By Reuters staff.
NEW DELHI – S. K. Arora spent more than three years trudging through the Indian summer heat and monsoon rains to inspect tobacco kiosks across this sprawling megacity, tearing down cigarette advertisements and handing out fines to store owners for putting them up.
But as fast as he removed the colorful ads, more appeared.
The chief tobacco control officer at the Delhi state government, Arora asked the major cigarette companies to put a stop to the cat-and-mouse routine. In official letters and face-to-face meetings, he told them India’s tobacco control laws barred such public advertising and promotion of cigarettes.
That included the Indian arm of Philip Morris International Inc, the world’s largest publicly traded tobacco company. Early last year, Arora said, he met with a Philip Morris director for corporate affairs in India, a man named R. Venkatesh, and told him the signs were an unequivocal violation of Indian law.
Like other tobacco companies, Philip Morris kept up its ad blitz.
But Indian government officials say Philip Morris is using methods that flout the nation’s tobacco-control regulations. These include tobacco shop displays as well as the free distribution of Marlboro – the world’s best-selling cigarette brand – at nightclubs and bars frequented by young people. Venkatesh says Philip Morris is doing nothing wrong. In response to questions from Reuters, he said the company’s advertising is “compliant with Indian law” and that Philip Morris has “fully cooperated with the enforcement authorities” on the matter.
In internal documents, Philip Morris International is explicit about targeting the country’s youth. A key goal is “winning the hearts and minds of LA-24,” those between legal age, 18, and 24, according to one slide in a 2015 commercial review presentation.
As with the point-of-sale ads at kiosks, public health officials say that giving away cigarettes is a violation of India’s Cigarettes and Other Tobacco Products Act and its accompanying rules.
Philip Morris’ marketing strategy for India, which relies heavily on kiosk advertising and social events, is laid out in hundreds of pages of internal documents reviewed by Reuters that cover the period from 2009 to 2016. In them, Philip Morris presents these promotions as key marketing activities. In recent years, they have helped to more than quadruple Marlboro’s market share in India, where the company is battling to expand its reach in the face of an entrenched local giant. Reuters is publishing a selection of those documents in a searchable repository, The Philip Morris Files.
The company’s goal is to make sure that “every adult Indian smoker should be able to buy Marlboro within walking distance,” according to another 2015 strategy document.
In targeting young adults, Philip Morris is deploying a promotional strategy that it and other tobacco companies used in the United States decades ago. A study published in the American Journal of Public Health in 2002 found that during the 1990s, “tobacco industry sponsorship of bars and nightclubs increased dramatically, accompanied by cigarette brand paraphernalia, advertisements, and entertainment events in bars and clubs.”
With cigarette sales declining in many countries, Philip Morris has identified India, population 1.3 billion, as a market with opportunity for significant growth. “India remains a high potential market with huge upside with cigarette market still in infancy,” says a 2014 internal document.
According to government data, India has about 100 million smokers. Of those, about two-thirds smoke traditional hand-rolled cigarettes. Tobacco use kills more than 900,000 people a year in India, and the World Health Organization estimates that tobacco-related diseases cost the country about $16 billion annually.
Tobacco-control officer Arora, a short, mustachioed man with a gruff demeanor, sent a letter to Philip Morris and other tobacco companies in mid-April, giving them until the end of the month to remove all advertisements. “Legal action will be initiated against the company” if it did not comply, he wrote in the letters, copies of which were reviewed by Reuters.
Philip Morris is not alone in using marketing methods that Indian officials say are illegal. The country’s largest cigarette maker, ITC Ltd, uses similar tactics, such as advertising at kiosks. British American Tobacco Plc and Indian state-run companies have large, passive stakes in ITC, which controls about 80 percent of the market.
A day after Arora’s deadline passed, he and his team conducted a raid in an affluent area of cafes and coffee shops in New Delhi that showed his letters did not have the desired effect.
On that hot afternoon in May, the team cut down about a dozen advertisements for Marlboro and various ITC brands. As word of the raid spread, worried vendors covered their ads with newspapers or took them down.
One kiosk owner, Rakesh Kumar Jain, removed his Marlboro ads before Arora’s team arrived. Jain said the signs had been put up by Philip Morris representatives. In return, he said, he received free cigarettes each month worth about 2,000 rupees (about $30). Jain knew that putting up the posters was illegal, but they helped improve sales, he said.
In payment receipts seen by Reuters, Philip Morris’ India unit promised to pay 500 Indian rupees ($7.50) a month to a cigarette seller with a small roadside kiosk in New Delhi for putting up Marlboro ads. The receipts were signed by a company representative.About a dozen kiosk owners interviewed by Reuters said that tobacco companies paid them a monthly fee for advertisements and product displays, with the amount determined by factors such as location, volume of business and type of promotional material.
During the raid, fines were issued to some vendors, many of them repeat offenders, and they were threatened with court action if the ads went up again.
Like Philip Morris, ITC says that it is in full compliance with India’s 2003 tobacco control law. If it wasn’t, the company said in a statement to Reuters, then “the relevant government authorities would have initiated action.”
Since Arora’s threat of legal action in April, there are fewer Philip Morris advertisements outside cigarette shops in the capital. But both Philip Morris and ITC say that advertising inside a shop is allowed.
“Advertisements of tobacco products at the entrance and inside the shops selling tobacco products are clearly and categorically permitted,” ITC said in response to questions from Reuters.
Arora, however, said all advertising is prohibited – “There are no two ways about it,” he insisted – but he can’t start legal proceedings until getting further guidance from the federal government. He has yet to receive an answer.
Federal health officials say in interviews that the ads are out of bounds. Amal Pusp, a director for tobacco control at the health ministry, told Reuters that “there is no confusion”: All advertisements – inside and outside shops – are illegal.
The 2003 law allows tobacco companies to advertise at shops, but subsequent rules issued by the government prohibit it.
“India remains a high potential market with huge upside with cigarette market still in infancy.”
From a 2014 internal Philip Morris document
In 2004, India became one of the first countries to ratify the World Health Organization’s Framework Convention on Tobacco Control (FCTC) treaty. The pact has 181 members and contains a raft of anti-smoking provisions, including tobacco taxes, warning labels on cigarette packs and advertising bans. The country enacted its national tobacco control law the year before ratifying the FCTC, and since then the government has added rules to strengthen the law in line with the treaty’s provisions.
The health ministry published rules in 2005 that banned any display of brand names, pack images or promotional messages. The rule specified that tobacco retailers could only display a 60-by-45 centimeter board, roughly 24 by 18 inches. The sign can have a description of the type of tobacco products sold – such as cigarettes or chewing tobacco – but cannot include any brand advertising and must carry a large health warning.
The High Court had overlooked the fact that advertisement of tobacco products “will attract younger generation and innocent minds, who are not aware of grave and adverse consequences of consuming such products,” the Supreme Court said in its ruling.The health ministry’s rules were challenged in court by a group of cigarette distributors and put on hold by a state-level High Court for seven years. They finally came into force in 2013 on orders of India’s Supreme Court.
Philip Morris has lobbied against the passing of stricter tobacco control rules by the Indian government. In documents detailing the company’s plans for the biennial FCTC treaty convention in India last November, Prime Minister Narendra Modi emerges as a prime target. A key goal: to pre-empt Modi from taking “extreme anti-tobacco measures” before delegates were to gather from around the world for the treaty meeting, according to a 2014 corporate affairs PowerPoint presentation.