Examination of Witnesses (Questions 760
- 779)
THURSDAY 20 JANUARY 2000
MR M MACLENNAN,
MR C MACLEOD,
MR N MUSTOE
AND MR
P BAINSFAIR
760 You would not be happy about advertising
directed to attracting women.
(Mr MacLennan) Young women; no.
Mr Gunnell
761 The piece which talks about the 15-year-old
group makes it clear that it is talking about the 15 to 24 so
that includes very young teenagers. If research has been done
on those who smoke and that research is used positively in these
documents to talk about how to attract them or how they are attracted
to the brand, I therefore simply take this as a piece of evidence
that those who work for you are concerned with young people smoking
and are not concerned with young people stopping smoking, they
are concerned with them continuing.
(Mr MacLennan) You have completely missed
the point about the research, where we got it from and what we
use it for.
Dr Stoate
762 You spend a lot of time telling us that you
are very careful to stick within the regulations and that is very
laudable. You probably think we are a pretty cynical committee
but I think we come a fairly poor second in cynicism. I refer
back to the CDP memorandum from Simon North to Barry Jenner and
I quote from it. "We wonder if you could slightly corrupt
the Jordan Logo to include a large `ampersand?' ... Our reasoning
for suggesting it, is that the ampersand is not actually part
of your logo, though if it were to appear, I believe people would
recognise it as being so". Is that not exactly the point
we are getting at, that it merely is a device for getting round
the putative ban on advertising on Formula 1?
(Mr Macleod) No.
Dr Stoate: Can it be anything else? It actually
says, "I believe people would recognise it as being so".
Surely it is overtly saying that is what you are aiming to do.
You want people to recognise it even though it is not part of
the logo and therefore must be getting round the ban. What else
could it mean?
Mr Gunnell: The words in brackets say, "(I
think that this would be sailing very close to the wind)".
Dr Stoate
763 The point being, how can it be any other
than an attempt to get round the ban because you have actually
said, "... if it were to appear, I believe people would recognise
it as being so".
(Mr Macleod) But it has not happened.
764 It may not have happened but it in an internal
memorandum wondering whether you could slightly corrupt the Jordan
logo. It is a request to do so. Therefore surely even if it has
not actually happened it is an attempt to get round the regulations.
(Mr Macleod) I do not think so.
765 What is it for?
(Mr Macleod) It is exploring how we might
promote our particular product. We are not responsible for Jordan's
logo and so on. I am certainly not passing the buck here but it
was something we hypothesised you might be able to do.
766 Why would you want to increase the size of
the ampersand? What would be the point of increasing the size
of the ampersand in the Jordan logo otherwise?
(Mr Macleod) To confirm our association
with Jordan.
767 Even though it says it would be sailing close
to the wind and that people would recognise it as an attempt.
(Mr Macleod) An idea is hypothesised,
if it would be accepted it is accepted, if it is not, it is not.
It is as simple as that. Something is put up, it is accepted or
rejected.
768 The fact still remains that it is nothing
more than an attempt to get round the regulations, even though
you have said in evidence that your intention is to stick as closely
as possible to the rules.
(Mr Macleod) I am actually not sure what
the rules are in relation to Formula 1. We are not responsible
for it now. In that specific regard I do not know whether it would
be sailing close to the rules or not.
Dr Brand
769 How long has it been that you have been so
sophisticated about targeting the audience you want to convert
to your own particular brand, approximately, in time?
(Mr MacLennan) What do you mean by "so
sophisticated"?
(Mr Bainsfair) Do you mean as an industry?
770 As an industry, yes.
(Mr Bainsfair) Generally or in this instance.
771 We have been talking about targeting young
males, young females, students, the more confirmed steady smokers.
You clearly have this very tight targeting strategy, not just
when you are advertising and launching a new product. I am just
interested to know how long this has been going on with quite
such skill and sophistication.
(Mr Bainsfair) For our part, we have
handled Marlboro since 1992 and it has been there very much ever
since we have worked with them. If you ask others, I think you
will find it pre-dates that by some considerable time.
772 How long do you reckon then?
(Mr Bainsfair) In advertising sophisticated
targeting goes back to the 1960s.
773 Would you still maintain that advertising
does not encourage smoking?
(Mr Bainsfair) Yes, I would.
774 Very interesting. There is an interesting,
well thumbed and presumably well used document which was submitted
on the marketing of hand rolling tobacco, Amber Leaf. It came
from the Gallaher people. Are you familiar with that?
(Mr MacLennan) No; not particularly.
I am sure I saw it at some point.
775 It is very interesting because it clearly
tries to increase the market brand of Amber Leaf versus other
hand rolling tobaccos, neither of which is available in this country
or regularly available in this country through tobacconists and
the main share is obtained through smuggling and bootlegging.
The document itself actually makes a play on how the bootlegging
part of the tobacco resale industry can be targeted to get them
on side so they sell more of your product. Do you have any concerns
about that?
(Mr MacLennan) Everyone is concerned
about smuggling because it is the chief reason for more young
smoking in the last two years. Everyone should be concerned about
that, just as a single cause of younger people smoking. It is
that tobacco is going through in a non-controlled distribution
to people who do not care to whom they sell it. Yes, one has to
be concerned about that, to answer your question. In this particular
instance, hand rolling tobacco is a particular issue. As I understand
it anyway, the price for instance in Belgium is about 20 per cent
of what it is here in the UK, which is a nice healthy smuggling
margin in my books. It is smuggled and I believe volume has gone
up accordingly because of the distribution. Yes, it is clearly
an issue.
776 Absolutely and you have recognised that because
in your briefing document it says "A Co-ordinate Approach.
Trial through bootleggers" and "Key Issues UK Distribution.
Adoption by bootleggers". Obviously the bootleggers were
not flogging the Amber Leaf but something else. "Amber Leaf.
Gaining share of Duty Paid. Not chosen by bootleggers". Presumably
there is an assumption you have got to change that. This is nothing
to do any more with the CAP rules, this is to do with advertising.
You are working through illegal channels to promote a product.
(Mr MacLennan) Advertising does not work
through illegal channels. That document suggests that what is
being forced to happen in certain instances, because of the lack
of control of smuggling in this country at the moment, which has
got so dramatically worse, is that the tobacco companies, yes,
are targeting legal distribution methods, some of which are on
the continent. They sell it through legal distribution. Because
of the lack of enforcement here in terms of smuggling, a lot of
that finds its way back into this country through illegal distribution.
777 So it is perfectly acceptable to you if you
target the legal sales on the continent to bootleggers so that
you can increase your market share of bootlegged, hand rolling
tobacco.
(Mr MacLennan) I do not distribute tobacco,
so it is not really a question for me. I am not in charge of distribution
for the tobacco industry; we do advertisements. However, I think
that really the onus is on the Government not the tobacco manufacturers.
They are allowed to distribute their products through legal distribution
means and if you want to look for someone to blame, you should
look elsewhere.
778 May I have a comment from the other gentlemen
at the table? Do you think it is appropriate to try to increase
your market share on illegally distributed products?
(Mr Macleod) No.
(Mr Mustoe) I have some sympathy with the point of
view about tobacco coming in that way because one of the brands
we work on is Golden Virginia, which is a market leader in hand
rolling tobacco. By far the majority of sales in the UK are now
sourced, I understand, abroad, which makes any kind of communication
with your audience slightly strange because it is all coming in
through illegal channels. I do think that is a recent phenomena.
I do think that is one of the reasons why tobacco consumption
patterns have changed in the last two years.
779 Have you been asked by Imperial to produce
a strategy which allows you to maintain the share of consumption
coming in in an illegal way, that is targeting the distributors
and the people who sell the stuff on the continent?
(Mr Mustoe) No, we have not been asked.
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