Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 780 - 799)



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 consumption.

Mr Austin

781  Are you aware of or have you seen evidence or allegations—Mr MacLennan's answer seems to suggest this in part—that the tobacco manufacturing companies themselves have a direct or indirect involvement in the bootlegging and smuggling business?

  (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.

Mr Austin

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 database.

  Chairman: Mr Mustoe is nodding his head.

Mr Hesford

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 analysed it.

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 might be.

  (Mr Mustoe) Of the Malaga tourist profile?

796  Yes.

  (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.

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