Category: News This Week

  • Dutch treat

    “The devil shits Dutchmen,” complained Sir William Batten in 1667 as he watched the English fleet burning in the Thames estuary.

    The famous British naval administrator was exasperated by Dutch challenges to English rule in the east Indies, on the high seas, and now even at home.

    While few would accuse the Netherlands of having an overly aggressive foreign policy today, at least part of Sir Batten’s observation continues to hold true—the Dutch are everywhere.

    A new contingent of guests arrived today at York Lodge. While not all proper Dutchmen, five of my seven fellow diners were Dutch speakers—two government officials from The Hague, the Belgian diamond trader who also joined us yesterday, an American teacher who has lived in Antwerp for nine years, and an Afrikaner.

    Unsurprisingly, dinner conversation focused on the idiosyncrasies of the various Dutch dialects.

    The only internationally recognized Dutch word, of course, is apartheid. But none of us felt inclined to bring this to the attention of our non-Dutch-speaking table mates.

  • Witchcraft

    Healer or troublemaker? Š Hans Hillewaert / CC-BY-SA-3.0

    In addition to the rising cost of production, unclear property rights and limited access to capital, the tobacco grower I visited this morning had to deal with another challenge recently—witchcraft.

    After several of his workers were killed in a car crash and others contracted mysterious illnesses, farm laborers started accusing each other of casting spells. They summoned a witchdoctor, but the ensuing spiritual cleansing ceremony got out of hand.

    These rituals typically involve wild drumming and dancing and it is not uncommon for participants to lose control. Apparently, several workers started speaking in languages they do not normally speak. More disturbingly, one person was stabbed.

    The witchdoctor was jailed for his role in the stabbing. Perhaps worse for him, his credentials were questioned.

    The farmer says he had used lighter fluid, rather than magic, to make water burn.

  • In a nutshell

    Securing supplies

    After visiting a commercial tobacco farm and several leaf merchants, the story that emerges is as follows:

    Zimbabwe tobacco production used to be dominated by a small number of large-scale tobacco farmers. The majority of these commercial growers were white descendants of British colonists.

    At independence in 1980, the Zimbabwean government announced it would purchase white-owned farms and redistribute them to landless black peasants, who account for the vast majority of Zimbabweans. The program was to be carried out on a willing-buyer-willing-seller basis, but for a variety of reasons, land redistribution didn’t happen as quickly as envisioned.

    People got impatient, and when President Robert Mugabe started losing popularity by the late 1990s, he changed tack. The willing-buyer-willing-seller principle was abandoned, and commercial farmers started being evicted from their land, sometimes violently and often without compensation.

    But instead of benefiting the landless masses, many properties ended up in the hands of the party bosses, police commissioners and army generals—people selected for their political connections rather than their farming skills.

    As a result, Zimbabwe’s once-thriving agricultural sector—and, with it, the entire economy—came to a grinding halt. (Tobacco at one point accounted for some 30 percent of Zimbabwe’s foreign currency earnings.)

    The new growers who are farming face a set of formidable challenges, including the fact that they have received no titles to their land. This means their properties cannot be used as collateral for obtaining bank loans, which is especially problematic for a crop like tobacco, which requires substantial upfront investment.

    In order to secure their leaf supplies, tobacco merchants have started contracting directly with growers, providing them with capital, inputs and other necessities. In essence, they have become financial institutions, a function with a considerably different risk profile than that of their core business—buying and selling leaf tobacco—and one that many remain uncomfortable with.

    Many people I’ve spoken with believe that lack of property rights and the related inability to access capital are the biggest limiting factors to further expansion of Zimbabwe’s leaf tobacco industry.

  • Table topics

    I had dinner with three fellow guests at York Lodge—a Belgian diamond trader, a Brazilian AIDS consultant and a member of the Danish embassy in Zambia.

    The diamond trader was in Zimbabwe to help the government secure the spoils of a recently discovered field—supposedly among the largest and most easily accessible in the world—and the Danish embassy worker was helping his colleagues reopen his country’s consulate in Harare.

    The Brazilian AIDS consultant described the challenge in getting patients to cooperate in their treatments.

    Infected people in rural areas, she said, have discovered that a new treatment also accelerates the growth of poultry. Expensive medicines intended to fight the AIDS virus are being fed to chickens instead.

    I love meeting people with different backgrounds.

  • Not your money’s worth

    Keep the change

    I met John Robertson today, a local economist whom I have always admired for his common sense and willingness to speak truth to power.

    He said the game changer in Zimbabwe has been the “dollarization” of the economy in 2009, which has restored a degree of order to the marketplace. Prior to that, hyperinflation, combined with a unrealistic official exchange rate, made it virtually impossible to conduct business—at least for reputable businessmen.

    A leaf buyer told me that when he and his friends would play a round of golf, they would buy the beer they planned to drink afterward prior to the match because its price was likely to double during the game.

    Quotes for services were valid for just one hour, and the banknotes could barely accommodate all the zeros. I think the last Zimbabwean dollar bill to be issued was a 100 trillion-dollar note—the equivalent of a few U.S. dollars—less toward the end of the week.

    Of course there are always people who thrive in such an environment—those with debts, for example. And before the government switched to the U.S. dollar, the Harare stock market was said to be the best performing in the world.

  • Portugese chicken

    Pleasant dinner with my good friend Murray Prince, whom I hadn’t seen for at least eight years.

    Murray gave me the skinny on tobacco and politics in Zimbabwe—none of it attributable, of course, but his primer will be helpful as I start my workweek.

  • Getting my bearings

    One of the local leaf companies kindly let me borrow a car for the week, which should facilitate logistics considerably.

    I spent the day with my friend Makiwa, getting my bearings in Harare. I have a basic knowledge of the city from previous visits, but things are different when you are driving yourself.

    For starters, I am unaccustomed to driving on the left-hand side of the road. It took me a while to stop activating my windshield wipers when I intended to use my turn signal. And I constantly have to remind myself to look in the right (or should it be left?) direction for oncoming traffic.

    More troubling for the out-of-town motorist is the general lack of pavement markers, street name signs and functioning traffic lights.

    Makiwa blamed the absence of street signs on “unscrupulous people”—i.e. vandals. But during a previous visit, I heard a more macabre explanation. AIDS has wreaked havoc among Zimbabweans (one in four is said to be infected), and coffin manufacturers are one of the few professional groups doing brisk business. The easily bendable street signs apparently make good coffin handles.

    Many traffic lights—which Makiwa consistently referred to as “robots”—are so faint that it’s difficult to tell whether they are red, yellow or green. Others don’t work at all, leaving drivers to work out the right of way among themselves.

    In practice this means the biggest vehicles and most assertive drivers go first. I am afraid my Toyota Vista is not much of a match for some of the tinted-windowed 4X4s on the road. And it certainly wasn’t a match for the presidential motorcade that crossed our way.

    It started with a police siren. I slowed, but Makiwa insisted I pull off the road and stop now. After the procession had passed, I asked what the fine would have been for failing to yield.

    “Zero,” said Makiwa. “They’d shoot you.”

  • Life is good again

    Life is good again

    After traveling for nearly 24 hours, watching four movies and almost finishing a badly written book on the Hells Angels motorcycle club, I am enjoying a Zambezi beer in front of my room at York Lodge in Highlands, Harare.

    During past visits, I’ve flown from the United States through either Johannesburg or London. Due to the flight connections, however, this meant either spending the night in Johannesburg or an entire day in London.

    This year, I tried something different, flying through Addis Ababa instead. It’s a long sit, but you don’t waste an entire day waiting.

    My joints are still aching from too many hours in economy class (we wouldn’t dare waste your advertising dollars on frivolous upgrades), but the pleasant weather and agreeable surroundings make it well worth the ride.

    The temperature is a mild 20 degrees Celsius and I am writing in the shade of an acacia tree listening to the songs of birds I cannot identify.

    It’s from this bubble of comfort that I will be reporting on the collapse—and possible rebirth—of the Zimbabwean tobacco industry.

  • Meeting of Minds

    Meeting of Minds

    Photo: ttinu

    Created only two years ago, the Global Tobacco Networking Forum concept once again proves its value to a rapidly changing industry.

    By George Gay

    One of the many advantages of attending a TR Global Tobacco Networking Forum (GTNF) is that you come to realize not everybody sees things the way you do. I was reminded of this in October when I attended a GTNF session that discussed the possibility that all ingredients other than tobacco might be banned from the cigarette rod. I had expected most people—with the obvious exceptions of those involved in supplying these ingredients and their associated equipment—to be celebrating, at least from a business point of view. But this was not the case. So in the spirit of discussion engendered by the GTNF, I will use a couple of paragraphs to describe what my reasoning was and wait for your responses.

    If those in authority who put themselves forward as being concerned about the health of cigarette smokers force the tobacco industry to remove ingredients other than tobacco from cigarettes, then those cigarettes will appear to the consumer to be somehow improved. For one thing, they will appear to be and, to some extent will be, more “natural.” And given the way the mind works, it’s not a long stretch from “improved” and “natural” to “safer,” and nor is it a long stretch from “safer” to “safe.”

    So if the World Health Organization’s Framework Convention on Tobacco Control (FCTC) comes down in favor of removing ingredients other than tobacco from cigarettes, then it will, de facto, be encouraging the introduction of the first official PREPs—though in this case purportedly reduced exposure products. And, in doing so, it will inevitably involve the media and so provide a cigarette marketing push the likes of which will not have been seen before; or it will if you accept the idea that smokers crave reduced-risk products. What’s not to like about that?

    But even as I’m writing this I’m starting to see that there’s a small fly in the ointment of my argument. Consumers are going to be torn between these “improved” products and the traditional ones that though no longer available from licit manufacturers will be provided with much alacrity by illicit operators.

    Why is it that some people in the tobacco control business are willing to put forward schemes that will do little if anything to reduce tobacco use but everything to improve the competitiveness of the illicit trade—in the case just considered, by wiping out its competition? Tobacco control is clearly something of a misnomer. Apparently, a group of researchers suggested during the Asia Pacific Conference on Tobacco or Health in Sydney recently that governments should reduce the amount of tobacco available for sale by 5 percent each six months—a cast-iron business plan for the illicit trade if ever I heard one.

    The illicit trade was another of the subjects much in evidence at the October GTNF held in Bangalore, India. I cannot disclose what went on at the forum because, in a successful effort to encourage open debate, the rules stipulated that what was said during the sessions was not reported. If you want to find out what is said, or if you want to have your say, you have to turn up. And, in any case, I didn’t get to the illicit trade sessions. One problem—if a problem it is—with the GTNF concept is that, with four simultaneous sessions in progress, you have to make some difficult choices. Twenty-four sessions were shoehorned into six four-session time slots spread over two afternoons, with the mornings being reserved for plenary sessions at which the more traditional, formal presentations were made.

    The illicit trade needs to be discussed. From outward appearances, combating this trade is such an unmitigated disaster that you have to assume either there is no will to put a stop to it or that some of those involved are incompetent on a hitherto unimagined scale.

    Nearly all of the problems and, therefore, the solutions, lie with governments, which often seem completely out of touch with reality. Examples are legion, but I saw a story just this morning that reported the German government as saying it planned to raise tobacco taxes during the next five years to make up for falling tobacco tax revenues as Germans smoked less, opted for cheaper brands or turned to smuggled products. So, if I’m not mistaken, the plan is to charge honest smokers to make up for a shortfall in revenue caused in part by dishonest ones. This sounds like a descent into madness. Already, manufacturers are required under various agreements with governments to dig enormous black holes called “hoping to combat the illicit trade in tobacco” holes, and shovel in smokers’ money. This is neither sensible nor fair.

    Could it be that there are too many accountants, lawyers and law-enforcement people looking at the contraband issue and not enough psychologists, sociologists and, dare I suggest it, ordinary people?

    In my view, even the tobacco industry does itself few favors in respect of contraband, though at least it has the excuse of having few options; it just has to keep those holes filled. A number of manufacturers have been making the point that only criminals benefit from the illicit trade, a claim that seems to take a wholly unnecessary waltz through the contraband minefield wearing a pair of magnetized boots.

    The question that anybody hearing this will ask herself is: Who are the “criminals?” Clearly, they comprise the counterfeiters and those who smuggle and or sell any form of illicit cigarettes. But when you think about those who buy and consume illicit cigarettes, you venture on to tricky ground. Either you fudge the answer by saying that these people aren’t really criminals and, in the process, condone what they do and, in effect, the illicit trade; or you say that they are criminals and admit that they benefit from the trade. Of course, some consumers do so benefit, but do we need to underline this?

    There is another difficulty too. If you believe that governments raise taxes so as to take the retail prices of cigarettes beyond the point at which smokers can afford them in an effort to eliminate smoking, then you have to believe that the illicit trade provides the only brake on this policy; so the illicit trade is of indirect benefit to the licit trade, which, by definition, isn’t criminal. And it goes further. Governments, which, technically, are not criminal, benefit too because they don’t really want to see a lot of people quitting tobacco since this would cause their tax revenues to fall; so the illicit trade provides a convenient fig leaf behind which they can hide this embarrassment.

    “Watershed”

    What is at stake here is the truth, a slippery concept if ever there was one. As somebody once said, truth is probably not a terribly useful concept and can lead to martyrdom. I was reminded of this at the GTNF when—I suppose I shouldn’t report this—on a number of occasions a still was shown from the 1994 video of seven U.S. tobacco executives standing and swearing before the Waxman Hearings that they believed nicotine was not addictive.

    This was portrayed as a watershed: the moment when the rest of the industry recognized the ideological error of the soon-to-be-martyred executives and turned to embrace the great truth that nicotine is addictive. But of course it was no such thing. We are still scrapping over whether nicotine is addictive. As I write this piece, there is a court case going on in the U.S. at which the plaintiff’s lawyers say their client was addicted while the tobacco manufacturer being sued says she wasn’t. Interestingly, the tobacco manufacturer claims there is no better proof that she wasn’t addicted than the fact that she hasn’t smoked for 14 years. Isn’t that what those seven executives were getting at?

    In fact, the major thing that has been achieved by changing the definition of addiction and moving to a position where those people who have a say in formulating tobacco policies agree that nicotine is addictive, is that smokers now believe they have a cast-iron excuse for not quitting because they pick up on the new addiction label while hanging like limpets to the old definition of that word.

    We all hold on to old ideas and, getting back to what I wrote at the beginning of this piece, this is one reason why the GTNF is a product for its time: It provides a forum during which ideas that are no longer useful can be shaken out. And the Bangalore event certainly had some shakers and movers. It attracted, from around the world, more than 200 delegates representing most aspects of the tobacco industry and including a number of representatives of the major manufacturers. And it also ttracted a number of people from outside the industry.

    One idea that I believe the industry needs to give an airing, if not a shaking, concerns whether the major tobacco manufacturers are fighting the wrong battles—or not enough battles. The tobacco industry is enormously competitive in the marketplace, and this can be seen reflected in the sorts of areas where the major manufacturers take their stands. They have made it clear through their actions that they are prepared to put up a fight against display bans and, in the future, it will become clear that they will be willing to go to war over plain packaging.

    But in my view, there is a danger in tobacco manufacturers aiming so much of their firepower at display bans and plain packs (both of which were discussed at some length at the GTNF) because while display bans and plain packs might be pointless and even, in the case of plain packs, unlawful, their pointlessness means they do not threaten the existence of the tobacco industry.

    However, the existence of the industry is threatened by attacks on the integrity of tobacco products and the imposition of smoking bans. To an extent, measures that attack the product are slightly easier to deal with because usually, though not exclusively, they are the product of national or international initiatives; so they present a very visible, large target. On the other hand, smoking bans, which for some time have been moving from public indoor places to public outdoor spaces and private indoor and outdoor places and spaces, are more invidious. They often play leapfrog at a local level, gradually building a momentum that allows tobacco out-of-control people to claim that it is confusing having some places where bans exist and some where they don’t. And you don’t need me to tell you that at this point they don’t lobby for doing away with the bans altogether.

    And this is a problem for the tobacco industry. While its big guns are fighting display bans and plain packs at the national level, smokers are being left with nowhere to smoke by local regulations and employer rules, and, in some places, a diminishing number of places to buy licit cigarettes, even assuming they could afford them. There is no point defending the right to display cigarettes to people who cannot afford these products, find a shop to buy them or a place to enjoy them.

    The industry needs to mobilize whatever resources it can muster against tobacco smoking bans and in support of product integrity, and generally against untruthful anti-smoking propaganda. This isn’t to say that it shouldn’t continue to work with people in the tobacco control community (let’s call them antibodies, and the out-of-control people busybodies) where such cooperation is possible and is aimed at the good of smokers and not the destruction of the industry. But just as it fights display bans and plain packs while it is working with tobacco control, it should be willing simultaneously to oppose smoking bans and other unnecessary controls.

    Call to Arms

    Appeasement is not the answer. A recent report in New Zealand calls for limits to be placed on the amount of tobacco that is imported, the number of outlets that can stock tobacco products and sales. It calls for tobacco to be sold in plain packaging and for the banning of retail displays and vending machine sales. And it recommends that tobacco companies be forced to fund the purchase of products to help smokers kick the habit.

    In France and elsewhere, calls are being made for exceptional taxes to be levied on tobacco company profits. And in Norway there is a proposal to increase to 20 the minimum age at which tobacco can be purchased. And once it is 20, there will be another study to show that it should be 22, and then 24 …. As the none-too-happy married couple once explained, in the end they decided to stay together until their children were dead.

    Nevertheless, there is one small candle flame flickering at the end of the tunnel. Last month, a story in The West Australian told how Western Australia’s (WA) tough new anti-smoker laws were not being enforced by councils amid growing concerns about the cost of such enforcement. This is an encouraging sign given that Australia’s economy, and especially the economy of WA, boosted by its mining industry, has been doing well of late. If the people of Australia cannot afford such laws, what about those in countries with less robust economies? As somebody once said, you should never let a good economic crisis go to waste.

    The tobacco industry should develop a strategy for exploiting concerns over anti-smoker regulations based on their costs and the assaults that they mount on freedoms. It should develop a strategy based also on pointing out whenever possible the distortions that busybodies pedal on a regular basis and that have been absorbed untested into the general media’s lexicon.

    Manufacturers have been successful at mobilizing quickly various parts of the industry against the threat of an ingredients ban; now it needs to do so in respect of public- and private-places smoking bans. But this time it will be harder because it will need to mobilize industry people, cigarette consumers and others. The localized nature of the smoking ban assaults make them just too numerous to be handled any other way. This sounds difficult, and it is, but we shouldn’t throw in the towel. There are groups of people around the world already fighting against bans, including those to do with smoking, but they could do with some support and encouragement.

    Every person who works for the tobacco industry, and anybody else who is interested in harmonious co-existence within societies, should be provided with information to counter the distortions trotted out by the busybodies; so they may use that information whenever they comment on website stories, whenever they write letters to the editor, whenever they talk with politicians, whenever they talk with other people. We all need to become much more vociferous ambassadors for the tobacco industry.

    But I would make four points here. The first is that we will never present a united front if some within the industry encourage regulation because it is a handy weapon to have aimed at their competitors.

    The second is that whatever information we put out must be the truth as best it is known, even at the risk of creating martyrs.

    The third, and perhaps the most important, is that the industry needs professional help in dealing with the general media.

    And the fourth is that GTNF events could be ideal rallying points for the industry; for the discussion and dissemination of vital information. All that is needed is a little more active participation by those who have the most to lose if the busybodies have their way—and that means all of us.

    George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
  • A New Concept

    A New Concept

    Photo: marchello74

    The Global Tobacco Networking Forum debuts in Rio de Janeiro.

    By George Gay

    There are other ways of looking at situations than the one that first comes to mind, or the one that is presented to you, gift wrapped. And this was one of the ideas behind Tobacco Reporter’s Global Networking Forum 08, which was held at the Intercontinental Hotel, Rio de Janeiro, Brazil, on Oct. 15-17.

    The forum was a horizontal conference at which all the delegates were potential speakers and all the speakers were delegates. There were set subjects and moderators to keep the debates jogging along where that was necessary, but by and large the sessions were ad hoc and participants were able to discuss the unthinkable if they so wanted.

    The forum was an experiment—and a brave experiment given that it was put on in Brazil, where, to my knowledge, no large-scale, global tobacco conference or exhibition had previously been staged successfully. As with most experiments, it needed fine tuning, but it was successful in its primary aim of extending the debate. Some of the moderators reported up to 100 percent participation from the attendees at the various sessions.

    There was variation, of course. One of the sessions at which the moderator was clearly much better informed about the received wisdom on the subject than were the other participants turned into a mini conference. The moderator spoke to the subject and the others listened. But even here there was a difference because, when the moderator stopped speaking, the questions came thicker and faster than is the case at less intimate gatherings.

    At other sessions, the moderator did little more than introduce the subject before sitting down and becoming one of a number of expert speakers.

    If I seem to be avoiding the subject, or subjects, here, it is because the forum was staged on the understanding that what was said would not be reported. This presumably allowed participants to feel freer to assert their opinions and to ask probing questions.

    And in Rio, this freedom was probably underlined because most of the major manufacturers were either not represented or were little represented. Their presence was missed at times because only they could answer certain questions, but to some extent this gap was filled by people who had previously worked for those manufacturers.

    Questions certainly arose and some of them could not have been answered even by the representatives of major manufacturers. In fact, it became clear that people were looking to find out the answers to questions that had been bothering them for some time. Breaking—or perhaps bruising—the rules of reporting just once more, I was pleased somebody asked a question that has been bothering me for some time and about which I wrote a year ago: are covert marks on cigarette packs worth applying as part of the fight against counterfeit cigarettes? Clearly, they might help you identify and count counterfeit products already manufactured, and they might win brownie points from governments, but do they prevent counterfeiting?

    If only I could let you know the answer that was given to that question, but, as explained, reporting restrictions will not allow me to do so. You’ll just have to attend the next forum.

    What Tobacco Industry?

    The Rio forum, and especially the absence of the major manufacturers, raised one enormous question. Is there such a thing as the “tobacco industry” in the sense that it comprises a united grouping of businesses linked by common interests and, generally, traveling in the same direction? The answer is, I think, no. From “regulation” to “plain packaging” and from “tobacco harm reduction” to the “illicit trade” (all subjects covered by the forum), different segments of the industry have different outlooks, different concerns and different drivers.

    Given the absence in Rio of the major manufacturers it was reasonable to reflect, also, on whether or not the presence on the world stage of a number of huge tobacco companies is a positive thing for the tobacco industry as a whole. Certainly, on the face of it the answer would have to be no. These companies have tended to break the links between tobacco manufacturing and the communities into which the former, small, family-owned businesses were embedded, and thereby to lose whatever support those businesses might have had in their communities. And the major manufacturers have provided the “Big Tobacco” target at which the anti-tobacco, anti-smoker groupings have found it easy to aim.

    Perhaps there is another way of looking at this issue.

    In one way, the absence of many of the major manufacturers was a major loss. The tobacco industry is being forced to address some fundamental issues that inevitably challenge our notions about what it is to consume tobacco, and unless those of us who work within the tobacco industry have discussed these new ideas and understood them, how can we communicate them to those in the outer dark?

    Let me give you an example. How do we define smoking? How do we know if someone is smoking? I guess that if there were any doubt—and I grant that normally there is not—one way to test this would be a sort of Turing Test for artificial exhalation. You stick the person in an airline toilet and wait for the alarm to go off. But supposing somebody could light a cigarette and then inhale and exhale tobacco smoke without setting the alarm off—would the person still be deemed to be smoking?

    I ask this question because, as I understand it, by the time this article is published, a product will have appeared on the market that would allow a smoker to consume a cigarette without people around her being aware that she was smoking or being in any way affected by that smoke. And so the question arises as to what our response should be to this product. I cannot help feeling that the industry should try to present a modicum of solidarity for once by having a response to the naysayers ready before the naysayers know what is happening.

    Clearly, the naysayers will complain that this is a device designed to allow people to smoke in pubs and even in airline toilets without being discovered. And of course, the body blow will be that this is a product designed so that children can enjoy a few drags under the covers as daddy is reading them a bedtime story.

    In fact, it is a device that, providing it works as it is said to work, would allow adult smokers to smoke at home without annoying or, as the antis would have it, harming, the nonsmokers in the family.

    Irrational Behavior

    Harm reduction was the subject of one of the sessions during the forum, as was illicit trade, with which I started this report. To my mind, there are connections between these two subjects, some of which have to do with the fact that the “industry” responses to them often seem to make little sense.

    Let me stretch a point or two. The industry is basically opposed to the illicit trade in tobacco products. In fact, the major manufacturers become quite indignant about this trade and often put forward what to me is the very dubious and, as far as I can tell, unsubstantiated argument that tobacco products made by illicit manufacturers may contain non-tobacco-related materials that would make these products more harmful than those made by the regulated industry. In fact, I cannot help thinking that by buying illicit cigarettes and thereby making sure that they spend less on their cigarettes, consumers are actually protecting their health—given that poverty is a major cause of ill health.

    So it would be interesting to know what is the major manufacturers’ response to the fact that tobacco users in places such as the U.K. are starting to consume snus, which is banned there and which consumers can obtain only through the illicit trade? Would they condemn them for buying illicit products or support them for trying to instigate a little harm reduction?

    In both instances of illicit trade, I would have to say that the consumers are acting rationally while governments and those that support the government positions are acting irrationally.

    It could be argued, too, that it is irrational for the industry to try to work with governments and organizations such as the World Health Organization in respect of industry regulation, which was another of the subjects discussed at the forum. Often, it would surely be worthwhile letting governments get on with it, because without input from the industry, they will bring in policies that will implode under the weight of the misinformation on which they are based.

    Take plain packaging. I shouldn’t mention this, but the introduction of plain packaging and the banning of certain cigarette manufacturing ingredients were seen by one person at the forum as being the worst threats posed to the industry.

    I cannot accept this, partly because, as previously noted, there is no “industry.” The banning of certain additives will hurt some manufacturers and some markets more than others. And the introduction of plain packaging will affect some manufacturers, along with some board suppliers and some converters, more than others. But these issues are not about the end of tobacco consumption.

    If both of these policies were brought in it would simply raise the industry’s game—make it even more innovative than it currently is.

    And both of these initiatives would have their upsides. What would consumers make of cigarettes that had no additives and whose packaging was dirty gray apart from the health warning? Well, no additives mean healthier smoking, right? Otherwise the government wouldn’t make the manufacturers remove those ingredients. And gray packaging means no bleach, which is better for the environment, right?

    The major point here is that the threat posed by each of these proposals is limited. They will not prevent people smoking licit products and will probably make them more likely to smoke illicit products. To my way of thinking, smoking bans are much more worrisome because they have a tendency of slipping out of their workplace homeland into private accommodation—hotels, apartments … And a ban is a ban.

    Shrugging off the Challenges

    It is perhaps amazing that with all of the negative issues discussed at the forum, there was a remarkable level of optimism among the participants. One moderator seemed to sum up the mood when he said with a shrug, “We’ve faced crises before.”

    Of course, when I say there was an amazing level of optimism, I am talking about the atmosphere at the sessions I attended. Because of the way the forum was structured, it was necessary to make choices, and there were a lot of sessions that I would like to have attended but could not because they clashed with others: cost management, tobacco regulations, future automation in the tobacco industry, sustainability, NTRM, dark markets and how to rebuild old machines for the future.

    And there was one other session that I didn’t attend; it was on leadership. I have to say that I avoided this one because I was told that participants were divided up into small groups that discussed the subject and then came together with the other groups to deliberate on what each had come up with. It all sounded a little bit too structured for my liking. But now I regret not having attended. After all, leadership is probably the key issue at the moment.

    In my view, if there is one positive to come out of the whirlwind currently blowing through the old economic order, it is that our “leaders” have lost the right to the deference that some of them seemed to think was theirs by right. From here on, if they want respect, they have to earn it. Right? Politicians, economists, bankers and businessmen have been caught out subscribing wholesale to the most ludicrously fragile systems, and they—both the people and the systems—need to be swept away and, eventually, replaced with different people and systems.

    Dream on: there’s no chance of that happening. These “leaders” have built an overarching system designed to keep them in place no matter in what buffoonery they become involved—from the faintly absurd, once-ubiquitous mission statement that they required their employees to worship to the massively destructive game of pass the parcel that bankers have been playing with contagious debt.

    The system is designed so that if there is a failure, those in power do all that they can to justify what brought that failure about and take it to new heights of absurdity. The banking system is on the verge of collapsing under the weight of its own greed, so the answer is to pump more money into it. It never seems to occur to those in power that perhaps it might be an idea to go back to square one and start rebuilding on ground that is more solid. That would require admitting irresponsibility.

    And outside of the leadership there seems to be a fear of the unknown that has become a phobia. In the U.K. in recent years, if anybody ever suggested that the pay of businessmen should be capped, the cry went up that the country would lose those business leaders to overseas companies, and that would be enough to put an end to the idea. This theory was never put to the test despite the fact that one of the mantras of many of these business people was that people should not fear change. In fact, the most rational response would have been to offer these leaders a lift to the airport. Right now, most of them would be hard put to find a job driving the airport car.

    But if you really want to get a sense of the massive scale of the failure of our leaders, all you have to do is to return to the start of this report. The tobacco business, in which the tobacco industry has a share and in which governments have a massive share, is starting to sag under the weight of an illicit trade clearly caused by grasping governments applying ludicrous levels of excise tax. So what is the solution sought by governments and supported by many tobacco manufacturers? The lowering of taxes? No, stiffer penalties for those caught in possession of illicit tobacco products.

    This is madness. Stiffer penalties imply more police, more court time, more jails; all of which have to be paid for by higher taxes and social breakdown.

    But the consensus of our leaders is to increase penalties. They are locked into a cycle of failure because they are largely divorced from the real world. They don’t understand how ordinary people think and they won’t unless they get out more.

    They should attend the next forum—on the understanding that they are just participants like everybody else.

    George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.