need to be placed on the foreign subsidiaries of the tobacco companies.
Mexico's Marlboro Man
The biggest single beneficiary of Philip Morris's entry into Mexico has been Carlos Helu Slim, the chairman and CEO of Grupo Carso, the conglomerate which owned Cigatam. According to Forbes magazine, Slim was the 26th richest person in the world in 1997, with a net worth of $7.2 billion.28 Slim's holdings include cigarettes, construction, retailing, financial services, auto parts, an 85 percent stake in 35 Mexican Denny's franchises, and minority shares in Prodigy and Apple. Slim is also chairman of Telfonos Mexico and serves on the Latin American Advisory Committee of the New York Stock Exchange.29 According to Institutional Investor, Slim controls nearly 25 percent of the market capitalization of the bolsa, Mexico's stock exchange.30
A month after purchasing Cigatam, Philip Morris announced that it was adding Slim to its Board of Directors.31 Perhaps to deflect attention from his great riches, Slim and his associates have tried to promote his image as the son of poor Lebanese immigrants who, through shrewd business deals and hard work, became wealthy. Yet Slim's current fortune owes more to his cozy relationship with former president Carlos Salinas and the ruling PRI party than to anything else.
Salinas' closest friend in the business community, Slim had already made a fortune on cigarettes and real estate when he was catapulted into the ranks of the world's super-rich as a result of his being on the receiving end of a sweetheart deal involving the privatization of the Mexican telephone company, Telfonos de Mexico (Telmex). The government sold the company to Slim at a vastly discounted rate and then, shortly thereafter, approved a 170 percent increase in phone tariffs. At the same time, wages increased by only 18 percent. "With wage increases of 18 percent and telephone rate increases of 170 percent, you don't need to be a financial genius to make it in the business world," says political scientist Lorenzo Meyer. "And since the telephone service in Mexico is a monopoly, there is no free competition to benefit the consumer."32 The signing of the NAFTA agreement with the United States in 1994 further ensured that Slim would profit from the deal, with foreign competitors blocked from the local phone market for another 10 years.
This generosity was not forgotten. A member of Salinas' campaign finance committee, Slim
was an active member of the Mexican Businessmen's Council, a group of extremely wealthy
Mexican businessmen who between them control over 25 percent of the Mexican economy.
The group made news in 1993 when its members attended a dinner party for Salinas where
they each pledged to donate or raise $25 million for the PRI's election campaign.33
Alfonso Romo Garza
Alfonso Romo Garza is chairman and CEO of Empresas La Moderna, the company which sold CLM to British American Tobacco. Like Slim, Romo is also a billionaire. Forbes magazine estimates his net worth at approximately $2.4 billion in 1997.34
Although known as a shrewd businessman, Romo's family connections have certainly helped him climb into the elite group of Mexican billionaires. A descendant of Mexican president Francisco Madera, Romo is married to a member of the wealthy Garza Sada clan that has long dominated Monterrey politics. Ironically, his entry into the cigarette business was facilitated by Carlos Slim. According to Business Week, Grupo Carso's finance chief asked Romo if he was interested in purchasing Cigarrera La Moderna. Slim, "who owned Cigatam, Moderna's chief competitor in cigarettes, had been buying up the shares, but he wanted to avoid antitrust problems. With his father-in-law and others, Romo paid $40 million for a controlling stake. Critics say that Slim's sale of Moderna to Romo was an effort to create another of Mexico's many "duopolies" -- industries controlled by two like-minded entrepreneurs with little price and quality competition."35
In 1996, Romo purchased a controlling interest in DNA Plant Technology, an Oakland, California-based biotechnology company that recently pled guilty to violating U.S. tobacco seed export laws. DNA is currently cooperating with a U.S. Justice Department investigation of the company's collaboration with Brown & Williamson to develop strains of tobacco with twice the normal amount of nicotine (see "Wacky Tabacky" above).
The owner of over 60 thoroughbred horses, Romo is an accomplished equestrian, having
represented Mexico in the 1996 Olympics, where he placed 78th in the jumping
competition. He also fancies himself an environmentalist. He has been on the board of
directors of Conservation International since 1993 and in 1996 gave the group a $10 million
gift to support the preservation of forests in the Lancandona Region of Chiapas.36
Ironically, his company has been active in encouraging farmers in Chiapas to expand the
cultivation of tobacco, a crop which not only requires heavy use of pesticides but also large
amounts of fuelwood for curing.
"The Americans came back...This time, with cigarettes."1
In Vietnam, an estimated 73 percent of men smoke, giving the country the highest male smoking rate in the world.2 With rising incomes, increasing urbanization and the opening up of the economy to foreign investment, multinational tobacco companies are hoping that women and young people will someday smoke at the same high rates. In addition to aggressively promoting their brands in Vietnam, these companies are taking advantage of the country's cheap labor to produce cigarettes for export. Domestic tobacco companies have responded to their sophisticated marketing campaigns by stepping up their own promotional activities.
The tobacco industry is largely controlled by the state-run Vietnam National Tobacco Corporation (Vinataba). Vinataba runs the country's five largest cigarette factories and two leaf processing plants, and accounts for about 72 percent of the legal cigarette market. Smaller factories owned by provincial governments produce the rest of the country's cigarettes.3 Although Vinataba executives once said that their goal was "not to increase volume, but to increase quality and value," cigarette production is on the rise.4 In 1996, the tobacco industry produced 42 billion cigarettes, compared with 29.8 billion in 1992.
With the lifting of the U.S. embargo against Vietnam in 1994, U.S. tobacco companies were among the first businesses to enter the country. That same year, foreign tobacco companies were allowed to contract with local factories to produce their international brands.5 Since cigarette imports are banned in Vietnam, this was the only way for the foreign companies to legally enter the market. These locally produced international brands -- which use 100 percent imported tobacco -- now account for between 15 percent and 18 percent of the market, although surveys show that some 38 percent of smokers would prefer the international brands if they could afford them.6 Although in U.S. terms cigarettes are quite cheap, in a country where most people earn less than $1 a day, they are quite expensive. The most expensive foreign brands sell for about 81 cents a pack, while the cheapest local brands can cost as little as 5 cents. A 1995 survey found that annual cigarette expenditures represented about one-third of the amount spent for food, six times the amount spent on health care, and twice the amount spent on education.7
Vietnam's poverty levels appear to make it a prime target for foreign tobacco companies looking for countries with cheap labor and available land to produce tobacco. Although most countries prefer not to openly advertise such questionable "competitive advantages", Vinataba Director Nguyen Thai Sinh boasts that "we have abundant land and inexpensive manpower. Our peasants have a reputation of being hard-working."8
Among the foreign multinational deals with Vietnamese tobacco partners:
Along with production deals with Vinataba, smuggling, which is rampant in Vietnam, is the other way to get foreign cigarettes into the country. Vietnam's long international borders and coastline make it difficult to intercept smugglers. Smuggled cigarettes are estimated to account for about 10 percent of the market, or close to 200 million packs per year, with Indonesian cigarettes accounting for some 60 percent of all confiscated contraband. Given that the smuggled cigarettes are not much more expensive than legal domestically produced brands, and given the apparent Vietnamese hunger for anything imported, smuggled brands are quickly snatched up on the streets of the relatively better-off large cities, like Hanoi and Ho Chi Minh City. In addition to the economic costs to the country in terms of lost revenues, smuggling appears to have led to increased corruption among public agencies. Hundreds of thousands of packs of foreign cigarettes, after being confiscated, are reportedly sold illegally on the black market.13
As a socialist country, Vietnam has much stricter controls on advertising than most Asian countries. Until 1990, advertising of any product was illegal. However, as the country has begun to open up to foreign investment, its advertising regulations have been loosened somewhat and foreign tobacco companies have been quick to take advantage.
Most direct advertising of tobacco products is banned in Vietnam. Yet tobacco companies get around this ban through point of sale ads, sponsorship of cultural and sports events, and direct marketing, all of which are permitted.14 For example, all of the international tobacco companies sell their cigarettes on city streets from carts painted with their logos. As Tobacco Reporter notes, "it's hard to overlook BAT's '555' sales carts. The shiny blue trolleys have become something of a leitmotif in Ho Chi Minh City, competing for attention with the red-and-yellow banners that advertise the virtues of socialism on every other street corner."15 Vendors receive the carts free of charge, and the tobacco company has employees who periodically clean them and make sure the packs are arranged neatly.
The foreign companies also ensure that stores selling cigarettes are equipped with flashy promotional material. "The nicest piece of retailing equipment in even the smallest dirt-floor stores is invariably a gleaming display case from Marlboro or BAT's 555 brand," notes the Boston Globe. One restaurant even went so far as to paint its interior to look like a giant pack of Marlboros.16 A marketing survey in Vietnam found that only 42 percent remembered seeing any cigarette ad, but 81 percent of these remembered a non-Vietnamese brand as the most commonly advertised.17
Other marketing tools include free handouts of t-shirts, umbrellas, and other items with brand name logos, and the hiring of young women to distribute free cigarette samples in hotels and at public events.18 These aggressive tactics to win new Vietnamese smokers have caused domestic cigarette companies to step up their marketing efforts in order to protect their market share. New domestic brands include 333 (a play on BAT's 555 brand) and Boy Boy Boy, which features a Vietnamese "Marlboro man."19
Hopefully, these outrageous practices will soon come to an end. In 1997, the government announced that it was considering a ban on tobacco companies' sponsorship of sporting and cultural events along with tightening of other marketing regulations.20
The Vietnamese government has also promoted a variety of direct and indirect control measures. Smoking is prohibited in public offices, theaters, health facilities and on all domestic flights.21 In 1996, it was also banned on army premises. In Ho Chi Minh City, the local government has embarked on a series of health education workshops to inform the public about the health risks of smoking. The government has also set up non-smoking public areas in 18 city districts.22
Much work however, remains to be done in the area of tobacco control. There are no bans on sales to minors, no tar and nicotine limits and no bans on smokeless tobacco. Cigarette companies are not required by law to include health warnings on cigarette packs.23
A 1995 prevalence survey of two large cities and two rural areas is the most comprehensive study to date on smoking rates in Vietnam. It showed an overall smoking rate of about 38 percent, with 73 percent of men smoking and only 4 percent of women24. This has made women a prime target of the cigarette companies, which seek to change the image of women who smoke to one of worldliness and sophistication. As the economy grows and multinational penetration of the country increases, smoking rates among young people have risen, an especially serious concern given that about 30 percent (21 million) of the population is under 15 years old.
Due to a shorter life expectancy in Vietnam and inadequate data, the full impact of the tobacco epidemic has yet to be fully documented.25 Nevertheless, researchers predict that close to 7.5 million people -- or 10 percent of the population -- will die of smoking-related causes.26 Lung cancer is already the most prevalent form of cancer among men.27
In spite of these staggering figures, there appears to be a high level of awareness of the dangers of smoking, highlighting the fact that public education campaigns alone are not sufficient to deter smoking. Some 87 percent of smokers are aware that smoking is harmful to your health, and 79 percent are aware that second hand smoke is also a health hazard, which is quite high compared with many other countries. Only 15 percent of smokers surveyed reported that a doctor had ever advised them to quit smoking, however.28
The Vietnamese government promotes tobacco production because it sees it as an important contributor to the national economy in terms of employment and revenue generation, although only .042 percent of the agricultural labor force is involved in tobacco cultivation and the tobacco taxes contribute only around 3 percent of government revenues.29
In recent years, the government has been investing heavily in leaf production in an effort to reduce its dependence on expensive imported tobacco. Currently, the country produces approximately 40,000 metric tons of tobacco per year. Vinataba hopes to increase that figure to 60,000 metric tons by the year 2001. "We want to be self-sufficient, and then begin exporting," says General Director Nguyen Thai Sinh. Vietnam's tobacco exports are negligible, although the country has set its sights on Russia where it used to export a significant amount of cigarettes and where U.S. cigarette companies have been spending hundreds of millions of dollars to establish a strong presence.30
The countries of Eastern Europe and the former Soviet Union have become major growth
markets for Philip Morris, RJ Reynolds and BAT, which have been purchasing formerly
state-owned cigarette factories and modernizing them. "This is where the American tobacco
companies are making money hand over fist," says Martin Feldman, tobacco analyst with Salomon
Smith Barney.1 While cigarette sales dropped by 4.5 percent in the United States and Canada
between 1990 and 1995, they increased by 5.6 percent in Eastern Europe and the former Soviet
Union.2According to the Times of London, "the key factor in the rise in smoking has been the
scale of the involvement by [Western] tobacco companies" which have spent more than $3 billion
in the region over the past six years on massive advertising campaigns, the purchase of formerly
state-owned cigarette factories, and the building of new ones.3 Philip Morris alone has spent more
than $1 billion since 1990 to acquire plants in Eastern Europe and the FSU.
"The Marlboro Man, that Madison Avenue icon of rugged American individuality, today looms across Moscow's billboard-filled skyline in much the same way Lenin's visage once commanded the view."4
Russia is the fourth largest cigarette market in the world, and one of the fastest-growing. Approximately two-thirds of Russian men and almost one-third of Russian women smoke, consuming close to 300 billion cigarettes a year. This lucrative market has attracted foreign cigarette companies, who now produce 70 percent of the cigarettes consumed in Russia.5
The current domination of the tobacco market by foreign multinationals can be traced back to 1990, when Philip Morris and RJ Reynolds came to the rescue of the former Soviet regime. At that time, the country was facing a cigarette shortage due to inadequate supplies of tobacco and other materials. Desperate smokers in a number of cities had begun rioting, blockading roads and burning vehicles. In return for cash and some barter goods, the U..S. tobacco companies airlifted 34 billion cigarettes to the country, helping to stave off a major political crisis and giving them a foothold in Russia's rich tobacco market.
Before the airlift, RJ Reynolds sold no cigarettes in the former Soviet Union. By 1995, it was selling over 50 billion a year 6 and has seen its sales in Russia double each year for the past three years, reaching $351 million in 1997.7 The company, which was the first to invest in Russia8 when it built its first factory there in 1992, has invested $520 million,9 and has already captured around 20 percent of the market.10 Together with Eastern Europe, the former Soviet Union is RJ Reynolds' largest foreign market.11 Sales of the company's new Peter I brand have skyrocketed, due in part to an "aggressive expansion of the company's manufacturing capacity and sales and distribution organization" according to a company press release.12 A RJ Reynolds spokesperson notes, "it's a very important market for us...because smoking has a long-standing tradition in Russia."13
Since 1992, Philip Morris, RJ Reynolds and British American Tobacco (BAT) have spent over $1 billion building new manufacturing plants in Russia and rehabilitating old ones.14 By setting up plants inside Russia, these companies have avoided Russia's stiff taxes on imported cigarettes. More importantly, it has allowed them to take advantage of two bountiful resources in Russia -- cheap labor and cheap factories. As the St. Petersburg Times notes, multinational tobacco companies have "bought up big stakes in choice domestic factories in order to produce more cheaply and efficiently, buy up well-known and potentially valuable local trademarks, barrage the consumer with as many choices as possible and ultimately control who enters the market."15
The apparent success of their Russian enterprises recently led the foreign tobacco giants to approve a new round of investments. In separate announcements on the same day in March 1998, Philip Morris, RJ Reynolds and BAT all announced new investments in Russia totaling $480 million. Philip Morris will invest $300 million to build a new plant outside of St. Petersburg with a capacity to produce 25 billion cigarettes annually. RJ Reynolds will invest $120 million over the next two years to boost its production at its St. Petersburg plant. And BAT, which recently spent $150 million to upgrade its Russian plants, announced additional investments worth $60 million.16 Says a BAT spokesman, "We see these new markets opening up in Central Asia and the Commonwealth of Independent States as really being the future of BAT well into the next century."17
The expansion of foreign tobacco companies in Russia has been accompanied and aided by their aggressive advertising and marketing techniques. Foreign cigarettes companies are the largest advertisers on Russian TV and radio,18 and account for as much as 40 percent of all advertising in the country,19 spending more than $10 million each year.20 Most of this advertising is carried out by foreign advertising agencies, for which tobacco companies are the biggest clients.21 Recently, Russian companies have stepped up their advertising and marketing efforts in response to the onslaught by the foreign cigarette companies.
Although Russia has relatively strict laws limiting tobacco advertising, they are poorly enforced. Although cigarette ads on TV have been banned, and printed advertisements must carry health warnings, the companies have devised a myriad of marketing tricks to win over Russian consumers. They bombard the populace with images linking smoking with freedom, sex appeal and adventure. Cigarette billboards have slogans like "Total Freedom" or "Rendezvous with America."22 They also sponsor sports teams, give away free samples at nightclubs, and even sponsor car giveaways.23
Market research has shown that Russians maintain strong loyalty towards Russian-made brands, coupled with nostalgia for the past and fear of growing western influence.24 Foreign cigarette companies have responded by manufacturing "local" brands and creating advertising campaigns that appeal to Russian nationalist sentiment (see "Advertising Ill-Health" above).
With their sizable economic clout, backed up by advertising firms and lobbyists, the foreign cigarette companies make sure that their interests are taken care of in the "new" Russia. After intense lobbying, these companies won changes in the country's tax laws in 1997 which led a 20 percent price increase for some domestically manufactured cigarettes, while the cost of brands such as Marlboros only went up by 2 percent.25
As foreign cigarette companies have become more active in Russia, adult smoking rates have increased significantly. Russian cigarette consumption has increased 40 percent since 1986, to close to 300 billion cigarettes per year. Approximately 67 percent of Russian men smoke (up from 53 percent in 1985) and 25-30 percent of Russian women smoke (up from 10 percent in 1985). Among health workers, almost 50 percent of male medical workers smoke, according to a 1993 survey.26
According to the WHO, smoking rates among young people are increasing as well, particularly among girls. A 1992-1993 survey by the Russian Academy of Medical Sciences found that for children aged 10-14, 19 percent of boys and 4 percent of girls had tried smoking. Between the ages of 15 and 18 those numbers rose to 35 percent of boys and 10 percent of girls.27 A more recent survey of young people in Moscow showed 14 percent of fifth-grade boys smoke. By the tenth grade, 53 percent did so. Most smoke foreign cigarettes, mostly because of the aggressive marketing tactics of the multinationals, which link smoking with glamor, sophistication and freedom.28 Foreign cigarette companies in Russia of course deny that they are even partly responsible for the increase in smoking. Philip Morris spokeswoman Elizabeth Cho insists that, "Russians smoked before we got there. We export cigarettes. We don't export smoking."29
U.S. tobacco company representatives are unapologetic about their activities in Russia. Former R.J. Reynolds chairman James Johnston went so far as to say in Moscow speech in 1995 that "we have enormous opportunities to use the tobacco industry as a powerful force for improving the economic and social well-being in this part of the world." Whose well-being he was referring to was not clear.30
Between 1985 and 1992, reported cases of lung cancer in Russia increased by 22 percent.31 By the year 2020, the WHO says, tobacco use will account for 22 percent of all deaths in Eastern Europe and the former Soviet Union. Currently, tobacco causes about 360,000 deaths per year in Russia, or 28 percent of all male deaths and 3 percent of all female deaths.32
Aside from the advertising restrictions, the government has established maximum permissible tar
and nicotine levels. In addition, smoking is prohibited in many public areas, such as buses and
theaters, although enforcement is uneven.
In Romania, where an estimated 60 percent of men and 25 percent of women smoke, the market has been flooded with foreign cigarettes since the overthrow of dictator Nicolae Ceacescu. Foreign cigarette companies currently control over one-third of what is Eastern Europe's second biggest market.1 At the official opening of Reynolds' first Romanian plant in 1994, U.S. Ambassador Alfred H. Moses said, "I'm sure that Camel and the other splendid products of the RJ Reynolds Company will prosper in Romania."2 He was right. The company is now the biggest foreign cigarette company in Romania, producing 4 billion cigarettes a year. By the year 2000 the company will have invested $100 million in the country. With no laws regulating cigarette advertising, Reynolds and the other foreign cigarette companies have spent millions of dollars a year on television, radio and print advertising. Lucky Strike sponsors the popular Friday night movie on Romanian television while Rothman's sponsors the country's theater troupe. Says Irina Dinka of the National Center for Health Promotion: "Tobacco companies have money for many ads, and we do not. So until we find the right weapons to fight with, they will push many to smoke. Right now, it's still the mouse versus the elephant."3
In Poland, multinational cigarette companies have spent over half a billion dollars to purchase five
out of the seven state-run cigarette plants, and now control most production in the country.1
Philip Morris has gained the most in this process, having purchased the country's largest cigarette
plant which instantly gave it 31 percent of the market. And a lucrative market it is. Poland is
ranked in the top five countries in the world in terms of cigarette consumption, at 3,600 cigarettes
per person per year, with annual cigarette sales estimated at between $5 and $6 billion.2 This lofty
ranking has not been without its costs. According to the WHO, mortality from lung cancer has
increased five-fold since 1950. Almost 70,000 Polish men die each year from tobacco use, more
than twice the number of 20 years ago. Lung cancer among women has also been increasing.
Between 1975 and 1995, the annual death rate for women from smoking-related illness more than
quadrupled, to around 12,000 per year.3
Compared to such countries as China and Russia, the West African nation of Senegal is neither a major producer nor consumer of tobacco products. Nevertheless, it too is subjected to aggressive campaigns by the tobacco companies, and tobacco use will have a similar effect on the health of its citizens over the long term. Since Africa has the lowest smoking rates in the world, the multinational tobacco companies see it as a region with great potential for market growth in the future. And, since Senegal is an influential leader among francophone countries in Africa, its actions with regard to tobacco control could have an important impact in the region. Unfortunately, in recent years the Senegalese government has backtracked on tobacco control legislation.
According to the World Health Organization, Senegalese are smoking more and more -- annual per capita adult cigarette consumption rose from 430 in the early 1970s to 1050 in the early 1990s.
Although more comprehensive studies are needed, the smoking prevalence surveys that have been conducted in Senegal paint a troubling picture. Smoking rates among young people are particularly alarming. A 1989 survey among 390 children between the ages of 10 and 12 in the capital of Dakar, found that 71 percent of boys and 52 percent of girls smoked. Among children not attending school, 87 percent were smokers. A 1989 a survey of medical students found that over one quarter of them smoked. Eighty- seven percent of these students were aware of the damaging effects of smoking on health, but many were unable to cite specific effects (such and cancer or emphysema). A separate survey found that an estimated 48 percent of male and 35 percent of female clerical workers over the age of 40 smoked.1
There are no comprehensive statistics on the health impact of smoking in Senegal. However, given the increase in cigarette consumption over the past twenty years, the incidence of lung cancer and other smoking related diseases is sure to rise in the future.
The Manufacture de Tabacs de l'Ouest Africain (MTOA) controls the vast majority (95 percent) of the Senegalese cigarette market. This monopoly is only 3 percent Senegalese-owned. The French tobacco company Coralma International, a joint venture of two other French companies, Bollore and SEITA, has a 97 percent stake.2 MTOA is the tenth largest company in Senegal and maintains a very cozy relationship with the Senegalese government.
In addition to its own brands, MTOA has licensing agreements with foreign cigarette companies to produce brand name names including Marlboro, Dunhill, Excellence and St. Moritz.3 Both Philip Morris and RJ Reynolds have had a presence in Senegal since the 1980s. Philip Morris has a licensing agreement with MTOA to produce Marlboros -- particularly popular among youth -- and L&Ms. RJR used to market its Gold Coast brand but turned its focus to marketing Camels in 1986.4 Camels suffer a price disadvantage; import duties make them more expensive than domestically produced brands.5
Since the mid-1980s, MTOA's Dakar factory has rapidly increased production, causing cigarette imports to decline dramatically. Cigarette imports plunged from 45 percent of domestic consumption in 1989 to 5 percent by 1991.6 MTOA has been so successful at increasing output at its Dakar plant that it is rumored to be preparing to build a second cigarette manufacturing plant in the city of Thies, an hour outside of Dakar.
In the early 1980s, Senegal was one of the first African nations to pass sweeping tobacco control legislation, including a ban on television advertising, and bans on smoking in some public places. Since then, however, the legislation has been watered down or simply eliminated due to pressure from the tobacco companies. The tobacco companies and their allies in the media successfully fought the advertising restrictions, arguing that they discriminated against local tobacco companies and were ineffective, since newspapers and radio stations produced outside of the country were still allowed to have cigarette advertisements. Today, both TV advertising (primarily through sponsorship of sports and cultural/musical events) and smoking in public places are commonplace. A majority of young people surveyed by investigator Anna White have told her that they have seen cigarette advertising on TV. And, it is not uncommon to see teachers smoking in local high schools, and doctors and nurses smoking on the job in the main hospital.7 Cigarette companies continue to be among the most active sponsors of sporting events in Senegal.8 They also sponsor youth dances and give away tobacco products and promotional items. There are no restrictions on selling cigarettes to minors.9
Marlboro, Camel and L&M brands all promote an "American" image to lure young Senegalese (many of whom admire anything from America) using such slogans such as "The cigarette sold most around the world!" (Marlboro), and "The real American taste!" (L&M). Investigator Anna White notes that "at least 90 percent of all cigarette billboards in Senegal show Caucasians only, a striking phenomenon in a country whose only light-skinned people are essentially albino or tourists."
Dunhill has set up fancy wooden kiosks throughout the country which read "New York * London * Paris." It sponsors the local Dakar radio station as well as musical and sporting events, including the annual International Tennis Tournament in Dakar. The Excellence brand is known for its phrase "La perfection chaque instant" ("Perfection at every moment"). Excellence ads often show high society white people next to a posh car or on a fancy cruise boat in the company of a token African male.
Marlboro sponsors musical events and a national sweepstakes with prizes including automobiles, while an L&M sweepstake offered a free trip to the United States. The Marlboro man is present in most stores and Marlboro umbrellas are used by all kinds of street vendors - even by traditional healers in Dakar.10 Marlboro women clad in skimpy outfits often hand out free cigarettes in popular nightclubs -- a practice which is illegal. The Marlboro logo is also found on all kinds of consumer products, including backpacks, baseball caps, t-shirts and clocks.
Prior to President Clinton's visit to Senegal in early 1998, Philip Morris reportedly removed all its advertising (posters, billboards and radio spots).11 Now that the visit is over, company representatives are busy repainting whole storefronts in the Marlboro colors. It appears that Marlboro's aggressive marketing strategies have paid off, making it one of, if not the, most popular brand in Senegal. Other brands in high demand are Excellence and Dunhill.
One particularly illustrative example of the tobacco companies' manipulation of international and American images to promote their products was found in the promotion of "Nelson" cigarettes in Senegal by the French tobacco company, Coralma. An advertisement showing attractive young people on a motor boat said "Long Live Nelson! The Cigarettes for Brave People." The Nelson cigarette package carried a symbol of the Statue of Liberty, conveniently tying in the American image that sells so well among the young. The release of the cigarettes followed shortly after Nelson Mandela was freed from prison in South Africa. In response, Nelson Mandela said that he was unaware of the use of his name for these purposes, and emphasized that he would never have agreed to sponsor cigarettes, since he is a strong believer that "smoking should be discouraged, most particularly amongst the young."12
Cigarettes cost between $.30 and $.80 per pack, but they are often sold singly at $.02 to $.04 each. While this may seem relatively cheap by U.S. standards, in a country where average GNP per capita is only about $730 per year,13 it represents a large expense for smokers. For example, a person who smokes a pack a day spends about $12 per month on the habit, representing about 5 percent of an average family's monthly income.14
The U.S. Ambassador to Senegal appears to be supportive of tobacco control efforts. He recently issued a statement on World No Tobacco Day calling on the Senegalese people to emulate U.S.-style tobacco control measures "to protect the health of its citizens, the youth in particular."15 He added that the heavy impact of tobacco on health and social costs has been felt by the U.S. government and people.
Although the situation in Senegal appears dim, there is still hope that successful tobacco control initiatives can be implemented in the future. Some of the most successful public health campaigns on tobacco control have been carried out by non-governmental organizations. Although they face severe funding limitations, these groups have focused on educating the public -- and youth in particular -- about the dangers of smoking. The Anti-Tobacco Movement of Senegal (MAT- a sister organization of the San Francisco Tobacco Free Project), for example, was awarded the Gold Medal from the World Health Organization for its youth programs. The group's health education campaign has reached some 36,000 students. It has also assisted in the formation of 80 youth anti-tobacco clubs.16
In May 1998, twelve organizations joined together in Dakar to form the "Federation of NGOs Fighting Against Tobacco." The Federation will push for the implementation of Senegal's two year old (and not yet implemented) National Anti-Tobacco Plan, lobby for passage and implementation of strong anti-tobacco laws, and tap into international funding for an ambitious national anti-tobacco awareness program.17
"This [tobacco] epidemic is sustained only by the search for profit; it is all about money." 1
South African Health Minister Dr. Nkosazana Zuma
Until the final days of apartheid in 1993, South Africa was an attractive place for tobacco companies to do business. About one-third of the population smoked, excise taxes were relatively low, and there were limited tobacco control measures in place. However the transition to democracy has brought with it a new government dedicated to reducing the incidence of smoking and promoting public health. The government's tobacco control efforts have had some significant successes in the past four years, providing an important example to the rest of the continent. Nevertheless, even with declining smoking rates in recent years, the human toll from tobacco use continues to rise as diseases resulting from past smoking become manifest.
Cigarette consumption increased steadily from the mid-1960s to the early 1990s. By 1995, an estimated 34 percent of South African adults 18 and older smoked -- 54 percent of men and 17 percent of women.2 In the past few years, however, tobacco use has been declining, with overall consumption reportedly falling by 20 percent between 1994 and 1997.3 Surveys show the number of smokers dropping to about 28 percent in 1997.4 Yet while smoking rates among whites appear to have dropped significantly, among "coloureds" (an apartheid designation referring to people of mixed race) and blacks -- especially blue collar workers -- smoking rates have been rising.5 This is due in part to increased targeting of these groups by cigarette companies. Currently, the highest smoking rates are found among coloureds, followed by whites, Indians and then blacks.
The Rupert family of South Africa controls Rothmans International, the world's fourth largest multinational tobacco company and the largest indigenously-owned tobacco company on the African continent. Rothman's sells its cigarettes in 160 countries and operates 38 cigarette factories around the world. Its most important growth market is the former Soviet Union, where its sales volume doubled in 1997. Its most popular brands include Dunhill, Peter Stuyvesant, Pall Mall, Rothmans and St. Moritz.6 In 1995, the Rupert family's Rembrandt and Richemont tobacco interests were merged with Rothman's International. The Ruperts began Rembrandt with National Party support in 1948, the year that party came in to office, and the company grew along with the apartheid state.
The strength of the South African tobacco industry, together with economic sanctions during much of the 1980s, limited the involvement of the other tobacco multinationals in the domestic market. Yet recent economic reforms, coupled with the transition to democracy and the country's leadership role on the continent, has made South Africa a prime target for foreign companies anxious to expand their market share in South Africa. BAT has long been established in South Africa, manufacturing its own brands like Benson & Hedges. It also has a licensing agreement with RJ Reynolds to produce that company's Winston, Aspen and Camel brands. RJR's imported Camels currently have a 2 percent market share.7 BAT controls about 10 percent of the South African market, with Rothmans/Rembrandt controlling the rest.8
In 1981, Philip Morris paid $350 million to the Rembrandt Group for a 22 percent stake in
Rothman's International. It also granted Rembrandt an exclusive license to manufacture
Marlboros in South Africa,9 an option that Rembrandt has never exercised, making South Africa
one of the few countries in the world where Marlboros are not legally available.10 This has led to
a fierce legal battle between the two companies, with Rembrandt charging that Philip Morris has
abetted the smuggling of Marlboros into South Africa from neighboring countries (see below).11
The availability of good epidemiological and economic data, combined with strong support among non-governmental organizations, helped to make tobacco a leading health and political issue in the run-up to the 1993 elections, and it has remained on the national agenda ever since. The tobacco companies' unprecedented attempts to defeat or roll back tobacco legislation have been resoundingly unsuccessful. Numerous public opinion polls over the years have shown that people of all political persuasions support stronger tobacco control measures, making it easier for politicians to stand up to the tobacco companies. A recent poll showed that more than two-thirds supported government plans to ban tobacco advertising and regulate smoking in public places, while a third backed an outright ban on smoking in public places. 12
South Africa introduced its first serious tobacco control measures in 1993-94, including: a 25 percent increase in the cigarette tax; the introduction of strict mandatory health warnings covering 15 percent of the front and 25 percent of the back of the cigarette pack and 12 percent of the advertisement;13 restrictions on smoking in government buildings and some private businesses (e.g. restaurants and airports); and, a ban on the sale of cigarettes to children under 16. Television advertising is also banned, although the tobacco companies often get their images on air via sports sponsorships. Tobacco control measures met with fierce resistance from the tobacco, advertising and media industries, including a threat to withdraw all cigarette advertising.14 Due to the panic which ensued among media representatives, who claimed that close to one quarter of the state-owned radio stations would go out of business without tobacco advertising revenue, radio stations were exempted from the requirement that they broadcast health warnings, provided they carried a pre-agreed amount of counter-advertising.15
The Rembrandt Group has said that the warning label requirement constitutes "a blatant intrusion upon the property rights of [the] company by the serious degrading of trademarks and packaging designs."16 Nevertheless, in July 1998 the Cabinet approved draft legislation that would allow the Minister of Health to prohibit all tobacco advertising (including promotion through sponsorships), ban smoking in the workplace, decide permissible tar and nicotine levels in tobacco products and outlaw the free distribution or radical discounting of tobacco products.17 Legislators are also considering raising the age at which minors can legally buy cigarettes from 16 to 18.18
During the apartheid era, cigarette taxes were relatively low. Since Nelson Mandela took office in 1994, the government has increased the excise tax on cigarettes each year: by 25 percent in 1994 and 1995, by 18 percent in 1996, and by 52 percent in 1997.19 In March of 1998, excise taxes were again increased, this time by 29 percent (or 9 percent of the retail price). This brings the total tax to 47 percent of the retail price of a pack of cigarettes, which is relatively high for Africa, but still significantly lower than most European countries.20 These tax increases have certainly played a major role in the recent reductions in cigarette consumption.
The tobacco industry spent about $50 million on media advertisements in 1996 -- about 5 percent of all advertising spending.21 Researchers at Economics of Tobacco Control (a joint project of the South African Medical Research Council and University of Cape Town) have linked tobacco advertising to increased cigarette demand in South Africa. They estimate that for each 1 percent increase in tobacco advertising expenditures, consumer demand for cigarettes rises by between 0.18 percent and 0.24 percent.22
Cigarette companies sponsor all kinds of sporting and entertainment events in South Africa. Rembrandt, for instance, promotes its Winfield brand via rugby, and its Peter Stuyvesant brand has sponsored the rock concerts of Tina Turner, Bon Jovi and Def Leppard. Its Rothmans brand sponsored South African soccer through the "1997 Rothmans Cup" which awarded $200,000 to the first place team. Rothmans also sponsors the most popular horse race in South Africa, the Rothmans July. In 1995, Rembrandt was embroiled in controversy when its Rothmans-sponsored "Cape Town to Rio" yacht race banned the entry of a Swedish yacht sponsored by Nicorette (the nicotine gum company). A spokesperson for the organizing committee of the race admitted that the yacht was barred because they considered the product to be in competition with the sponsor's product.23
Recently, the tobacco companies appear to be targeting women and black South Africans in increasing numbers. In South Africa, smoking by black women of child-bearing age is culturally frowned upon. Nevertheless, Benson & Hedges have begun an ad campaign featuring young black women. One ad features a young black woman in aerobics gear smoking a cigarette with a young black male. In another, a black woman wearing traditional headgear is sitting with a black man and is shown accepting a cigarette from a white man. The slogan reads: 'Share the feeling, share the taste', echoing the African cultural value of communalism. Another brand which appears to target women is Vogue, a "stylish type of cigarette with obvious feminine appeal, being slim and therefore highly distinctive." It has been advertised in South Africa as "The new style that's sweeping Europe."24
The tobacco industry in South Africa, as in all countries around the world, has tried to defeat tobacco control legislation by claiming that it will have severe economic consequences. But according to the Economics of Tobacco Control project, even with Rothman's operations in South Africa, the tobacco industry represents only 0.2 percent of the country's gross domestic product and employs only 0.1 percent of South African workers. In the unlikely event that tobacco was completely eliminated from South Africa, between 9,000 and 34,000 new jobs would be created by smokers diverting their cash into other goods and services, the project's economists estimate.25 This would help to offset jobs lost by some of the estimated 35,000 people who currently have jobs linked to the tobacco industry. In addition, a reduction in tobacco consumption would help save the country some of the $700 million per year it currently loses in health care costs and lower productivity as a result of tobacco use. Tobacco also contributes to the country's negative trade balance -- in 1994, for example, tobacco imports cost the country $630 million, while tobacco exports only garnered $60 million.26
In South Africa, around two billion cigarettes are smuggled into the country each year, costing the government around $30 million in lost revenue.27 Smuggled cigarettes currently make up between 5 percent and 7 percent of cigarettes sold in the country. These cigarettes are primarily smuggled into the country through "round tripping," where cigarettes produced in South Africa are exported to neighboring countries (meaning they are not subject to domestic value added and excise taxes), and then smuggled back into the country, where they are sold at lower prices, and without the health warnings required for cigarettes produced for the domestic market.28 Often, however, the cigarettes are "round-tripped" without ever even leaving the country. As Deputy Commissioner of Customs and Excise Sarel du Plessis notes, "these dealers go through the borders to get the stamps on their so-called export forms to back up their VAT claims, but they don't take the cigarettes with them."29 In March of 1998, a 14 percent value added tax (VAT) was approved for cigarette exports, in an attempt to combat the smuggling problem. Although the cigarette companies publicly heralded the VAT increase (since they are not major exporters), recent disputes among them have involved allegations that they too are linked to smuggling.
In 1994, Philip Morris began selling to wholesalers in countries bordering South Africa. Company representatives acknowledge that there is smuggling of Marlboros, but claim that the company has no control over it. A 1994 US foreign agricultural services attach
report on the tobacco trade said that of South Africa's total tobacco exports, which amounted to 21,859 tons, a staggering 84 percent went to neighboring Mozambique. Clearly, this was not just for consumption in Mozambique, and a large number of these cigarettes were going to be returned illegally to South Africa. Dr. Yussuf Saloojee of the Council Against Smoking says, "If the tobacco companies are doing all they can, then their accounting practices are useless. I just do not accept that they are doing all they can."30
In a rare court battle which began in 1997, the Rembrandt Group filed suit against Philip Morris, accusing it of allowing its cigarettes (primarily Marlboros) to be smuggled into South Africa through bordering countries. Rembrandt claims that this represents a violation of its exclusive license to produce and sell Philip Morris products in South Africa. In response, Philip Morris Europe's chief counsel commented that "the most prevalent unauthorized tobacco product on the South African market is [Rembrandt's] Peter Stuyvesant, and second is [Rembrandt's] Rothmans," implying that Rembrandt was turning a blind eye to extensive round tripping of its own cigarettes.31
South Africa's smoking-related death and disease rates are higher than most other countries in Africa. The South African Medical Research Council estimates that 25,000 people die each year from tobacco related illnesses. If current smoking rates continue, this number will rise to an average of 89,000 smoking-related deaths a year over the next four decades.32 According to the National Cancer Policy Board, South Africa and Zimbabwe are the only African nations with evidence of increasing tobacco-related mortality because their economic status has led to increased smoking rates and decreased mortality from other preventable diseases. In sub-Saharan Africa, lung cancer accounts for 6 percent of all cancers -- in South Africa it accounts for 24 percent of cancer mortalities in men and 11 percent in women.33 In the last 20 years, the occurrence of lung cancer has more than doubled among coloureds and white women, and chronic obstructive lung disease is also on the rise.
In an effort to better track tobacco-related mortality, the South African Institute of Medical
Research recently announced that tobacco use would be noted on death certificates if the patient
had smoked in the past five years. Until now, death certificates would often note causes such as
"inability to breathe" without any reference to smoking-related lung cancer.34