Letter from Paris: Tobacco Road

Is tobacco advertising in europe about to go up in smoke? If officials at the European Commission have their way, the answer is yes. Brussels health officials claim that in a few years, pro-smoking messages will be history in the European Union's 15 member states. By bureaucratic fiat, billboards and print ads will dissipate into thin air like a smoke ring caught in a summer breeze. Challenging this stance is an alliance of formidable opponents: tobacco companies, industry trade associations, sports organizations, ad agencies and the media. Lining up behind them, the governments of Germany and Austria are buttressing the backroom efforts of Europe's pro-smoking advertising advocates. The battle of the butts has reached a critical stage. The anti-tobacco lobby, which hopes to banish Marlboro Country from the minds of Western Europe's 385 million inhabitants, appears to be winning. And although Silk Cut and Marlboro sponsorship of Formula 1 auto racing won't be extinguished overnight (2006 is the earliest a total ban could begin), there is a sense within the ad industry that the days of exploiting even limited media opportunities across the Continent may be numbered. The potential financial risk to tobacco media and sports sponsorship in Europe is significant. According to the Paris-based media company Havas, 1996 above-the-line ad spending in just the seven largest European markets was roughly $49 billion. This could bring tobacco's outlay, not including promotions expenditures, to somewhere between $490 million and $980 million. Anti-tobacco groups in Europe also charge that promotions spending, especially for Formula 1 racing, adds exponentially to the total. One trade group, the London-based Tobacco Manufacturers' Association (TMA), provided figures for the U.K. market. "Press and poster ads in the U.K. was worth about £50 million [around $82 million] in 1996. This figure was probably flat last year," says Ian Howell, TMA's manager for information systems. "Promotion spending, outside of Formula 1 racing, was £9 million [over $14 million]." Neither Philip Morris nor the Brussels-based Confederation of European Community Cigarette Manufacturers (CECCM), the EU-level trade association, would comment on spending. But Luk Joossens, a Brussels-based sociologist working for the International Union Against Cancer and the World Health Organization, estimates that "tobacco companys' above-the-line media ad spending in the European Union in 1996 represented between 1 percent and 2 percent of total European ad spending." Is it any wonder cigarette manufacturers, including Philip Morris and British American Tobacco (BAT), are all fired up? They are worried by recent efforts within the EC to restrict their presence to little more than ads inside tobacco sales outlets. Not surprisingly, a siege-like mentality has gripped the tobacco business in Europe. On-the-record comments from cigarette company officials are difficult to obtain. Queries are funneled to national or European-level trade groups, which offer little in the way of hard data. Indeed, the mood within the industry today is redolent of the U.S., where tobacco companies have agreed to multibillion-dollar settlements in various states. Last December, after eight years of failure by European health authorities to regulate the remaining legal forms of tobacco advertising and sponsorship (television ads were banned throughout Europe in 1989), the tide turned. The EC health council succeeded in adopting a common position on phasing in restrictions over an eight-year period. Despite the fact that Germany and Austria voted against the measure, while Spain and Denmark abstained, the minimum number of votes was scraped together. The German government of Chancellor Helmut Kohl has long-opposed European measures to regulate the tobacco industry. Some EC officials, however, privately charge that the ruling Christian Democrat-led government is in the pocket of the tobacco industry, beneficiaries of generous financial support in exchange for favorable consideration in government. "The German point of view is indistinguishable from the cigarette industry," claims a Brussels EC official. A German government representative obliquely acknowledged the charge, admitting that "commercial interests are involved, especially given there are [national] elections in October." Outmaneuvered in December, Germany managed to stall a full European Council of Ministers vote on the directive, originally scheduled in January. It's likely to be considered this month. If passed, the directive will be sent to the Strasbourg, France-based European Parliament. The Parliament could adopt the text as is or recommend amendments. With the latter, a "reconciliation" between the two versions is then sought. Though "compromise is reached in 96 percent of the cases," explains a Parliament official, there have been instances when the Parliament has voted to kill the bill because an agreement between the EP and the EC could not be reached. The lengthy legislative procedures allows "Germany and the tobacco lobby to do all it can to unravel the deal," warns an EC Health Ministry official. "We are very nervous about this." But beyond Bonn, there are many voices speaking out against the proposed supranational legislation. "There is a grave contradiction in the proposed text; it doesn't correspond to the right article for advancing European harmonization," says Jacques Bille, general director of the AACC, the French advertising trade association. Bille argues that the basis for the EC directive is illegal: It has been framed on a European Maastricht Treaty article, which critics charge is less focused on health and easier to pass within the EC health council. Though it is a highly arcane legalist point, this view echoes loudly throughout European pro-smoking quarters and forms the basis for upcoming challenges to the directive. "The European Advertising Tripartite [which represents interests of advertisers, ad agencies and ad media at the European level] is most concerned by the decision ... to ban tobacco advertising," began an EAT statement after the December vote. "EAT will continue to defend the right of freedom of commercial speech, particularly for legally available products." Florence Ranson, EAT secretary general, agrees with Bille, noting that the bill will be challenged on its legal foundations. "We will push this with Parliament," she threatens. Do Europeans care? If tobacco advertisers pull out and the Formula 1 race is held in Asia rather than Europe, a huge popular uproar is expected. Tobacco companies and their associated communication partners are already preparing for battle. A passed directive could be challenged at the European Court of Justice. "Germany could say it violates their constitution," explains Catherine de Vallois at CECCM, "if it's adopted into law." Or, tobacco marketers could be tempted to increase their reliance on spinoff line extensions, such as Marlboro brand clothing or Benson & Hedges coffee, currently being marketed in Malaysia for a possible international rollout. It is not clear whether a coffee branded with the Benson & Hedges name could withstand interpretation under the EC directive. Brendan Brady, head of issues management for BAT, says he believes there were already limited sales of other BAT brand extensions, such as Lucky Strike clothing and John Player special whiskey. While Brady says the BAT firmly opposed this latest EC anti-smoking effort, he insists the company will not try and circumvent EU law if ancillary marketing is ruled illegal. The war is heating up. Who will be standing when the smoke clears?

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Letter from Paris: Tobacco Road

Daniel Tilles

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Daniel Tilles