Examination of Witnesses (Questions 780
THURSDAY 20 JANUARY 2000
MR M MACLENNAN,
MR C MACLEOD,
MR N MUSTOE
780 That is in contrast to Saatchi.
(Mr Mustoe) We have not been asked and
actually we have done very well just by dint of the fact that
now it is effectively because the Government or whoever has allowed
that situation to develop that tobacco has become a lot cheaper
in the UK and actually they are selling a lot more because of
that fact. It is nothing to do with advertising or communication:
it is to do with price which is always the biggest factor in tobacco
781 Are you aware of or have you seen evidence
or allegationsMr MacLennan's answer seems to suggest this
in partthat the tobacco manufacturing companies themselves
have a direct or indirect involvement in the bootlegging and smuggling
(Mr MacLennan) Absolutely no evidence
whatsoever and no conversation I have ever had with anyone at
Gallaher suggested that. In fact if you do not believe them and
you do not believe me, then look at the economics of it and that
will convince you.
782 May I press you a little further on the issues
before we move on? The ideas you have for keeping in touch with
your customers after the ad ban. We have picked up one or two
ideas from the information you have given us. Mr Mustoe, your
creative brief dated 29 May 1998 suggests that the package tourist
in Spain should be targeted. It includes the suggestion on your
last page that tabloid English newspapers produced in Spain for
tourists could be used as a way of getting round the ad ban. The
CDP discussion document produced on the impact of the ban also
emphasises in its final line the potential of Formula 1 to keep
brands "alive". Obviously we shall be looking at Formula
1 in the next session. What do you feel to have been your best
ideas to date in relation to carrying on what you are doing in
the new climate?
(Mr Mustoe) I am aware of two ideas which
we have looked at, one of which is Spain and we are doing that
anyway. We have done work in Spain. We are looking to target people
who smoke our brands and one of the places we can target them
is where there is a high concentration in certain parts of Spain
which means that our newspapers are distributed out there in special
editions and we can buy space in them. It is no different in terms
of targeting from the mainstream.
783 Do the adverts include health warnings?
(Mr Mustoe) In Spain they do, but I shall
have to check as I am not absolutely familiar with our work in
that area. This comment here is simply that if this Government
seeks to bring in a ban faster than the EU ban, there is a window
when we can legally advertise the Spanish editions of newspapers
before the EU ban comes in. Commercially if that can give us advantage
over competitive brands then we will use it. That is that one.
The other example is whether one can maintain a presence in terms
of brand identity at point of sale, which is only targeting in-market
smokers, is only on the back fixture within outlet. We do not
do point of sales as a rule but if it became a way that we could
use an advertising image, then we would by way of being cooperative
with our clients show them how we might approach that. It is very
much only on the back fixture at point of sale.
(Mr Macleod) I have nothing much to add to that really.
On the Formula 1 side, we are not now responsible and never have
been responsible for Formula 1. The proposals about Formula 1
would have been in the context of the then available provisions.
They were not a way of getting round the ban, it was to say if
Formula 1 presentations permit it then that would be something
logical to carry on. It was not Formula 1 to get round the ban.
In terms of other ideas, we do not really have many in terms of
the proposals as they are currently outlined. When and if advertising
is banned we shall probably cease to work for Gallaher.
784 May I pursue that? People have said a ban
is a ban is a ban, but it seems to me that you suggested you have
gone to all sorts of lengths, and the evidence suggests this,
to get round the ban and to sail as close to the wind as possible.
You present it as an ethical industry, highly regulated with codes
of practice, etcetera. May I just refer you to one of the memoranda
from CDP in the evidence on the Hamlet campaign? This says, "The
idea is to trick Castella Classic smokers into applying for a
free pack under the belief that they will receive Classic back.
In fact, they will receive a pack of Hamlet Extra Mild and Gallaher
will have captured their name for their database. Stepping close
to the legal rulings, this technique has proven to be very successful".
(Mr Macleod) I have read it. I am mystified
about what that example refers to. When it says "legal rulings"
it may well relate to other legal rulings relating to trading
rulings as opposed to rulings in relation to advertising promotion.
785 You will try whatever you can to get round
bans, legal rulings and codes of practice, will you not?
(Mr Macleod) No, we will continue to
work within the code as we always do. I should be happy to look
into that example. It has intrigued me. I believe the law referred
to probably relates to some trading issue rather than an advertising
promotion issue. Of course we do not work within the law, we work
within a voluntary code, although we treat it like a law, we take
it that seriously.
786 But to trick your customers.
(Mr Macleod) To switch market. I think
I would be stealing it from this man next to me.
787 But to trick your customers.
(Mr Mustoe) I think you will find actually
it is simply about trading laws. We are aware that it happens
and it is nothing to do with health but about taking one cigar
smoker and trying to switch him to another cigar brand.
788 It is about trying to deceive the customer.
(Mr Mustoe) Not in terms of any health
issues, only in terms of trying to make sure that they try one
brand when they are smoking another. Brand switching is the point.
Mr Austin: An attempt to deceive the person
who is at the other end of the advert. To trick the customer into
believing that they will receive a Classic and they will actually
get a Hamlet. To trick them in order to gain information for your
Chairman: Mr Mustoe is nodding his head.
789 Mr Mustoe, you handle Lambert & Butler,
is that right?
(Mr Mustoe) Yes, we do.
790 Lambert & Butler are aimed at a cheaper,
lower end market.
(Mr Mustoe) We call them mid price. They
are not the cheapest, they are mid price in our categorisation
of the market.
791 It is roughly aimed at lower social classes.
(Mr Mustoe) It is a market leader, with
a market share at around 17 per cent now so you would have to
say it is a very broad church.
792 Would it include a substantial element at
the lower economic end?
(Mr Mustoe) The point was made earlier
which is that price brands generally speaking tend to appeal to
people of lesser economic means, but it certainly is not targeted
at downmarket people, it is a very broad church. A 17 per cent
market share includes everybody. Actually it is worth noting that
price is more prevalent as people become older if you actually
793 Malaga. Would you accept that Malaga is a
holiday destination for families?
(Mr Mustoe) I have no idea.
794 You have done no research.
(Mr Mustoe) None at all.
795 You have no understanding of what Malaga
(Mr Mustoe) Of the Malaga tourist profile?
(Mr Mustoe) No. All I can say is that
we have targeted those newspapers merely because there is a high
incidence of adults who go there. It is because such a high number
of UK adults go there that the national newspapers
797 Families. Families go there.
(Mr Mustoe) Yes, but I do not suppose
children are buying the newspapers any more than they are in the
UK. There are also health warnings and things.
798 In the Creative Brief dated 29 May 1998 in
your submission to us, "Keep the characters' expression warm
and friendly". That is aimed at families.
(Mr Mustoe) No. We would not produce
advertising which was unfriendly and cold, it would seem perverse.
799 Are you saying to this Committee in all seriousness
that the idea of adults with children at these common holiday
destinations never crossed your mind, was never spoken of by anybody,
was never part of the brief, either subliminally or
(Mr Mustoe) I find it extraordinary to
think that we are targeting children by buying national editions
of newspapers distributed in Spain. Absolutely no way at all.