Ban on Tobacco Ads by the Government of India

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Themes: Ethics in Business
Period : 1981-2001
Organization : Indian Tobacco Company Philip Morris
Pub Date : 2001
Countries : India
Industry : Food, Beverages & Tobacco

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Case Code : BECG002
Case Length : 8 Pages
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The Ayes' Contd...

According to the World Health Organisation (WHO), tobacco accounted for over 3 million deaths in 1990, the figure rising to 4.023 million deaths in 1998. It was estimated that tobacco related deaths would rise to 8.4 million in 2020 and to 10 million in about 2030. There was an increasing fear that tobacco companies were inducing children and young people to begin experimenting with tobacco products, and in this way initiate regular smoking, as this held the key for the industry to flourish.

Internal industry documents² released in the United States, described 14-24 year olds as 'tomorrow's cigarette business.' In a case which started in 1991 and ended in 1997, RJ Reynolds Tobacco company, marketer of Camel cigarettes, was forced to withdraw its mascot, Joe Carmel, an animated camel, from all its advertisements, after the California Supreme Court (USA) ruled that the company could be prosecuted for exploiting minors.

The accusation was that the slick, colourful advertisements (using an animated camel) appealed to the children and encouraged them to smoke. In India, analysts estimated that cigarettes contributed only 0.14% of the G.D.P and the health costs roughly translated to 0.21% of the G.D.P. So the revenue logic of huge contribution in the form of excise to the Exchequer did not seem to be valid. Also, given the state's significant contribution to health care, smokers, by damaging their health were in fact enhancing the State's expenditure. Questions were also raised about the economic impact of such a ban, given the fact that the tobacco industry provided direct and indirect employment to 26 million people.

However, a study on tobacco consumption and employment³, showed that effective policies to reduce smoking were likely to increase, and not decrease employment. The reason for this was that when people stopped smoking, the money did not disappear from the economy. It was spent on other goods and services, which the study showed, were more labour intensive. This, in turn produced more jobs.

The impact of cigarette advertising on consumers was another contentious issue. A World Bank report⁴, had pointed out that policymakers who wanted to control tobacco should be aware of the fact that bans on advertising and promotion would prove effective, only if they were comprehensive-covering all media and all uses of brand names and logos.

The report also published the details of a comprehensive study of over 100 countries, comparing the consumption trends over time in those countries where were relatively complete bans on advertising and promotion and where were no such bans⁵. In the countries with nearly complete bans, the downward trend in consumption was much steeper (Refer Figure 1)

FIGURE I
TRENDS IN CIGARETTE CONSUMPTION

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2] Internal document from R J Reynolds, reported in Newsweek, 26th Jan 1998.
3] Society for the Study of Addiction to Alcohol and Other Drugs, London, Press release, 20 November 1997.
4] Curbing the Epidemic: Governments and the Economics of Tobacco Control, 1999 The World Bank, Washington D.C.
5] The analysis covered 102 countries, with or without a comprehensive ban on tobacco advertising, with comparative changes in cigarette consumption data per adult aged 15 to 64, weighted by population, between 1980-82 and 1990-92. Countries with comprehensive bans started at a higher consumption level than the nonban group, but ended the period with a lower consumption rate. The change was due to a higher rate of decrease in consumption for the ban group than the nonban group.