Bliley PM
PM European Industry Profiles - The European Tobacco Industry
Abstract
Comprises report on European tobacco industry. Includes chapters: "A. Background (Tobacco - The product; History; Varieties of tobacco; [and] Why do people smoke?; B. The market (Importance of the tobacco industry; A major source of income for governments; New brands; Country summaries {France; Germany; Italy; Spain; [and] United Kingdom; C. The players (The state monopolies; The multinationals {American Brands Inc. (USA); BAT Industries Plc (UK); Imperial Tobacco/Hanson (UK); Philip Morris Companies, Inc. (USA); RJR Nabisco (USA); [and] Rothmans International Plc (UK)); D. Characteristics & trends (1. Varieties of cigarettes; 2. Consumption; 3. Sales; 4. Policy developments; 5. Distribution; 6. Price harmonization; [and] E. Conclusion". Includes commentary and editing in marginalia from multiple individuals, including 'insistence' that section "Why do people smoke?" be deleted (see "Document Quotes" field for key quotes). Indicates "first draft".
Fields
- Quotes
Editing notes: "Use activity, custom, practice, etc.; 'habit' sometimes has the adverse connotation of 'drug habit'".
"Smoking has its origins in the religious ceremonies of the American Indians. Later, when Europeans first began to take tobacco in the early 16th century, they did so because they believed it held medicinal benefits. In time, however, people smoked for the pleasure it brought them. This is due mostly to the fact that tobacco contains small amounts of nicotine, a substance which has both stimulating and relaxing effects".
"I would not discuss smoking and health as it is unnecessary to do so. PM [Philip Morris] does not say people smoke because of nicotine. This emphasizes the 'drug like' nature of nicotine and tobacco and gives credibility to the 'addiction' argument. We also do not like to refer to early beliefs regarding 'medicinal benefits'".
"I do not like to concede that 'government health campaigns' can influence smoking incidence because we often say that larger warnings, advertising restrictions, etc. would not decrease overall consumption thus this phrase could be misunderstood to be a concession on this point by us".
- Company
- Philip Morris Europe
- Type
- Draft material
- Fax
- Report
- Author (Organization)
- Burson-Marsteller
- Named Person
- Marsteller, B.
- Named Organization
- American Brands/Gallaher
- *British American Tobacco Company Limited BAT (See British-American Tobacco Co.)Defense
- British American Tobacco
- Brown and Williamson Tobacco Corp.
- Department of Agriculture
- EU
- Euromonitor
- European Union
- Hanson/Imperial
- Martin Brinkman
- Monital
- Monopoli di Stato
- Nomura Research Institute Europe
- Philip Morris Cos., Inc.
- Philip Morris EEC
- Philip Morris International
- Pieda
- PJ Carroll
- PM (See Philip Morris Companies Inc.)Defense
- PMI (See Philip Morris Inc.)See Philip Morris Inc.
- Reemstma (German cigarette group)A privately-owned German cigarette group in 1991. One of the biggest international tobacco marketers in 1994.
- RJR Nabisco
- Rothmans
- SEITA (Societe Nationale d'Exploitation Industrielle des Tabacs et)Societe Nationale d'Exploitation Industrielle des Tabacs et Allumettes
- Surgeon General
- Tabacalera
- Tabacofina
- Tabaqueira
- US Dept of Agriculture
- Region
- China
- Czechoslovakia
- Denmark
- Finland
- France
- Germany
- Greece
- Hungary
- Indonesia
- Ireland
- Italy
- Japan
- Korea, Republic of
- Luxembourg
- Netherlands
- Poland
- Portugal
- Romania
- Spain
- Sweden
- Switzerland
- Taiwan
- Thailand
- Turkey
- United Kingdom
- United States
- USSR
- Yugoslavia
- Albania
- Austria
- Belgium
- Bulgaria
- Keyword
- 1964 Surgeon Generals Report
- ECUs
- Excise taxes
- Value added taxes
- VATs
- Brand
- Winston (RJR)
- Barclay
- Benson & Hedges (PM)
- BERKELEY
- Camel (RJR)
- Chesterfield (Liggett)
- CONSULATE
- CRAVEN A
- Dunhill
- Embassy
- Gauloise Bleue
- JPS Lights
- Kent (Lorillard)
- Kool (BW (1933-2003)/RJR (2003-present))First Menthol cigarette line, released in 1933. Premium priced brand.
- L&M
- Lucky Strike (ATC (until 1996)/ BW (1996-2004)/ RJR (2004 on))
- Marlboro (PM)
- Merit (PM)
- More
- MS
- MURATTI
- Now (RJR)
- Pall Mall (ATC)
- PETER STUYVESANT
- Philip Morris
- Rothmans King Size
- Salem (RJR)
- SG
- SILK CUT
- SUPERKINGS
- Vantage (RJR)
- Subject
- advertising
- Advertising regulations
- cigarette design
- Consumption rates
- data analysis
- demographics
- Diseases
- Economic benefits
- epidemiology
- Federal level
- Government agencies
- Health effects
- Human subjects
- industry response
- industry sponsored research
- International level
- marketing
- National level
- nicotine
- Nonsmokers
- price elasticity
- Regulations
- Research studies
- Retail trade
- sales
- tar
- Taxes
- Tobacco control programs
- tobacco industry structure
- tobacco use
- Warning labels
- Women
- Additives
Document Images
~I~SZ ~ ZSTSOT~ _
PHILIP ]iOl~RI$ CO -~'* Pi£ EEC
~002/020
PM EUI~OPEAN II'~USTRY PROFI[T~
THE EUROPEAN TOBACCO
INDUSTRY
PHILIP ~ORRI$ CO ~ P~ EEC
~003/020
-2-
TABLE OF COiVrENTS
A. Background
3
B. T~ ~et
C. The P~ayars
9
Chamcteristic~ & Trends
I3
Conclus~.on
18
o
- 0:~
o
o
-3-
BACKGROUND
Tobacco - The Product
Tobacco is an ~nm~! plant rdated to the tomato and potato plants which
was originally grown in the Can'bbcan, Mexico and South America, Its
leaves are used for making cigarettes, cigars, chewing tobacco and snu~.
Tobacco is now grown on a large scale in over 60 countries in thc world,
with ~ the USA, Ind~ B~I~ the foyer Soviet Union, Turkey,
Italy, Zimbabwe and C.~eece being the leading producers.
The plant itself reaches a height of 1.2 to 1.8 metres, is Hght to dark green
in colour and produces some 20 leave, s in its annual growing s~ason. M~
h.wcsting, the leaves are cured by a variety ofmetho& depend~-g on the
use to wtn'~h the tobacco is to be put. For example, air-ouring is used
m~nly for chewing tobacco and mu~, fire-curing for strong cigars and
flu~Rn'ing for dgaretts__s. Freshly cured tobacco has a sharp atom, and is
~ bittex in fast% so it is put in storage and allowed to age or fcnn~nt
before being used to make tobacco products.
History
Long popular with the Am~rican Indian% the habit of tobacco smoldng
spread gradually throughout Europe aft~ Columbus's remm from the New
World in 1492. At first, the tobacco was used as a medicine to help
people relax. The Spaniards and Portuguese then discovered the
s,2,~ ~ ~',-~ ~ e,,
pleasures of smoking and mufftaldng,~which in fi~e the Germans, "..
F~nch, li~,_'a~s and othexs also ~ame to e~oy. Smoking was introduced
to England by colonists returning from Virgkda, the great Elizabctb~n Sir
Waker Raleigh playing a key role in making smoking popular.
~J.~ewhcre, in the mid 17th century, the movement of peoples during the
Thirty Years War was a key factor/n spreading the custom of smold~g
throughout Europe. Developments in later centuries such as the clay and
briar pipes and the introduction of the cigar to the French and English
dur~g the Pen~n.~ular War ~reviously a m~nly Span~ practice) farther
~b~ . • "'
~,~'-','~
popularizedthc._.-~" ~,--~-~'.~,~.-.,~.~.~'.~, ~. ,
IO/AA '~ ~;~ ~D2 2 2~7~077 PHILIP ~ORRI$ CO ~, PI EEC
~OOS/020
During another conflict, the Crimean War of 1854-56, French and Brit/sh
soldiers saw their Tuddsh allies smoldug cigarettes. On their return home
the former did lik~wise.
Later innovations such as the invention of the first cigarette-malting
machine in 1867 meant that by the end of the F/i'st World War cigaretto
smoking lind become th~ most popular form of tobacco consumption.
Varieties of Tobacco
The most common varieti¢s of tobacco found in cigarettes ar~ the mild,
light-coloured Bufley and Vh-ginia tobaccos. A stronger flavour is
obta/ncd from Oriental tobacco which is gown in the Balkan region and is
used in the manufacture of cigarettes and in pipe tobacco.
~vVhy Do People Smoke?
Smoking has its ori~,~.~ in the religious c~remonies of the Americaa
~dians. Later, when Europeans first began to take tobacco in the early
16th cemtury, t:hey~o-b~'mu~e-the~~~d L~heki-m~d/c/nai benefu~%~
In thne, however, people smoked for the pleasure it brought them. ~
'" ' - - small amuuu~ ,~,. ~u.~, ~
Dm/ug~e present century, however, scientists have found incre~/n~
evid~nce~ff~:~~g can endanger one's
S~geon-General is~t officiA.~am~ng of the haz~ds of
~dkiug. Many countn'es~easures bel/e~
d/scoum~ p~~~~ such ~ ba~~ in public
pla~.s,m
-p'f6ducts. o
PHILIP KORRI$ CO ~ P~ EHC
~00~/0~0
-5-
lEO TOiELACCO-RELATED EMPLOYMENT
162,331
162,513 ."
150,890
141,872
,=, 26,253
10,352
200K 300K 400K
t8
• 500K
The countries of the ~constune more th~n 600 billion cigar~:tes
per year ~.nd produces over 700 m~lllon. Italy and Crte~c~ grow ov~ 80%
of the EC's tobe, coo crop. Of importance Ls flae ~act that, for the most part,
the growing and processing oftob~cco t~es pl.ace in the poorer regions qf
the E(~ and E~ro~e - $o~daem I~y, Crrcec.e..~d Turkey - where there are
very ~ew ~1ternative e~ployment opporttm~es.
1~/11 ~ 1~:2~ ~: : :~78077 PHILIP XORRIS CO ~ PM ]~EC
~007/020
% Adult Regular Smokers
" - . ............ = '-'~'~¢~===~=~ 48
|1 II I
0 10 2O 30 40 ~0
World-wide, there are an estimated I39 rni11ion people around the globe
d~pcadCnt for a livi~ on tho income d~v~ from tobaoco, of which 88
m~ll|oa are ill Asia C,15 rn~ll~on in Indonesia a/one) 33 million on the Indian
sub-continent, 14 million in Latin America and the Can'bbean and four
ra~ll~on ~ Africa. In many of these marketz, tobacco is one ofth~ few
crops which can b~ sold on the world market to obtain hard currency.
19/11 '93 18:24 '~2 2 2878077_.___ PHILIP MORRIS CO ee* P~EEC
~1005/0~0
-7.
~ A Major Source of Income for Governments
"~ ,~r % Approxima~y ~ovcuty porc~t of ~¢ rc~ pdce of a p~k of
~,~ ~ . ~v~y gov~~ ~ ~ fo~ of~s. For e~,
,
~ ~, fo~ of cxc~o ~es md VAT.
.
~~h~e ci~c~ cost ~o~d ~ ~, price, ~ cap~ ~pfion ~
~cy ~ms a~ut by t~ ~cr,~ss or o~c~s~ - ~ ~cly
p~o=cM ~cct on~emoh~ pow~ of~o less ~uont
~0m~On ~ ~~~~nbudget ~ p~
show
~ ~ ~¢ ~ ~i,~y ~pul~, ~c~y ~ No~ E~o~.
"~.-.. ¢¢~ B~nd ci~e~s (~edc~ Blend ~ V~) do~a~
m~et, ~c b~ck mba~ ¢i~,~s s~ hold a ~c~t m~rket shoe
~Su~ss~ ~oduc~o~ onto ~¢ ~ket ~v¢ ~oluded ~e 100ram
"sup~g" o~, pop~ ~or ~ =1~t ap~c= ~d v~u~ for
money, ~d ~ ~c¢-~u~ br~ such ~ B~k~l~y ~
~ F~ ~k~t ~w ~om 1987-~ ~ ~e e~fon of
' ~ pr~-pd~ s~r ~d ~ss ~ t~s ~n toba~ pro&c~. F~
~O_l~. ~s on~ of the few major European markets where ~ tobacco rem~us.
si~~op~-
-[b~ ~"~" ~(r~ ~ud ~ ~ ~rench m~rket is fore~~creas, ~ a rate ot ~der 14~ but ~
Sp~dn proved to be the
~ in the years 198%91, retail sales
: ~o Hve year period. ~ the years up to 1996,
at a rate of 6.5% p.~.
is decli~;ng ia pop .t~rity due to its perceived/L=-..
however, Spain ~s a market where per ,~,~,~"
2878077 PHILIP MORRIS CO ~* PM EEC ~010/020
-9-
C. TFIE PLAYERS ~_ _,vr,-~. '_
~ &~ ~ E~, ~~~e state monopolies con~ol ~ ~m~ufion ~d
~ ~ .~ - rc~ ofm~pr~u~, ~cv (SE~A), l~y ~nopoH ~ State),
~, ,~'~ - For e~mpl¢ ~ I~y, a pack of~, ~ lea~g monopoly b~ is
~-~ ~ ~ retat!~ ~ 1.58 E~ comp~ed to ~l~ro at 2.36 E~ - a ~er~ of/
~, ~ ~e o~er b,u~ ~e ~n~ ~ less m~ed ~ manet lead~ SO
~' ~' ret~l{ng at 1.41 ~s ve~ ~Iboro ~ 1.73 E~s. However, ~
F~ce ~e ~a~on~ ~o~e Bleue s~ at close ~ h~e ~ of
~~s~ ~nt ~ Spai~ ~ Po~ ~w ~ lost ~
~% m~t~o to more exp~ve ~~onM b~.~m-~
pzop~ to pay f~ a beR~ ~~ product. It ~
~~ no comold~ce ~t ~I ~e mono~ly ~es suppo~ m adv~g bm
on toba~ produc~, w~oh w~d_r~ mark¢~ to pHc~g md
% vol~une
Canary Island excluded
87 88 89 90 91 92
55,2 53.5 51.3 49.4 46.8 47.6
61.1 58.5. .. . 56.1 50,3 45.$ 48.6
73.5 71.6 7.0.3 67.4 64,6 67.9
- --., 99.2 98.7 97.5 __~.I ,,~
1~/11
PHILIP ~ORRIS CO ~-~ P~EEC
-10-
rer~' ehare~ of the cigarette nmrk ~,~,j~ ~.~
...... ~ ~ ~- ~- ~.~ ~.
R~R Nabisco
~r .......
3oume : EwromoMtor
FranCe
13
48
i00
Gem~any
32.6
20.9
8.7
6.3
Italy .
35
2
Spain
13,2 .J
io.2
66.4
I++:'o
lO0.O I~0 ' IO0.O I I00.0
~distribute+ Philip Mor't~ pmduct~ in the UK
The MulflnaflonaI~
Amcdcan Brands is the L~ ¢~g~ct'l:e marl~t leader with 43% of~e
m~ct ~OU~ ~~ ~ch ~ ~ee l~g b~ ~c~on &
H~ges, B~keley md S~ ~t). E~ope generates mo~ of~e,~oup,':s
~ov~ - 62% of ~N,~ ~ 1991 - but ~ ~at ~ ~er's sN,~ were
B~s"+l+ading Brands ~'~"~hd+ KO0|, Kent, Lucky Strfl<¢ and Bm'clay.
W+th 21% ofth+ mm+k~ shmr+, +t ranks third in C.~rmany.
