Tobacco players are doing just fine

Once upon a time, it was the era of the cigarette brands. And the ad budgets were astronomically high. You could say they were the last of the big spenders. Agencies who handle a cigarette brand or two were bound to become rich beyond their dreams. The offices of these clients were so opulent, the boardroom of one such office could hold up to 50 people with probably the longest meeting table I had ever seen.

And at the head of the table sat the top dog, the big cahuna like a White Rajah.

Just to get some perspective of their affluence, check this out….

The Carreras Cigarette Factory building in Camden, London is noted as a striking example of early 20th Century Egyptian Revival architecture.

The building’s Egyptian-style ornamentation originally included a solar disc to the Sun-god Ra, two gigantic effigies of black cats flanking the entrance and colourful painted details – large 8.5 foot-high bronze statues of cats, stylised versions of the Egyptian god Bastet.

The image of a black cat was a branding device which Carreras used on the packets of their Craven A range of cigarettes.

So you see, there are oil magnates and there are tobacco royalty.

Winston-Salem town has been called “a city of reluctant millionaires”.

For a few years, I worked on a few cigarette brands in Malaysia, namely Camel, More, Rothmans, Perilly’s, Dunhill and Peter Stuyvesant (named after the man who founded New York). The budgets we worked with were huge and it always seem like there was no limit to what we could spend.

The people charged with marketing the brands didn’t do much really. Days were spent intellectualising about the colour of a certain pack (and hundreds of variations were made for them to choose from). While they fell in love with their voices on an hourly basis, sometimes they would turn around and ask a mundane question like “Where were you born Ham?”

More like virtue signaling to show they were also in touch with reality, and do care what happens on earth.

If you wanted to see how to talk for 25 hours a day without getting anywhere, just sit in one of their meetings. All will be gathered deep in thought as if they were going to change the world, until someone blurts I “think” we go with the red colour, and with that mention of “think” starts another marathon dissection of every microscopic pixel possibility available in the rainbow.

They were geniuses from another planet.

As a writer, I learned a lot of words from them. And then they will stare at me for not knowing them. Being a Marketing person for a cigarette brand gave you God-like status.

It was very rare to see an agency challenge the client on anything from headlines to pack design. Their role in most meetings would be to wear a dumb smile and nod to every utterance that spilled from the client’s mouth. Like collecting their nuggets of wisdom on a gold-plated tray.

The clients were so well paid, they just had to dress well for the office.

The agencies was also paid very well, so they just had to buy all the lunches.

In fact, the clients were so rich, if you took their dog for a walk or tissue-cleaned the fake plants in their offices, they’d even pay the agency in advance.

I once shot a series of TV commercials worth a few million ringgit in the snowy alpines of Europe for Peter Stuyvesant travel, which the client did not like for no reason known to man. So I asked, “Do you want me to dump these commercials and shoot new ones?”

They answered, “Yes, do that and we’ll pay for the new ones too.”

See? You have to be God to make a call like that!

This was a long time ago, but they were great times, as many egos got bruised and many brands were set on a trajectory to failure just to move all the money around.

When was it going to end? 

The Malaysia cigarettes market size was MYR4.89 billion in 2021.

About 120,000 people are involved in tobacco farming, and 360 independent curers employ about 25,000 workers. Mainly in the states of Kelantan, Terengganu, Kedah and Perlis.

Young people are not stopping their use of tobacco products, they actually using them in multiple forms. So, while yes cigarettes sales are falling especially for those under age 35, they are aggressively moving to other forms of nicotine delivery that produce more profit for the major companies.

In the meantime, the government has had a much difficult time in trying to create similar sin-taxes on a product that only looks like smoking. Some governments also face the challenge of balancing the revenue generated from tobacco taxes with the costs associated with healthcare expenditures and other negative externalities caused by smoking, such as increased healthcare costs due to smoking-related illnesses.

According to Kementerian Kesihatan Malaysia, more 20,000 deaths are attributed to smoking-related complications annually.

How much did Malaysia spend in 2020 on treating lung cancer, heart disease and chronic obstructive pulmonary disease, the three major smoking-related illnesses? RM6.5 billion.

How much did the country earn from tobacco sales that year? RM3 billion.

Lawyers replaced marketers.

We all knew those golden times would not last, and one day the anti-smoking movement won.

And the tobacco companies were being slapped with so many lawsuits for health damaging reasons, it was rumoured they employed more lawyers than the Attorney General’s Chambers.

According to the World Health Organization (WHO), tobacco use kills more than 8 million people each year, and if current trends continue, tobacco-related deaths are projected to increase to more than 10 million deaths annually by 2030.

Many jurisdictions throughout the world have implemented laws prohibiting advertising of tobacco products on radio, television and billboards.

As a result, comparably less restricted point-of-sale opportunities have become a critical component of tobacco company marketing strategies.

New order, new language 

Tobacco companies have a new narrative now and they sound like saints.

They don’t talk about smoking anymore. But they still make a lot of money from it.

You don’t see top management holding cigarettes at Press photo ops anymore.

British American Tobacco (BAT) Malaysia says, “Our marketing is not designed to ‘sell smoking’. We are working in a long-established, mature product category, where people already know what the basic product is. There would be no commercial sense trying to market to informed customers who don’t want the product.”

Philip Morris International says it is leading the marketing and digital function to shape the next generation strategy through consumer-centricity and a purpose-driven vision towards a smoke-free future.

Some new language in their ethos highlight….

– Delivering on Harm Reduction for Adults Who Smoke

– Driving Solutions that Reduce Underage Use

– Educating on Why Prohibition is the Wrong Choice

– Improving Enforcement Against Illicit Markets

  A thriving underground market in tobacco products is a serious threat to effective regulation and public health and more importantly, profits for the Cig boys)

– Supporting Risk-Based Taxation

Tax classifications written many decades ago make little sense today given the science showing major risk differences between combustible and smoke-free products.

JT (Japan Tobacco) International Berhad says it is committed to investing in Reduced-Risk Products (RRP). Our tobacco business reported solid growth and continued market share gains.

“We are accelerating investment towards heated tobacco sticks (HTS) for our future growth. We have committed to be Carbon Neutral (making or resulting in no net release of carbon dioxide into the atmosphere) as a result of carbon offsetting and aim to hit Net-Zero across our entire value chain by 2050.”

Imperial Brands is the fourth largest tobacco company in the world, and now focusses on investment behind heated tobacco opportunities in Europe, and in selective market opportunities in vapour. “Guided by science, Imperial can build a healthier future for our consumers through Harm Reduction Engagement.”

Altria, another Big Tobacco Brand in the US is “moving beyond smoking”.

For us, ‘Moving Beyond Smoking’ means advocating for a harm reduction future in which the industry is operating within science-based regulation, underage tobacco use continues to decline and adult smokers who can’t or won’t quit are moving to smoke-free products authorised by the Food & Drug Administration (FDA). They also “discovered” overwhelming public support for harm reduction as the best path forward for tobacco products.

All the right words are there: sustainable future, funding reforestation, DIE, ESG, Gender-Balancing, you name it. I almost forgot three more: Gaya. Mutu. Keunggulan.

An afternoon of conversations we never had, with leaders most of you never met.

Discover what’s possible from those who made it possible. Plus a preview of The HAM Agency Rankings REPORT 2024.

Limited seats: [email protected]

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