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Big Tobacco - eager to apply their special skills to Asia's emerging markets
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Mountain of Cigarettes
Driving home on Friday evening I was listing to National Public Radio's business program- Market Place. The segment was an interview involving Kai Ryssdal, the shows moderator, and NPR's China bureau chief Scott Tong. The full text of that interview can be seen here.
To summarize the key points, the FDA's first tobacco regulator is due to begin work in two weeks (September 14th to be exact). In anticipation of greater regulation, Big Tobacco is looking to Asia's emerging market to keep profits rolling in.
The entire interview is short and to the point but below are some of the highlights (actually low-lights if health is your thing) along with some of my editorial comments.
1. In business, when two companies cut a deal, a carton of cigarettes will be given as a gift. A carton of cigarettes is China's version of the fruit basket.
2. For Big Tobacco, the global picture is the best it's been in the last five or ten years. While the mature markets (US and Europe) are shrinking by maybe 2 or 3 percent every year, the emerging markets (Asia) are going up by 4 percent.
3. According to one anti-smoking advocate, if you're a global tobacco company and you can convince the men in Asia to switch to an American brand and get a certain number of woman to pick up the habit, basically everyone in America everyone could quit today and it wouldn't matter.
4. In addition to heavy public marketing of tobacco, Big Tobacco is applying their discredited marketing techniques in Asia. For instance, in Thailand, documents say that industry groups have planted scientists in key research groups in an attempt to skew the debate over second-hand smoke (sound familiar?). And in China, where foreign brands still are limited in the market, companies have been known to smuggle their brands into China to build brand awareness.
5. While the government is prepared to implement some advertising and marketing bans over the next several years, it could take 20 years or more to really change tobacco and smoking habits. (Within that 20 year period, tens of millions of Asians will die of smoking related diseases).
6. China has 350 million smokers, which is more than the U.S. has people. So Big Tobacco figures you have to be in China.
7. Marlboro's parent company, Phillip Morris, is taking its marketing and branding expertise and its sharing them with Chines companies that want to go global. So the next big multinational company in this space could be a Chinese company (oh joy!).
It's a shame that specter of globalization will end up benefiting the merchants of death.
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