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Last Updated: Wednesday, 27 September 2006, 23:00 GMT 00:00 UK
Tobacco firms won't be stubbed out
By Belinda Rhodes
BBC World Service

A smoker outside bars in Glasgow, Scotland
Scotland is one country to bring in some form of smoking ban

Now that it is accepted that smoking kills and second-hand smoke is dangerous too, many nations have introduced anti-smoking legislation in the last few years.

Ireland, Canada, Cuba, Italy, the Netherlands, Scotland, South Africa, India and Iran, to name a few, have all introduced some kind of smoking ban, from outlawing the advertising of cigarettes to banning smoking in bars, restaurants and other public places.

With regulations tightening in many places, one might assume that the massive tobacco corporations of the developed world have been dealt a huge blow. But the picture is not that straightforward.

David Betteridge, a spokesman for British American Tobacco (BAT), the second largest tobacco company in the world, says the market is expected to grow.

"Fewer people are smoking in percentage terms, but because of huge population growth around the world, we are looking at a market about the same size in ten years' time, and beyond that maybe even bigger," he says.

You could say the single biggest marketing opportunity in the world is to sell cigarettes to Chinese women
Jeff Collin, Edinburgh University

Adam Spielman, a tobacco industry analyst with Citigroup, says there are other reasons for the tobacco companies' continuing success.

"Volumes in the West are clearly declining," he says. "But profitability is not, because each year the tobacco companies put their prices up and that's more than offsetting the decline."

Of course tobacco companies can't realistically continue putting their prices up forever, and they also know more anti-smoking legislation is on the way.

Youth appeal?

Last year 168 countries signed the Framework Convention for Tobacco Control (FCTC), a World Health Organization-backed initiative aimed at reducing the number of deaths due to smoking - which currently total five million a year.

With this in mind, tobacco companies are thinking up new strategies.

"All tobacco companies are looking to grow their business outside their home markets in areas where they haven't been before," says Adam Spielman.

Cigarette smoker
The World Health Organization is trying to save lives lost to smoking

This is where they often earn the condemnation of anti-smoking groups.

"They do a lot of advertising designed to appeal to the young," says Ian Willmore, of Ash (Action on Smoking and Health).

"They associate tobacco with sport and glamour. They sell single sticks, which was banned here a long time ago and is aimed at low income people. They use techniques that they were caught using here and in the US and banned from doing years ago."

Ash has slammed BAT in particular for aggressively marketing its cigarettes to the youth and female market in countries such as Pakistan and Kenya.

Asian markets

But the developing-world market that all the major companies are watching wide-eyed is China, which has one third of the world's smokers.

Currently, the Chinese government itself is the biggest manufacturer of cigarettes in the world.

"China is the jewel in the crown for British American Tobacco as it is for all tobacco companies," says Jeff Collin, a lecturer in international public health policy at Edinburgh University.

A smoker in Beijing, China
China accounts for one-third of the world's smokers

"BAT hasn't cracked the market yet, nor has any foreign tobacco company, but it has made repeated attempts to establish a meaningful presence there."

A huge portion of the market in China remains largely untapped, as women smoke far less than men.

"You could say the single biggest marketing opportunity in the world is to sell cigarettes to Chinese women," says Mr Collin.

Mr Collin has published papers claiming that smuggling has played a role in the company's Asian marketing strategies.

BAT denies this and says it can't be blamed for inventing smoking in Asia.

Analyst Adam Spielman says it is a myth that Western companies are pursuing developing world markets specifically because sales in the West are decreasing.

"It is true that volumes are decreasing in the Western world but they are not increasing in developing countries," he says.

"In China, they are only growing by about 1% a year, and in other emerging markets they are essentially flat."

'Mistakes in the past'

But tobacco corporations have other plans for shoring up their profits against more anti-smoking legislation.

Philip Morris in particular is focusing on developing a "safer" cigarette, while others are promoting so-called "smokeless" products such as "snus", a kind of snuff that is placed beneath the lip.

The difficulty with these, however, is that in many countries they would not be allowed to market them.

"We would like to offer snus to more consumers, because it is significantly less harmful,'' says BAT's David Betteridge.

But opponents say the development of such smokeless tobacco products has everything to do with the companies' image, and little to do with health concerns.

"If you look at (BAT's) own documents, they are described in PR terms," says Mr Collin.

"They are geared to portraying the industry as a responsible one that recognises its mistakes in the past."

While tobacco companies do all they can to survive in the face of tightening legislation, health experts are hoping the World Health Organization convention on tobacco control will bear results and save millions of lives.

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