The tobacco giants are nervous: increasing aversion to smoking and stricter EU legislation threaten to curb their sales. Some are turning to advertising to reassure investors that they are defending their interests.
Across Europe the advertising blitz is reaching a new intensity. One day it's maps of city centres with a smoking section marked off in heavy black lines; the next, contemplation of the brevity of Pythagoras' Theorem against the 24,942 words of EU legislation on smoking. 'The passion to regulate down to the finest detail of people's lives can lead to infringements of personal liberty,' the text intones in the full-page ads.
Behind this multi-million pound exercise in 'issues' advertising is Philip Morris, the world's largest tobacco company. Its objective is to convince Europeans that smoking is not merely a personal pleasure but a fundamental human right. 'We want to stir rational debate before things get out of hand,' says a company spokesman.
For tobacco companies, long used to public assault, these are particularly worrying times. The EU market, worth £52 billion in annual sales, is now under serious threat on two interrelated fronts; growing anti-smoking sentiment among the public, and a raft of new local and EU legislative initiatives that would dramatically curtail cigarette marketing, impose restrictions on smoking in public places and require tough, new health warnings. Among the moves that are setting off alarm bells are a rigorous anti-smoking ban on Bournemouth beaches and recent legislation in Italy to ban smoking in all workplaces.
It smacks increasingly of the draconian anti-smoking backlash in the US, where Philip Morris, along with rival RJR Nabisco, was particularly badly mauled. Determined not to get hammered the same way in Europe it views the Continent as the next battleground, where strong, pre-emptive public relations and lobbying may yet save the day. While other companies have yet to take such a combative approach, many tacitly support Philip Morris's tactics. 'Our industry must stand up and be counted now,' says Michael Prideaux, BAT's director of corporate affairs. 'We must get the voice of reason to prevail.' Brussels insiders estimate that tobacco industry lobbying at the EU has more than doubled in the last four years. The industry is also increasingly focusing on the individual governments of the EU members to influence EU policy, even where the local market is relatively small. 'Whether it's Bonn or Copenhagen, in the end EU policy is shaped by member governments, not just bureaucrats in Brussels,' says one executive.
High-minded arguments for 'smokers' rights' are only part of the campaign: the industry is also bluntly touting its robust profits, tax contribution and employment figures. 'We tell everyone about the £11 billion in revenue we earn in the UK and the £500 million contribution we make to the UK balance of payments', says Ben Welsh of the Tobacco Manufacturers Association. 'And we tell Labour how many jobs we create in areas of high unemployment.' In large part this cascade of lobbying, advertising and PR is aimed at an audience watching from the sidelines: investors and analysts. Massive class action suits against tobacco companies in the US, recent settlements (though not by tobacco companies directly) for passive smoking damage claims in the UK and Europe and the growing sentiment for EU-legislated restrictions has begun to unsettle the City and other European financial centres. 'For some time we've felt that the industry was too much on the back foot defending itself, and that it hurt in the markets,' says Nyren Scott-Malden, tobacco industry analyst at BZW. By fighting back the industry aims to send a signal to the investment community that it is in control of its destiny and defending shareholder interests. It's a message that is now featuring prominently in annual reports, including BAT's chairman's statement and a 'Dear Shareholder' missive from Philip Morris entitled 'Defending Our Company'. Such moves seem to have met with approval: 'The new aggressiveness is good for confidence,' says BZW's Scott-Malden.
Well, up to a point. For all the tough talk in public, those tobacco companies wise enough to have invested heavily in other sectors - such as BAT in financial services and, yes, Philip Morris, where non-tobacco lines account for 65% of operating revenues - still take pains to stress their diversification and reliance on non-tobacco profits when talking to investors. Says one analyst wryly, 'It's called hedging your bets.'.