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STRATEGIC PLAN FOR THE TOBACCO INSTITUTE September, 1989 0

• TABLE OF CONTENTS EXECUTIVE SUMMARY TAB 1 THE ENVIRONMENT TAB 2 THE INSTITUTE'S STRENGTHS TAB 3 ORGANIZATION OF THE TOBACCO INSTITUTE TAB 4 MISSION AND OPERATION OF THE TOBACCO INSTITUTE TAB 5 ISSUE STRATEGIES - Tax Issue TAB A - Public Smoking Issue TAB B - Advertising Restrictions TAB C - Fire Safety Issue TAB D - Trade Issue TAB E - Social Cost Issue TAB F Other Industry Issues TAB G i

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Executive Summary The Tobacco Institute's long-range strategic plan has been designed to fulfill The Institute's mission as defined by its members: to lead and direct the tobacco industry's resources in defending the industry against unwarranted restrictions and promoting acceptance of the role of tobacco in society. The strategies reflect The Institute's assessment of the most effective approaches to issues currently facing the industry, as well as those only now emerging. Unlike The Institute's short-term, tactically oriented plans, this document is intended to represent a broad blueprint for activities over the long term. At the same time, the plan must be dynamic to some degree: that is, subject to modification as required by the shifting sands of politics and societal attitudes. By nature, a strategic plan for a trade association such as The Tobacco Institute differs in certain ways from plans that might be developed by its members for their own organizations. The most notable difference, perhaps, is in terms of measurable targets. A strategic plan for business frequently sets specific targets for increases in sales volume, market share and return on investment. The Tobacco Institute, like most trade associations, is concerned with legislative proposals, regulatory action, and the perceptions of the industry and its products by the media, opinion leaders and the public. Here the specific objectives and strategies deal with issues and concepts, allies and audiences. Therefore, quantifiable targets do not represent themselves in the strategic plan, but are more properly addressed in The Institute's annual planning and budgeting documents (or more frequently if appropriate). A second distinction is the absence of strategies designed specifically to combat the various "risk factors," i.e., major unforseen events that would impact The Institute's focus. Again, the many risks and contingencies in the volatile environment of tobacco issues are more effectively addressed in The Institute's short-term plans. Importantly, however, The Institute's ongoing strategies, as well as its structure and internal resources -- with regard to both legislative matters and public affairs -- are designed to establish a foundation on which an effective response, regardless of the threat, can be rapidly devised and implemented. I

The following pages provide an overview of the environment in which the tobacco industry operates and its strengths. That is followed by the organization of The Institute, its mission and operation. Finally, this document summarizes The Institute's strategic plan to address six priority issues. They are: • 0 1. Excise Taxes 2. Public smoking restrictions 3. Advertising restrictions 4. Fire safety regulation 5. International trade restrictions 6. "Social cost" claims In addition, the plan touches briefly on strategies. for five other significant and emerging issues: 1. Indication of tobacco use on death certificates 2. Tobacco manufacturer liability legislation/regulation 3. Tort and product liability reform 4. Toxic substances regulation 5. Packaging taxes and restrictions ,

s 9 The Environment When the first Surgeon General's report on smoking and health was released 25 years ago, it was received by a small army of relatively unknown anti-smoking activists. It wasn't until former Surgeon General C. Everett Koop announced in the mid-1980s his goal of "a smoke-free society by the year 2000" that the myriad of organizations, government agencies and individuals who make up the anti-smoking movement were able to rally their forces. This goal has been a unifying force for the anti-smoking movement in •its efforts to eradicate smoking. Whether on Capitol Hill, in state and local legislative chambers, or in public buildings, offices and private homes around the country, the effects of the anti-smoking movement are evident. Many people can no longer smoke at the office or in other publi'c places including restaurants; some are prohibited from smoking even at home. _ Federal, state and local lawmakers, influenced by apparent anti-smoking sentiment among their constituents, are passing laws which restrict the use of tobacco products and the industry's legitimate business activities. And the "watchdog" of our society, the news media, exhibit a growing bias against smoking and the tobacco industry. This change in public opinion is largely the result of a change in the anti-smoking movement itself. A movement that once was small and poorly organized.has grown into a well financed and well coordinated effort by a growing -- and increasingly sophisticated -- community of anti-smoking organizations and individuals. The Anti-Smoking Movement: Who Are They? The anti-smoking efforts are led in part by major medical and health-related organizations, such as the American Cancer Society, American Heart Association, and American Lung Association, the three of which also compose the Coalition on Smoking OR Health, chaired by Scott D. Sallin. Another key player to emerge in recent years is the Smoking Control Advocacy Resource Center (SCARC) of the Advocacy Institute, led by former FTC Chairman Michael Pertschuk.

. _ . 4 __..........:.~:.,~:~. n : Several smaller organizations, such as John Banzhaf's Action on Smoking and Health (ASH), the Group Against Smokers' Pollution (GASP) and Citizens Against Tobacco Smoke (CATS), have been formed at the grassroots level, as well as organizations created to battle the tobacco industry on the legal front, e.g., the Tobacco Products Liability Project. A number of other diverse organizations also are represented, including various scientific and consumer groups, governments, federal agencies, and even certain individuals who are leaders of their own anti-smoking efforts. Additionally, 37 anti-tobacco members of Congress recently formed a bi-partisan caucus, the Congressional Task Force on Smoking and Health, dedicated to eliminating or restricting tobacco use. All of these groups and individuals play a role in shaping the anti-smoking movement's activities. These groups are motivated primarily by their shared opinion that tobacco, in all forms, is detrimental to health and should not be available to consumers who choose to use it. Aware that an outright ban on tobacco is not politically feasible, they seek rather to destroy the tobacco industry through other means, i.e., increasing excise taxes and placing a wide array of restrictions on tobacco use, sales, advertising and promotion. Their crusade is extremely emotional and, often, irrational. For example, although anti-smokers assert that environmental tobacco smoke causes 46,000 nonsmoker deaths per year in the U.S. -- a figure with no scientific basis -- the justification for that figure is rarely, if ever questioned publicly. As a result, it is becoming widely accepted as conventional wisdom. At a congressional hearing on smoking in commercial airliners, flight attendants were not challenged by the panel on their emotional testimony that serious health problems, including cervical cancer, had been directly caused by ETS. In addition, it is illustrative to recognize that the anti-smoking business is a considerable industry in itself, involving hundreds of millions of dollars and countless jobs. Organizations like the American Medical Association (with PAC resources over $1 million) use their anti-smoking projects to rally members and donations -- and to demonstrate a degree of "social responsibility."

! Many of the anti-smoking spokespeople seem to enjoy their newfound celebrity status, and are attracted to the publicity accompanying their efforts, and the image of "David" taking on "Goliath." Congressman Richard Durbin and Senator Frank Lautenberg, in their quest for airline smoking bans, are good examples of this. In the past, the anti-smoking movement was divided by differing agendas, each group competing for the same money and recognition. But the change in the public's attitudes toward smoking reflects, in large part, the movement's discovery that strength comes with unity. The Anti-Smoking Movement: A New Agenda The anti=smoking movement now realizes that to be truly successful, it must fight and win battles on several fronts. It has developed an inundation strategy in which the industry is barraged with proposed restrictions -- from public smoking to taxes to advertising to trade -- at every level of government. In addition to maximizing its opportunities for success by sheer numbers, this strategy seeks to diffuse the industry's resources and attention. On a larger front, the movement has recognized that to reach its goal of a smoke-free society, it must persuade the general public that smoking is unacceptable and harmful behavior. Legislators do not act in a vacuum. It is public opinion that ultimately will dictate the winner in these battles. So, too, must the anti-smoking movement target the media in its message, utilizing.this tool for public opinion and agenda-setting with increasing success. In January of this year, the American Medical Association, the American Lung Association, the American Cancer Society, the American Heart Association, key members of Congress, and many other citizens and organizations convened in Houston, TX, for a two-day summit to develop a common agenda. The Houston conference was much like the 1981 gathering of anti-smoking activists in New York for the National Conference on Smoking OR Health, which developed the first "blueprint" for action. Although the focus of the discussion in Houston was somewhat similar, the anti-smoking movement has chosen new targets and arenas for its efforts in the 1990s.

The dominant issue at the Houston conference was how to reduce smoking among our nation's children, young women, minorities and those less-educated Americans. Anti-smoking efforts based on the issue of smoking by these individuals can be seen in the separate agendas set forth by a number of organizations. The major recommendations from the Houston conference include: - giving the U.S. Food and Drug Administration authority over all tobacco products; - restricting tobacco advertising and promotion activities; - raising excise taxes on tobacco products to raise revenues and price cigarettes out of reach of most individuals; - eliminating all federal support for the growth and sale of tobacco; - - "protecting" nonsmokers from so-called "involuntary smoking" in public places, trains, planes and buses, and ia the workplace; and ~ - restricting the U.S. Trade Representative from opening up tobacco markets in other nations. Current Trends A.number of trends are shaping the direction.of the anti-smoking movement of the future. Primarily, its growing pragmatism and political savvy have provided a tremendous boost to its efforts to eliminate the use of tobacco products. When blanket public smoking bans were considered in earlier years, most Americans thought that type of action was too harsh. After losing many of these legislative battles, the anti-smoking movement compromised on designated smoking sections, waiting until the climate became more favorable to stricter bans. As a result, over recent years, we have witnessed a slow but steady erosion of smoking rights in public places and the workplace, and a move to ever-harsher restrictions. 0

The anti-smoking movement's newfound political finesse also is evident in its attempts to ban advertising and promotion of tobacco products. When initial censorship efforts failed to garner enough support from the public, First Amendment advocates and policy-makers, the movement quickly adopted a variety of backdoor methods ("content only" advertising, curtailing the deduction for advertising expenses, banning sponsorship of cultural and athletic events, etc.) to achieve similar ends. The legislative challenge by the anti-smoking movement continues to grow in scope. The number of anti-tobacco proposals introduced in Congress each year has increased from a total of 28 in the 96th Congress (1979-80), to 150 in the 100th Congress and 95 to date this year. The number of annual state tobacco proposals has grown by more than 250 percent -- from 250 measures in 1980 to more than 900 this year. At the local level, the amount of activity against tobacco has quadrupled -- from about 90 proposals in 1980 to 364 measures last year. While smoking restriction proposals clearly are driven by anti-smoking forces, tax-related legislation usually is sponsored by those concerned with more general budget needs. However, anti-smoking leaders are quick to align themselves with proponents of these tax measures. Additionally, anti-tobacco strategists have begun to more fully understand and utilize the initiative and referendum process. California's Proposition 99, and its 25-cent per pack increase in the cigarette excise tax, was used successfully by anti-tobacco elements as a means of bypassing legislative and constitutional roadblocks to tax increases. Similar efforts are underway in other states. Another trend has been the anti-smoking movement's turn to the development of coalition allies in its fight against the tobacco industry. Seeking the help of - parents, teachers, businesses, minority groups, and even the media, among others, the new anti-smoking movement is borrowing successful strategies used by the tobacco industry.