From: afoxland@starband.net
Date: Tue, 01/20/04
Anne LandmanPosting Date: Tuesday, January 20, 2003
GOALS: Where do we HAVE to be in the year 2000?
Company/Source: Philip Morris
Document Date: 19920204/R ("R" apparently means "date received," which is
stamped on the document.)
Length: 33 pages
Bates No. 2024705949/5981
URL: http://tobaccodocuments.org/landman/2024705949-5981.html
PDF Version:
http://legacy.library.ucsf.edu/cgi/getdoc?tid=aak98e00&fmt=pdf&ref=results
This Philip Morris (PM) document appears to be a brass-tacks discussion
of concessions the embattled tobacco industry is willing to make, and for what
gains. For bargaining purposes, the list is divided into "Must haves," "Must
haves-plus," and "Want to haves."
"Must Haves" include keeping cigarettes legal, making sure smoking
remains a "tolerated social activity," maintaining a retail distribution
infrastructure for cigarettes and eliminating lawsuit liability threats from
"the primary issue" (the health issue) and the ETS issue (environmental tobacco
smoke). To get these "must-haves," PM is willing to concede to "incremental,
intermittent tax increases, ingredients disclosure...smoking bans in transient
and common areas...bans on sampling...bans on vending machines, industry
marketing code, youth no-smoking advertising...industry marketing code written
into law."
The paper describes the circumstances under which the company (or the
industry) would trade a "want to have" in order to keep a "must have." Many of
their "want to have" items have already been traded away for the 1998 Master
Settlement Agreement (MSA). Those concessions included bans on sampling through
the mail, bans on vending machines and some forms of advertising, incorporating
youth no-smoking advertising, etc.
The document indicates exactly where government needs to step in to
regulate the industry:
"All give-ups should have a legislative or specific business
purpose--only law can destroy must-haves or want-to-haves."
Government can, then look at PM's list of "must-haves" and see where
it needs to take action against cigarette companies to improve public health.
Another PM statement is that "Public opinion and media coverage are
only important insofar as they affect government." This can be interpreted as
meaning that PM's "feel good" advertising (ads that show PM feeding the hungry,
aiding domestic violence victims, etc.) is ultimately aimed at the government.
The paper makes some interesting observations about the significance of
advertising in American vs. European culture:
"Commercial advertising in Europe is less central to culture than in
U.S. -- ads in Europe are more a mark of 'illegitimacy' than 'legitimacy."
and...
"In Europe, overall media coverage of arcane risks is less sensational
and smoking among social elite is more widespread making social acceptability of
smoking higher..."
This is a very rich document about the tobacco industry's strategies to
defeat public health efforts on all fronts--public and private. It also shows
that the tobacco industry "thinks" and plans about a decade ahead of public
health advocates and government authorities to plan how to head off actions
these groups will take against it. It also shows that the industry has a very
clear game plan for how to deal with actions that threaten their profits and
control of their product.
Quotes:
Our strategy MUST be designed to maintain and create the political
conditions to attain our primary goal [still be a viable, profitable business]
and SHOULD be designed to maintain the political conditions to attain our
secondary goal [continue income and share growth rates...]
THE ELEMENTS NECESSARY TO REACH THESE GOALS CAN BE DIVIDED INTO
WHAT WE MUST HAVE AND WHAT WE WANT TO HAVE:
MUST HAVE: Means those variables essential to maintaining a
profitable viable business, thereby meeting our primary goal.
WANT TO HAVE: Means those variables essential to maintaining a
profitable, viable business with sustainable double-digit income growth and
corresponding share growth thereby meeting our secondary goal.
WHAT WE MUST HAVE TO ATTAIN PRIMARY GOAL:
(1) Cigarettes AS THEY EXIST TODAY-- still a legal product (i.e.,
no law or regulation which would effectively ban current product, pricing or
packaging).
(2) Smoking a tolerated SOCIAL activity -- i.e., smokers not
excluded from employment, obtaining insurance, etc.
(3) 400 billion cigarettes consumed by 40 million adults annually.
(4) Retail presence and sufficient distribution outlets to sustain
widespread availability of product to consumers.
(5) Stability in product liability litigation on the primary issue
[health] and ETS [environmental tobacco smoke]--i.e., no perceived threat of
significant or escalating financial losses in court cases.
THE MUST-HAVES PLUS:
(1) Advertising to spread value-added "news" about the product.
(2) Tax rates equal to a stable or declining percentage of retail
product price.
(3) Sponsorship and promotions to add value to the product.
(4) Flexibility to alter product attributes and packaging...
(5) Smoking still allowed in workplaces and indoor locations open
to the public...
(6) Product liability litigation perceived to be no more a threat
to PM than to Pfizer or PGG.
CONCESSIONS
(1) Incremental, intermittent tax increases. (2) Ingredients
disclosure/labeling using food labeling as a model. (3) New and/or additional
warning labels (size and location are main concern) (4) Smoking bans in
transient and common areas (critical concern is preserving some accessible
smoking area or section).
(5) Bans on sampling apart from a retail purchase or mail
delivery.
(6) Bans on vending machines.
(7) Industry marketing code with private enforcement body (as in
60s and 70s).
(8) Youth no-smoking advertising in some ratio to brand ads.
(9) Licensing as enforcement mechanism to stop sales to minors.
(10) Industry Marketing code written into law.
STRATEGY PARAMETERS
--Must-haves CANNOT be traded or lost. --Want-to-Haves MAY be
traded only to save a Must-have, otherwise they CANNOT be lost. --Concessions
may be used to protect must-haves and want-to-haves. --No political magic
bullets--only a product breakthrough can change the basic situation, i.e.,
smoking is considered unhealthy and "rude."
--All give-ups should have a legislative or specific business
purpose -- only law can destroy must-haves and want-to-haves.
--Public opinion and media coverage are only important insofar as
they affect the government--we will never be liked and what we want is to be
ignored.
--No "grand" compromise --antis are well-funded, enduring
business.
NOT-SO-GRAND COMPROMISE
Proposal: Trade advertising for explicit tort preemption.
EFFECTS: (1) Remove litigation threat (2) Remove controversy
caused by advertising.
DEFECTS:
(1) Declining core business lowers multiple as much as litigation
threat.
(2) Litigation threat is not significant, just newsworthy.
(3) Threat can be effectively removed by changing state laws.
(4) Advertising is essential to secondary goals and surplus
advertising dollars of competitors would worsen mix.
(5) Livelihoods of professional antis depend on criticizing the
industry--they will not go away.
INTERNATIONAL EXPERIENCE "INDICATES":
(1) Consumers will pay much higher prices for cigarettes.
(2) Advertising of cigarettes not linked to social acceptability.
But U.S. may be different because:
--Sociodemographics are different in Europe--cigarettes always a
"luxury" due to post-war shortage and number of upscale smokers.
--Commercial advertising in Europe less central to culture than in
U.S. --ads in Europe are more a mark of "illegitimacy" than "legitimacy."
--In Europe, overall media coverage of arcane risks is less
sensational and smoking among social elite is more widespread making social
acceptability of smoking higher and price elasticity of cigarettes lower.
KEY VULNERABILITIES
(1) Charge of marketing and selling to youth...
(2) Link of health care cost to supposed social cost of smoking...
(3) Continued fiscal problems in Washington and the states --Tax
increases
(4) Federal regulatory bodies --FTC: all marketing activities
--EPA and OSHA: smoking bans --HHS: disclosure of ingredients, ASSIST-type
program --Justice: antitrust, broadcast of brand events, RICO --CPSC et al:
"fire safe" product
(5) State ballot initiatives --Large tax increases earmarked to
antis
(6) Solid waste/environmental movement --packaging bans
(7) Statutory funding of antis, boycotts and general harassment...
(8) Tort litigation on primary issue, ETS and fire safety
--Loss of ability to provide balanced view on smoking and health
issues. --Marketing activities curbed. --Product characteristics changed.
--Costs
[Page 14]:
STATE BALLOT INITIATIVES
Threat: Large tax increases earmarked to the antis
Concession: Smaller increases with different or no earmarking.
Ongoing Programs: Reform state initiative process to make it more
difficult to place tax initiatives on ballot.
----------------------------------------------------------------
Company: Philip Morris
Author: Presumed corporate author, Philip Morris
Recipient: Corporate recipient, Philip Morris
Region: United States
Named Organization: American Civil Liberties Union
Act Up (Activist gay rights organization) Boycotted Philip
Morris due to its support of Congressman Jesse Helms, who opposed gay rights
American Legislative Exchange Council (Entity through which PM
launders favors and donations)
AMOA
American Stop-Smoking Intervention Study (Six year effort to reduce
smoking rate in 17 U.S. states) ASSIST was funded with approximately $114
million over six years in the early to mid 1990's by the American Cancer Society
and the National Cancer Institute for a period of approximately 6 years.
BPAA
Cato Institute (Pro-industry think-tank)
United States Consumer Product Safety Commission (Consumer Product
Safety Commission) Consumer Product Safety Commission
EPA (Environmental Protection Agency)
FAC
Family Course Consortium (Industry-created "youth anti-smoking"
front group)
Franklin Associates
Federal Trade Commission (Enforcement agency for laws against
deceptive advertising) Enforces laws against false and deceptive
advertising, including ads for tobacco products. Ensures proper display of
health warnings in ads and on tobacco products;collects and reports to Congress
information concerning cigarette and smokeless tobacco advertising, sales
expenditures, and the tar, nicotine, and carbon monoxide content of cigarettes.
HHSC (Health and Human Services Commission, Austin, TX)
Health and Human Services Commission, Austin, Texas
Jefferson Center
National Association of Convenience Stores (Long-time tobacco
industry proxy/surrogate group) Stands up for tobacco industry causes
NASFM
National Assn of Legislative Fiscal Officers
National Conference of State Legislatures
National Consumer League
National Federation of Independent Business
National Tax Limitation Comm
Occupational Safety and Health Administration (Held hearings in 1994
to ban smoking in workplaces) OSHA opened hearings in September 1994 on a
proposal that amounts to a virtual ban on smoking in every workplace in the
nation
P&G - Proctor and Gamble
Pfizer - Pharmaceutical company
Reason Foundation (See Sullum, Jacob) Sullum, Jacob- Managing
editor of "Reason" magazine. Also worked at "National Review." Sullum argued
that news accounts of the Environmental Protection Agency's 1993 report on
second-hand smoke were "one-sided, credulous and superficial," and that
journalists "missed an important story about the corruption of science by the
political crusade against smoking." The Reason Foundation, which employed Sullum
when he wrote the article criticizing the EPA, received at least $10,000 from
Philip Morris in 1993 (AP, 6/24/94), and got further funding from Philip Morris
subsidiary Kraft General Foods (L.A. Times, 7/18/94). Sullum himself has
received $5,000 from R.J. Reynolds, another major cigarette company (Richmond
Times Dispatch, 6/30/94)--to reprint another article he wrote about secondhand
smoke. Sullum's ties to the tobacco industry were exposed in a 1994 article by
FAIR (Fairness and Accuracy in Reporting) which can be seen at
http://www.fair.org/extra/9409/smoke.html
Roper Organization (Consumer Research/Public Relations Org.)
Interested in finding out what drives consumer behavior; surveys consumers on
their prime areas of concern; assists corporations with reputation-building and
public image based on its findings.
STAT (Stop Teenage Addiction to Tobacco) Stop Teenage
Addiction to Tobacco - anti tobacco group started by Joe Tye.
Washington Legal Foundation (Legal organization that supports
industry causes)
PM, Philip Morris
Litigation: Stmn/Produced
Type: SPCH, SPEECH, PRESENTATION
CHAR, CHART, GRAPH, TABLE, MAPS
Named Person: Parrish, Steven C. (Sr. VP, General Counsel for PM
USA) Partner of industry law firm Shook Hardy and Bacon before going to
work for PM. Was VP of PM Corporate Scientific Affairs in 1990. Defends PM on
television.
Subject: industry response
industry strategy
Corporate image
Corporate strategy
--------------------------------------------------------------------------------
Letters to the Editor:
Regarding the posting of January 13, about RJR's "Son of a Bitch memo," Dick
Daynard, Director of the Tobacco Products Liability Project at Northeastern
University School of Law in Boston, Massachusetts writes:
Actually, Steve Kazan was not involved in the Haines case. It was actually
used by Dan Childs, who wrote the brief for Susan Haines opposing her attorney’s
effort to wriggle out of representing her.
John Ladd, an attorney in San Francisco writes,
Anne,
I don't think that the Patton memo is available anywhere it can be
authenticated very well. We all believe that it is real but the best we can get
on authenticating it is probably by matching it to a description on a privilege
log. I've looked for it pretty hard, without success.
--------------------------------------------------------------------------------
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afoxland@starband.net
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