Smoke Free Solutions: March 2010

I returned from the Imperial Tobacco AGM feeling my usual sense of hopelessness and depression at the sight of the company’s smug self congratulation, ever-growing sales, 16% payout in share dividends, worldwide demand and success. A row of 12 grey suited men and 2 grey suited women all sitting there on the board of directors looking sombre but very pleased with themselves at the same time.

Gareth Davis the CEO made his swan song speech as he is to retire in May and will be replaced by Alison Cooper, a 42 year old mother of two who has worked for Imperial for 11 years. She had a face like a wet weekend! The only person who every shows any cheeriness is Gareth Davis CEO. Still, earning approx $2.8million dollars a year I suppose he would wouldn’t he!

The chairman, Iain Napier, a dour Scotsman lacking any charm, and Gareth Davis CEO, between them told us how much sales were up all over the world, region by region, with Davidoff brand of cigarettes leading the way with sales up by 12%. The only brand in decline is West cigarettes. They commented that loose tobacco sales had increased in the UK since economic difficulties meant people travelled less and bought less cheap rolling tobacco overseas. He reported that when Gareth Davis took over as CEO in 1997, Imperial Tobacco was 14th in the world of tobacco companies. He said that in 12 years, it has risen to an international tobacco company which is now 4th in the world. I’ve been going to shareholder meetings with my handful of shares for over half that period since they became a plc company so I have witnessed their relentless rise spreading their tentacles over the world.

Plain packaging
The one thing which scored high ratings on the tobacco control ‘scream test’ was plain packaging. Gareth Davis warned, “We are strongly opposed to plain packing. Packaging does not make young people take up smoking nor adults continue to smoke.” He then continued , “but plain packaging will rob us of our brands.” Marketing their brands is one of their stated aims. He added with an understated determination, that Imperial does not resort to legal action lightly, but will do so in order to protect their brands.

I’ve never heard them be so outspoken against any proposed policy. They usually make comments about good sales despite bans and tax increases. But threats of plain packaging really provoke their wrath.

In their display cabinet of brands they had at the AGM were many new, trendy packaging designs for most of their brands. This shows how important they see packaging in the marketing of their products. Gareth Davis commented later that the prohibition of tobacco advertising makes building brand awareness more difficult. But he added, “…we are still able to promote our products. We have a great marketing department. We’re very good at it!”
They also reported falls in sales in Poland and Czech Republic due to increases in taxation. However they noted increase sales in USA, Saudi Arabia and Australia. Sales were up 10% overall.
Questions during the resolutions:
A campaigning shareholder who worked as a missionary in Africa asked many questions about Imperial’s corporate responsibility towards Africa. All got non committal answers except for the one about Malawi. He asked if Imperial encouraged farmers in Malawi to diversify as part of their corporate responsibility programme as Malawi farmers are over dependent on tobacco growing. Imperial CEO commented that it was for Malawi to decide and that they did very nicely out of tobacco so why should they want to change.

I asked the Imperial Tobacco board a few questions which had been sent to me from campaigners around the world. The first was a question about the WHO Framework Convention on Tobacco Control. In light of the FCTC resolution 5.3 how many meeting had Imperial Tobacco had with the UK Government and what was the purpose of these meetings. The reply was that had not nearly enough meetings, particularly in Scotland where no politician will speak to them. They insisted that it is a legal product and they need to talk to Government about taxation and other issues but they don’t seem to want to talk to the tobacco companies.
The next questions were about ETS/Secondhand smoke. Based on Imperial’s website which still denies that secondhand smoke is harmful, I asked, why is smoking banned around tobacco seedlings (as reported by Malaysian health worker who visited a tobacco farm) but not considered harmful for children or babies? I also asked if they believe that the concentration of ETS (or SHS) in cars is harmful to non-smokers, particularly the young. Predictably the answer was that Imperial considers that courtesy and consideration is the way to sort out any problems with smoking in public.
I asked for a definition of courtesy and also why should it be made obligatory around seedlings but courtesy is OK for protecting babies? This caused them to laugh and ask if they could know the name and address of the seedlings as they couldn’t answer on their behalf.
The next question was to ask how Imperial Tobacco group is responding to evidence that mentholated cigarettes are more addictive and harmful than other cigarettes? Their short answer was “We don’t believe they are.”

I asked them to clarify who owns Davidoff cigarettes. They said that Imperial owns Davidoff cigarette brand, Swiss Davidoff Cie SA owns all other Davidoff tobacco products and other goods.

Finally, on the subject of butts and litter. I set the scene that 200 million butts are dropped on the streets every day (100+ million are Imperial’s). Should they be taxed as some local authorities suggest to help pay for multi million pound clean ups? Their reply was an emphatic “Absolutely NO. Our product already has 80% tax. We now sell at cost a portable ashtray. We cannot be held responsible for anti-social behaviour.”
Goodbye Gareth
As I was leaving the meeting, Gareth Davis approached me to say goodbye. He is a sociable man and has always greeted me affably at the shareholder meetings as opposed to many who just growl and scowl. He is one of very few members of the board who actually uses Imperial’s products! As we are the same age I commented that I wished that I could retire but that marketing public health did not pay as much as marketing anti-health products. I continued with the old cliché, “I don’t know how you sleep at night”, to which he replied, “I sleep very well.” I ended the conversation with a ‘goodbye’. I left the straggle of Imperial staff and directors standing outside in the cold, smoking, got on my bike and escaped from the grey-suited business world of making mega bucks from killer butts.