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B.A.T INDumms P.L.C. - MINNESOTA DEposrroFty COPY PRODUCED PURWANT To VILD. OF
CONSENT JuoomENT DATED 5/8/98 IN STATE OF A*NWSOTA, ET AL. V. PHILP MORRO, ET AL CASE No. Cl-944M5
CONTENTS
Executive Summary offal
Introductioit 00162
How Advertising Works-
Competition in a 'Mature' Market 04164
International Experienn with
Cipmtte Advertisint Ban Pettit
ZQ9619?OZ
B.A.T INDUSTRIES P.L.C. - MINNESOTA DEPOSITORY COPY - PRODUCED PURSUANT To VILD. OF
CONSENT JuDamENT DATED 5/8W IN STATE OF MAINESOTA, ET AL. v. PHxp Aloggis, ET AL. CASE No. Ci-9"5e5
Executive Summary
 A cigarette advertising ben would not affect tobacco product consumption by either adults
or young people.
- According to government health officials. the most forceful determinants of stocking by
young people are parents, peers end older siblings.
- Anti-smoking advocates until recently acknowledged that advertising is not a significant
determinant of smoking by young people or anyone else.
 Smoking generally appears to be highest in those countries when advertising is forbidden
and lowest in those countries where advertising is allowed. Tobacco product consumption
by young people is declining in many countries where advertising is permitted and
increasing in many countries where advertising is prohibited.
*Advertising a 'mature' product like cigarettes or laundry detergent does not operate to
increase ovetall demand for the product. Advertising instead operates to maintain or
expand company market share within the industry.
 The successful brand advertiser must break through the commercial clutter that exists in
the advertising marketplace. This can be done most effectively by employing eye-catching
settings and by creating a distinct personality for the advertised brand.
 Smokers, like consumers of other products, are not an undifferentiated mass. Rather.
individual consumers tend to cluster in distinctive 'taste cultures'. Cigarette manu.
facturers, like manufacturers in other highly competitive markets. tailor their brand
messages to those who consume their products.
 Advertising bans and content controls are premised on an assumption antithetical to
democratic values - that ordinary citizens should not be informed about the products they
use or. if informed. cannot be trusted to make their own decisionL
B.A.T INDUSTRIES P.L.C. - MINNESOTA DEposrToRy Copy - PRODUCED PURSUANT To VILD. OF
CONSENT JuDomm DATED 541M IN STATE OF MAWESOTA, ET AL. V. PHXV NORM, ET AL CASE No. CI-94-SM5
31"
.... . ... .....
Introduction
'No one really pretends that advertising is a major determinant of smoking in this country
or my other".
Hichmi Pilresclesili
Famw Ch.i@.
We"i 7,04, cm-is'o.
In many countries around the world, governments have been under pressure from anti-
smoking activists to introduce legislation to ban cigarette advertising or to impose controls
on the content of cigarette advertising that would be tantamount to a total advertising bon.
The premise of this legislation is that cigarette advertising is a significant determinant of
smoking by young people and adults and that banning cigarette advertising would reduce
smoking. Anti-smoking advocates have issued a number oll manifestoes attempting to justify
legislation banning cigarette advertising on this basis.
This paper considers whether banning cigarette advertising in fact would advance
the goal of reducing smoking. Relying principally on data reported by government agencies
and by anti-smoking advocates themselves, the paper demonstrates that a cigarette
advertising ban would not affect tobacco product consumption. Moreover. the paper
demonstrates that an advertising ban would run contrary to all concepts of freedom of
commercial speech. reduce the information available to consumers. inifle competition among
the cigarette manufacturers, and trigger 'major cutbacks' in advertising, publishing and
other industries.'
Anti-smoking advocates only recently have begun to proclaim that cigarette
advertising is a major influence on the decision by young people to start smoking. Before
banning cigarette advertising become one of their principal political goals. anti-smoking
advocates (in agreement with government officials and other experts) emphasised family and
peer influences as the key determinants of smoking, while advertising played little or no
tictimstrable role.
The contention that tobacco advertising influences people to smoke overlooks the
function of advertising in a 'mature' product market such as the market for cigarettes. In a
mature product market. whert the product category is loarg-establish" and awareness of the
product category is universal. advertising generally does not operate to increase overall
demand, Advertising instead operates to maintain at expand market share within the
product category - to maintain the loyalty of consumers who already use the brand being
advertised and to switch consumers who use other brands. In a market such as the United
sereneness
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B.A.T INDUSTRIES P.L.C. - MmEwu DEposrroRy Copy - PRODUCED PURSUANT To I VII.D. OF
CONSENT JUDGWNT DATED 518W IN STATE OF MAWESCITA, ET AL. V. PHALF MORRIS, ET AL. CASE No. Cl-94-8565
States. for example, where a single market-share point may be worth as much as $400
million in sales (and where the market itself is shrinking), and one out of every four
customers may switch among brands in any given year, it should come as no surprise that
cigarette manufacturers ore prepared to spend large sums to maintain their market share or
to expand their market share by even a small increment.
To be successful, however, brand advertising must overcome two hurdles: it must
attract the viewer's attention and it must distinguish the advertised brand from the
multitude of others on the market. To break through the 'clutter' that exists in the
advertising marketplace, advertisers won frequently employ vivid settings and employ bold
graphic designs and memorable brand slogans. To separate the advertised brand from its
competitors. an advertiser most create a distinct 'personality' for the brand. Manufacturers
typically commit significant resources to sustain brand identification and loVsIfY to the
brand personality.
Preventing the use of imagery. themn and slogans in cigarette advertising, &a some
proposed legislation would do. would be equivalent to no advertising at all. Such
advertisements would not attract the attention of smokers or distinguish one brand from
another.
If cigarette advertising were a significant factor in smoking, one would expect to
find more smoking in those countries that allow such advertising than in thaw countries
that do nor. In gerietal, however. one finds just the opposite. Whether considerce ' , flit
standpoint of per ca0ta consumption or the proportion of smokers, the level of smoking
appears to be highest in those countries where advertising is forbidden and lowest in those
countries where advertising is allowed. Even move significant. tobacco product consumption
- including consumption by young people - is declining in many countries where advertising
is permitted. and increasing where advertising is prohibited.
Advertising bans or content controls would not reduce smoking among young
people at adults. They ore premised - as are all government attempts to suppress
information - on the dangerous assumption that ordinary citizens cannot be trusted to make
their own decisions. Such a premise is antithetical to the principles of both a (gee market
economy and an open, democratic society.
599619'ZOZ
B.A.T INDUSTRIES P.L.C. - MINNESOTA DEPOSITORY COPY - PRODUCED PURSUANT TO I VILD. OF
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How advertising works:
Competition In a'Mature' market
'There is little evidence that advertising results its additional smoking. As with many
products. iciprette) advertising mainly shifts consumers among brands.*
Prisslaknes council of
Economic Advisers
Introduction
The contention that tobacco advertising influences people to smoke overlooks the function
of advertising in a 'mature' product market such as the market for cigarettes.
In a mature product market, where the product category is long-established and
awareness of the product category is universal. advertising generally does not operate to
increase overall demand. Advertising instead operates to maintain or expand market share
within the product category - to maintain the loyalty of consumers who already use the
brand being advertised and to switch consumers who use other brands.
It should come as no surprise that cigarette manufacturers are prepared to spend
large sums to maintain their market. In the US, a single msrkci-share point may be worth as
much as $400 million in sales, and one out of evary four customers; may switch among
brands in any liven year. In Germany. one markirt-sharc point is estimated to be
approximately DM 3 12 million for 1991 - over $550 million at June 1991 exchange rates.
In Japan, one market-shate point was worth Y35.71 billion or S243 million in 1990 01
Y147).
To be successful, brand advertising must overcome two hurdles: it must attract the
viewer's attention and it must distinguish the advertised brand from the multitude of others
an the market. To break through the 'clutter' that exists in the advertising marketplace.
advertisers must frequently employ vivid settings and employ bold graphic designs and
memorable brand slogans. To separate the advertised brand from its competitors. an
advertiser must create a distinct 'personality' for the brand. Manufacturers typically commit
significant resources to sustain brand identification and loyalty to the brand personality.
Enforced foreclosure of imagery, themes and slogans in cigarette advertising, as some
proposed legislation would do. would be tantamount to too advertising at all. Such
advertisements would not attract the attention of smokers or distinguish one brand from
somber.
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BAT INDUSTRIES P.LC. - MWNESOTA DEPOSITORY COPY - PROOMED PURSUANT To I VII.D. OF
CONSENT JUDGMENT DATED 5/8M IN STATE OF ARNMESOTA, ET AL V. PMXAP NORM ET AL CASE No. CI-944US
a. The distinction between 'Now' and 'Mature' product markets
Certainly all companies, cigarette companies included, use advertising to promote their
products. Proposals to ban cigarette adveriising, however. reflect a basic misunderstanding
of how advertising works. Much advertising, including cigarette advertising, neither is
intended to. nor has the effect of increasing the number of people who use the 'product
category.* Instead. advertising is used to serve a variety of disparate objectives depending on
whether the product carcgory is 'new' or 'mature,' and depending on whether the product
category is in competition with other product categories.'
In the case of a 'new' product category like compact disc players or cellular
telephones, advertising attempts to inform people about general product attributes and
benefits. Because the product category is new, advertising functions as a means by which
consumers learn that the product category exists and how it might be useful to them. At this
stage, advertising promotes demand for the product category in the course of promoting
demand for particular brands - although all advertisers ultimately Pre interested in
promoting their brands against competing brands.
As awareness of the product category spreads, advertising matters less and less in
stimulating aggregate demand. In fact, demand flattens because there are fewer people who
have not either tried the product (and become settled users or non-users) or decided that
they have no interest in the product category. Consumers no longer need advertising to
appreciate the existence of television, soft drinks, laundry detergent or toothpaste. These
products have become a part of everyday life for those consumers who are likely to want
them. The aim and effect of advertising for such 'mature* product categories is to promote
particular brands of the product, not to promote the product category itself. Many studies
have found that advertising in such markets - including the cigarette market - is not
significantly related to aggregate product demand.'
There is an exception to this rule. Even after a product category has 'matured' and
advertising is no longer necessary to create awareness of the product, the product category
may be in direct competition with other product categories. Electricity competes in some
countries with natural gas. Milk competes with soft-drinks, and other beverages. In such
cases, it is not uncommon to see advertisements that promote a product category rather than
a particular product brand. But cigarettes. like soap, are not in competition with other
product categories, and one never sees an advertisement promoting cigarettes or soap as such.
Instead, one sees only advertisements promoting particular brands of cigarettes of Soap.
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BAT INDUSTRIES P.LC. - MINNESOTA DEPOSITORY COPY PRODUCED PURSUANT To I VII.D. OF
CONSENT JuDGmEwr DATED 5498 IN STATE OF UNNESOTA, ET AL. V. PHX1P MORR6. ET AL. CASE No. C1.9441565
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Those who claim that cigarettes are not a 'mature' market so far as young people are
concerned misunderstand what it means for a product category to be 'mature.' Even a
'mature' market will have first-time buyers. Consumers who never before purchased a home,
a car, a television. a washing machine. laundry detergent or a cigarette will decide to do so.
This does not mean, however. that the product category is not 'mature.' Young people are
aware of laundry detergent and cigarettes long before they reach maturity because older
people around them use those products. Awareness of cigarettes is in fact so widespread that
they are the very model of a 'mature' product category.
b. The primary objectives of advertising in 'Mature' product markets
Even though advertising will not influence the absolute size of the market, the incentive to
advertise particular brands of a mature product is substantial. The US cigarette market has
annual sales of about $40 billion, the market in Germany has sales of $55 billion far June
1991 exchange rates), and the market in Japan had sales of $24.3 billion in 1990. Gaining a
single market-share point means garnering $400 million in US sales. S550 million in German
sates. and $243 million in Japanese sales. Equally important, preserving a single market-
share point means keeping nearly $400 million, $550 million or S243 million in sales.
Moreover. as many as one our of every four smokers - 25 per cent - may switch among
brands in any given year.' Even if relatively few smokers permanently switch brands each
year, the amount spent per smoker to prevent brand switching - that is, to encourage brand
loyalty - is relatively low.'
Successful brand promotion in a mature product market. however, must overcome
two hurdles. First, the advertising must attract the viewer's attention. Second, and no less
important, the advertising must distinguish the advertised brand from the multitude of other
brands on the market. The long-term success of a brand depends an 'building the * * * most
sharply defined Personality for (the) brand." in short, both the advertisement itself and the
advertised brand must stand out from the crowd.
r- Cigarette manufacturers face a unique set of limitations in this regard in their
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brand advertising. First. in the United States there are more than 350 cigarette brands and
brand styles an the market.' There arc 303 brands on the market in Germany and 265
brands in Japan. Second. the media to which cigarette advertising is restricted in many
countries - the print media - are relatively inefficient vehicles for advertising. Third,
advertisements for cigarettes in the print media draw even less attention than print media
advertisements for other product categories. As Young & Moschis have observed:
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CONSENT JuDamEw DATED W8198 IN STATE OF A*AwEsOTA, ET AL. V. PHXAP MORRE, ET AL CASE No. Cl-94-8565
'it is generally acknowledged that in a typical magazine trivironment an 'average'
advertisement receives approximately three second of viewing time * * '. Cigarette
advertisements receive she least amount of viewing time of any major print advertising
category. This is because the typical cigarette advertisement is a quintessential 'reminder,
advertisement - it grabs your attention, you see the picturc and you go on to the next pose.
It is extremely rare for a cigarette stivercisemem to hold a viewer's attention For more than
a couple of seconde '
c. Attracting Viewer Attention
Advertisers typically use attractive models in attractive settings to promote their products.
Attractive men and women are used to sell brands of everything from floor Polish to
mouthwash. In using attractive modch in attractive scttingi@ advertisers arc not attempting
to persuade consumers that scrubbing floors or gargling is attractive. The goal is to catch the
viewer's attention for the advertised brand.
Consumers are exposed to countless advertisements each day in a variety of media.
On television, as many as 20 minutes of each broadcast hour may be consumed by
commercials. and advertisements account for mace pages then text in most newspapers and
magazines. The result is 'commercial clutter.' As one advertising executive has stated:
'Hardly anyone in the advertising business would disagree that clutter is a problem. As
consumers are bombarded by more and more advertising massages, it becomes most and
more difficult for advertising messages to Set through., I
US research shows that 'about 13 per cent of magazine ads are totally misted by
the reader. largely because of ad cluster.' and that 'readers are totally ignoring 40 per cent
of advertised names.'" It also has been reported that '(s)omt SS pet cent of magazine
readers do not remember seeing the average advertisement: 11 According to George Gallup,
two sdvtrtised products in the same commodity group, using the same size Wce, can differ
by as much as 12 to one in their ability to command attention and register the product's
brand name."
Numerous studies demonstrate that various measures of advertising effectiveness -
such as recall and positive attitudes - decrease as the amount of 'clutter' increases in the
media environment. Viewer attention is a limited resource, and advertisers compete intensely
for it. The ability to gain consumer attention, other things being equal, often is weakest in
.mature* product markets because consumers aft so familiar with the advertised product.
Tbus@ advertising expenditures often must be higher in mature markets than in 'new' or
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B.A.T INDUSTRIES P.LC. - MINNESOTA DEPOSITORY COPY - PRODUCED PURSUANT To I VII.D. OF
CONSENT JUDGMENT DATED 5/8M IN STATE OF AtAINESOTA, JET AL V. PHILIP NORRN. ET AL. CASE No. C1 -944M5
..................... . . ..
emerging markets if advertising is to achieve the same level of attention," Every advertiser
therefore seeks the most effective means available to get a message noticed, for he reaps the
reward of a vitwcr's momentary focus and a chance to 'speak* to the viewer.@
d. Audience Segmentation
Broadly speaking, an advertiser in a 'mature' product market can promote a particular
brand in either of two ways, He can point to objective characteristics of the brand that make
that brand superior to other brands, or he can identify the brand subjectively as the brand
that is desirable."
There are many product categories in which an advertiser can point to objective
characteristics of a brand that distinguish that brand from competing brands. One make of
automobile may have better milesge or require fewer repairs than another, and of course
automobiles vary dramatically in price. Similarly, laboratory studies may in fact show that
some antacids work faster and mote effectively than others. Cigarette advertisements also
can point to the 'tar' and nicotine rating of a particular brand, its type of filter. taste or
length. When such objective characteristics allow an advertiser to distinguish his brand from
others, the advertiser is likely to streis those characteristics in the advertising.
In many cases, however. brands are more or less interchangeable in 'objective'
terms. Some cigarette brands. like some soft drinks and soaps, are more difficult to
distinguish from one another on the basis of objective characteristics than ate other brands.
Thus. other approaches, nor limited to purely textual messages, may be used.
An advertiser attempting to promote a brand that is less readily distinguishable
from other brands therefore tries a different approach. He aims to promote his brand with
particular groups of consumers within the product category by saying, in effect, 'If you are
this kind of consumer. Brand X is for you, if you are that kind of consumer. Brand Y is for
you.' The advertiser. in other words. chooses a particular group of consumers within the
product category at which to direct his message and tailors his message in a way that is
more likely to strike a responsive chord with that group.
Regardless of the product, individuals tend to cluster in 'taste cultures.' It is to
these groupings that advertisers direct their messages - psirikulafly in mature product
categories in which objective differentiation of the constituent product brands is difficult.
Advertisers no longer treat the public as an undifferentiated mass. That approach is not
cost-effective, and it is particularly inefficient when many interchangeable brands of a
product are competing for a share of the market. This is simply a fact of effective marketing,
which indicates nothing in itself about whether advertising increases total consumption of a
particular product.
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CONSENT JUDGMENT DATED 51W" IN STATE OF ARNNESOTA, ET AL V. PF#L1P AfORRB. ET AL. CASE No. CI-94-8565
All advertising seek to portray the brand being advertised in a *positive' manner. and
cigarette advertising is no different in this regard. Not surprisingly, people in cigarette
advertisements often appear to be enjoying themselves and taking pleasure in smoking. This
cannot be considered inherently misleading. Similarly, manv cigarette advertisements depict
attractive people, but that is about people portrayed are confirmed individualists; sometimes
they are emphatically sociable creatures. The various cigarette manufacturers. like
advetsisets of soaps and colognes, attempt to attract the attention of each of these audiences.
But it is not the advertisement that 'shapes' the consumer. It is the consumer (those in the
audience who already use the product category) that 'shapes' the advertisement.
In addressing their advertising to particular audiences. and in seeking to pin their
attention and preference, cigarette manufacturers are doing exactly what other advertisers
do - and must do -- to copse in brand competition.
e. Consurner Response to Advertising
Proponents of a ban on cigarette advertising overestimate the power of advertising - in part
by under-estimating the intelligence and free will of the 'target' audiences. Although this
view of consumers is one that prevailed in advertising theory earlier in this century, it has
since bete discredited. Consumers, young and old &like, arc far mote sophisticated and
discriminating in their responses to advertising than was once believed.
Once it was thought that advertising had a direct and powerful effect on
consumers. Advertisers would say, 'Buy Brand X because it is superior to Brand W and if
the advertisement was clever enough, the consumer would buy the advertised brand. fit
reality, the world does not and never did operate in the way described by this 'one-way
flow' model. Advertisers soon reelised that simply disseminating a commercial message did
not ensure it would be noticed. They also learned that. even when noticed, commercial
messages were not necessarily retained. and that even when viewers fuund a particular
dveriisgment memorable, they did not always remember what brand was being adverrised."
teciver, even when consumers did remember an advertisement. as well as the name of the
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advertised brand, there was no guarantee that they would have any interest in buying the
brand at even a product within the product category. The failure of consumers to provide a
Pavlovian response stems from the fact that people are not hapless recipients of advertising.
Rather. when they do notice advertisin& they ace active participants who ignore, selectively
attend to, laugh, counter-arlut, forger or say no, to it." Individual audience members are
the sum of myriad experiences and beliefs who evaluate commercial messages not in a
vacuum but in the context of their lives.111
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B.A.T INDUSTRIES P.L.C. - MINNESOTA DEPOSITORY COPY - PRODUCED PumiuAw To I VILD. OF
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Counter-arguments are a pervasive pan of the exchange between advertiser and consumer.
One may resist the most appealing a.. .,,-tisement for a fast-food chain because one is on a
diet at does not like 'junk' food. One may resist a clever advertisement for a foreign
automobile because one believes that domestic-made cars are more reliable or because one is
pleased with the performance of one's own car. One may decide against chewing gum -
despite the attractive, happy people who inhabit Sum advertisements - because one thinks
that chewing Sum is annoying. This kind of counter-argument Soes on all the time, most
often in the form of an internalised debate.
What is distinctive sbout the counter-arSumentation that occurs in the case of
cigarettes is that no viewer can possibly avoid the counter-argument. The anti tobacco point
of view is one of the most widely disseminated consumer messages in the world. Indeed,
cigarette advertising in most countries carries health warnings. Every cigarette advertisement
is a reminder of she smoking and health controversy, containing its own counttr-artument.
Despite the pervasiveness of advertising, it lacks the persuasive impact on the consuming
public that some would ascribe to it. Indeed, advertising is so pervasive precisely because the
persuasive impact is so limited. Advertisers must advertise if they arc to retain the brand
loyalty of their own consumers and, perhaps. attract consumers away from competing
brands. And, particularly in the case of mature products, advertisers must compete
aggressively to be heard through the commercial clutter. Even if the advertiser manages to
catch the momentary attention of a consumer, he always risks rejection of his message by
the consumer's own internal counter-artument.
Proposals to ban or restrict advertising therefore both overestimate the power of
advertising and underestimate the sophistication of consumers. Because such proposals sire
based on flawed assumptions, advertising bans and content controls will not have the effect
proponents claim.
U9 it 07
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CONSENT JUDGMENT DATED 51aW IN STATE OF AOWNEsOTA, ET AL. V. PHILAP MORRIS, ET AL. CASE No. CI-94-8565
International experience
with Cigarette Advertising fiAoss
-Evidence from other countries stiggests that banning tobacco product advertising has not
discouraged smoking." I
PneeMenes Cwtoscif of gcomemseAwdubm -
11 cigarette advervising were a significant factor in smoking, one would expect to find more
smoking in those countries that allow such advertising than in then countries that do not.
In general, however, one finds just the opposite. Vhether considered (coin the standpoint of
per capita consumption or the percentage of amokers. tobacco product consumption appears
to be higher in many countries when odwertiting is forbidden then in many countries where
advertising is allowed. Even more significantly. tobacco product consumption - both among
adults and young people - is declining in many countries where advertising is permitted
while increasing in many countries where advertising is prohibited.
a. Trends In simaking among younj isessisk In the Wend States
The decline in the incidence of tobacco product consumption among both sexes for the
1975 - 1 !087 period in the United States is unmistakable. The critics of tobacco product
advertising have vastly exaggerated its influence. as Table One below reveals. Indeed,
between 1973 and 1907, there was a 30 per cent decline in smoking among high school
seniors, from 27 to 19 per cent. Meanwhile there was a corresponding increase of 27 per
cent in the inumber of high school seniors who had never smoked. from 26 to 33 pet cent.
TARLE ONE
StnokinS status (per cent) of high Kbool seniors United States 1975- 87
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CONSENT JuDaum DATED 5/8= IN STATE OF A*NNESOTA, ET AL. V. PHILP MORRIS, ET AL CASE NO. Cl-94-805
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ArrordinF to th,! US surc ., General's 1999 report, daily smoking among male high school
seniors dropped at an even sharper rate. from a peak prevalence of 28 per cent in 1976 to
16 per cent in 1937 - a 43 per cent decrease. Among female high school seniors, daily
smoking decreased from a peak prevalence of 30 per cent in 1977 to 20 per cent in 1987 - a
33 per cent decrease. The decline among black high school seniors was especially significant,
falling 70 per cent, from 26 per cent in 1976 to eight per cent in 1987.1
The trend among high school seniors is consistent with those of other age groups.
Among 20 to 24 year Wds, for example, consumption fell from 47.8 per cent in 1965 to 29.3
per cent in 1997. Among malt% in this age group, consumption dropped from 56.3 to 31.1
per cent between 1963 and 1987. Among females, it declined from 40.S to 28.1 per cent.'
Despite a period of rising advertising and promotion expenditures by cigarette
companies. smoking has declined.dramstically and across the board. These statistics scarcely
support the thesis that tobacco product advertising increases the incidence of smoking
among teenagers in the United States.
1. Smoking among juveniles in Vinland, Sweden and Norway
Finland and Norway have banned cigarette advertising, and Sweden has severely restricted
such advertising. Evidence from these countries, however, suggests that these measures have
been ineffective in reducing smoking among their young people. Tobacco use among
teenagers in Finland and Sweden is increasing, not decreasing. Thc authors of a recent study
in the Joursual of the Norwegian Medlical Association (1990Y report that the advertising ban
in that country has had no disctntible effect on the incidence of smoking in Norway.
In Finland, tobacco product advertising has been banned completely since 1978.
Nevenheless. University of Helsinki researchers have found that smoking among juveniles
increased after imposition of the baml This is in sharp contrast to smoking incidence among
the some age group before the ban - which had been declining sharply before the ad ban was
imposed. In particular, the incidence of smoking among 12 to 18 year olds of both sexes had
been declining sharply in the period preceding the ban in 1971. but generally stabiliscif
between 1979 and 198S. Then. between 1995 and 1987. the evidence showed 'a clear
increase in smoking... among adolescents.' The researchers noted that the increase had been
greatest among girls alted 16 to 18 - from 25 per cent in 1979-1985 to 32 per cent in 1983-
1937. As the 1989 survey report indicates, these trends have not shown any sip of
weakening in 1987-1989: 'The percentage of 14 to 18 year olds who smoke daily in 1989
was greater than the respective percentage when the Ace on Smokiag came into effect in
1977' (p. 3) - 12 years earlier!
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CONSENT JUDGMENT DATED WSW IN STATE OF A*WESOTA, ET AL. V. PHXF AFORRIS, ET AL. CASE No. C1-944wa;
A sm-1- itist published in the Finnish Medical Gazette reports 'a 1:;;Iit increase' in smoking
among adult men and women lages IS to 64) between 1988 and 1990. The authors report
that daily smoking among adult men increased from 35 per cent in 1938 to 36 per cent in
1990, and daily smoking among adult women increased from 20 per cent to 21 per cent in
the same period. I%e authors state that 'the greatest increase in smoking over (tht) two-year
period appears to be among young men.* More generally, the authors state that smoking
increased in Finland until 1976. two years before tobacco product advertisino was banned.
Then, "the consumption of tobacco products, and smoking among young people started to
fall. However, in she mid 11"O's the figures once man stained to rise. and an the basis of the
situation of the early 1990's. smoking don nor appear to be decreasing at the asoment.'
In Sweden, tobacco advetrising has been severely restricted since 1979. Tobacco
advertising is prohibited on television. radio. public transportation, posters and in.the
cinema. Some advertising in the print media is permitted, but illustrations are confined to the
product pack and trademark without decorative embellishment, and the text is limited to
'objective' information about the product's, nature and properties, Yet, the Swedish National
Smoking and Health Association reported in 1983' that between 1980 and 1982 - after
imposition of the 1979 restrictions - the incidence of smoking among teenagers in Sweden
has not declined. According to the World Health Organisation, smoking among 16 year old
males, which has dropped from above 40 per cent in 1971 to 20 per cent in 1979, increased
to at least 23 per cent in 1992. During the same period, the incidence of smoking among 13
year old males rose from about five per cent to over eight per cent. Following a brief,
subsequent decline, smoking began to increase again in 1984. This is not because the
restrictions currently in effect are not severe enough. It is because advertising restrictions do
nor affect consumption.,
In Norway, tobacco advertising was banned in 1975. However. according to a
recent study in the journal of the Norwegian Medical Association', the total incidence of
daily smoking among Norwegian adults remained virtually unchanged between 1979 (38 per
cent) and 1989 136 per cent). As the authors observe, smoking incidence in 1937 remained
higher in Norway than in the United States or Great Britain, between 1977 and 1937.
smoking incidence declined mom slowly in Norway than in the United States or Great
Britain; and smoking incidence among women in Norway increased duting this period (from
29.7 per cent to 33.3 per cent). Assessing the impact of the 1975 ban, in a published
exchange of cormpandence with Dt Siarrveit, the authors concluded that- 'Even though the
law to stop tobacco advertising has a meaningful content, we cannot see that it has had a
fundamental effect upon the sale or use of tobacco.'
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Those who favour tobacco advertising hans claim that smoking among 13 to 15 ytai old
Norwegian schoolchildren has declined sharply since advertising was banned in 1975,
reversing a supposedly upward trend." but how could juvenile smoking incidence have
declined since 1973 if adult smoking incidence has remained essentially unchanged during
the some period? There could be three explanations for this s"ming paradox. 11) Many more
people are waiting until adulthood to begin smoking, 12) older generations of smokers are
smoking much more than they used to. offsetting the supposed decline in smoking among
younger generations; or (3) juvenile smoking incidence is not declinin& The first and third
of these explanations lead no support to advertising controls as a means of reducing
consumption. The second explanation seems highly implausible since it is generally older
groups that are quitting at the highest rates.
A fourth 'explanation' might be that advertising in fact is not banned in Norway. 'This
explanation has began to emerge. ever so subtly, in the controversy over so-called 'hidden'
advertising. Psavols and his colleagues. for example, suggested in their recent study" that the
persistence of 'hidden' advertising in Finland may help to account for the fact that juvenile
smoking incidence in Finland is increasing. Dr blartycat has even suggested that people %make
because of 'hidden' advertising on ashtrays! It strains credulity to assign such overwhelming
influence to 'hidden' advertising. be that as it may, one simply cannot have it both ways - citing a
country A- r--, that bannil1r, 1,4, -i-i-r. r@duces consumption, st-A -ggestit.1t t:.--
continued advertising is why consumption in that country has not declined.
The claimed decline in smoking among Norwegian youth depends, in any event, an
a misleadingly selective use of the data from the underlying surveys. This claimed decline
relates to daily smoking, but the data indicate that daily and occasional smoking among
boys in this age group was in fact declining prior to 1975, and that daily and occasional
smoking among J3 year olds. at least. increased after 1975.
Moreover. it is not at all dear that the incidence of smoking in this age Stoup was
an the rise before the imposition of the advertising ban. Although the incidence of smoking"
in this age group reportedly was higher in 1975 than in 1963. no nationwide schoolchildren
study was performed between 1963 and 197S. nus, the incidence of smoking in this age
group may well have peaked as early as 1970, when the incidence of adult smoking also
peaked, and declined therrafter. As Aare and others" have noted: ""Mere was no nation-
wide study of smoking among schoolchildren in Norway between 1963 and 1975.
Accordingly it is not known whether the increase in daily smokets; among children of both
sexes-. occurred evady throughout dw.. period or whether thi trend may have reached a
peak and culminated some time between the two date&"
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fit
Since the social acceptability of smoking has been decreasing, it is possible that the more
recent schoolchildren studies reflect 'under reporting' of smoking rather than the stated
decline in smoking. Also. it may be significant that the 1957 and 1963 data and the 1973-
1985 schoolchildren data were collected by different organisations. The two sets of data
relied on by Dt Biarweir therefore simply may riot be comparable.
Finally, the Chief of the Tobacco Products Unit in Canada questioned the
reliability of the studies cited by Dr Biartycit on the ground that it is 'based on small
samples of a rather narrow age range."' The Norway data, he said, do not offer 'compelling
evidence that banning tobacco product advertising reduce$ either smoking by youth at
overall tobacco consumption.'
c. Cross-Counwir Surveys
If advertising were a significant influence on smoking among juveniles. am would expect
juvenile smoking to be higher where tobacco advertising is permitted than where it is not.
But a seminal World Health Organisation survey found 'no systematic differences' between
juvenile smoking in countries such as Norway and Finland, where tobacco advertising is
completely banned, and in countries such as Austria and England, where it is not." Indeed,
the WHO survey and the three CRU studies disclose that the incidence of smoking among
young people is higher in many places where advertising is banned than where it is not. In
other cases, the incidence of juvenile smoking is found to be virtually identical in both
situations."
In Finland. (or example, where tobacco advertising has been banned completely
since 1978, the WHO survey found that 30 per cent of IS year old schoolboys smoked
weekly; while in Austria, where print-media and outdoor advertising are permitted, the
WHO survey found that only 17 per cent of tS year old schoolboys smoked weekly.* in
Norway, where tobacco advertising has been banned completely since 1973, and in the
United Kingdom, where print-media and outdoor advertising are permitted, 23 per cent of
15 year old schoolboys were found to smoke weekly.
Similarly, the CRU 16-Country study found that the proportion of 11 to 35 year
ulds who claimed to smoke regularly was significantly higher in Norway (13 per cent) and
Sweden (10 per cent) than in Spain (7 per cent). where only minor advertising restrictions
were in effect, and far higher than in either Hong Kong (3 per cent), where few tobacco
advertising controls existed. or Kenya (less than 0.3 per cent), which had no restrictions." In
Nor"y, 36 per cent of all 13 year aids claimed to smoke iegularly in 1937 while in Spain
the figure was 27 per cem. In Hong Kong, the figure was I I par cent."
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B.A.T INDUSTRIES P.LC. - MINNESOTA DEPOSITORY COPY - PRODUCED PURSUANT To VILD. OF
CONSENT JUDGMENT DATED 51M IN STATE OF ANNIVESOTA, ET AL. Y, PHALIP UORM, ET AL. CASE No. CI-94-6565
In Norway. of course. the subjects of the CRU 16-Country study were too young to have
been influenced by cigarette advertising - or the 'climate' that it allegedly fosters - before
the ban was imposed in 1975. Indeed, some of the subjects of the study had not even been
born yet. By contrast, all of the subjects of the CRU study in Spain and Hong Kong had
grown up in the presence of cigarette advertising. Yet. the incidence of smoking among the
juveniles studied in Spain and Hong Kong was lower by far than the incidence of smoking
among juveniles in Norway.
In other words, although all these countries have very different tobacco sdvtMsing
controls - ranging from minor to major and to a ban - one could not predict from that
situation which country has the lowest incidence of juvenile smoking. Conversely, juvenile
smoking statistics would not help predict which country has the strongest restrictions on
tobacco advertising. Clearly, factors other than tobacco advertising and its regulation must
have played the key toles in juvenile smoking initiation and incidence in these countries.
This evidence strongly indicates that an advertising ban or increased restrictions would not
lead to reduced smoking among iuvtnilcs.
d. Tobacco product advertising and smoking by adults
The evidence from a variety of free-market countries indicates that tobacco product
consumption by adults is unaffected by advertising controls. For the most part. the
consumption trends in evidence before controls were imposed remained unchanged after
controls were imposed. In some countries, as will be seen, adult consumption levels are higher
where advertising is forbidden than where it is allowed. The effect of advertising controls on
adult consumption can be assessed from the standpoint of adult per capita consumption or
the incidence of smoking among adults. From either standpoint, the results are the sarne.
As with young people. the Scandinavian countries often are cited by advertising
ban proponents as places in which tobacco advertising restrictions have been followed by
declining per capita consumption among adults. But the statistics from Finland, Sweden and
Norway establish that adult per capita tobacco product consumption in those countries
began declining before advertising controls were imposed and thereafter either continued to
decline or even increased somewhm"
Major cros"ouniry studies disclose similar findings. A 16-Countq Study of eight
Soviet-bloc and eight free market countries disclosed that smoking iocressed - sharply in
some cases - between 1970 and 1984 in the Soviet-bloc countries. even though advertising
did not exist during this period.' At the same time, in Canada, the UK and the US. per
capita consumption of cigatettes declined significantly during the same period.
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In the eight free-market countries. consumption trends were not substantially affected by
tobacco product advertising bans or strict controls. In Italy, for example. where advertising
was banned in 1962, adult per capita consumption increased from a base of 100 in 1960/65
to 182 in 1984.1' In Singapore, adult per capita consumption increased from a base of 100
when advertising was banned in 1970 to 112 in 1984. And in Iceland. adult per capita
consumption increased from a base of 100 in 1971, when advertising was banned. to 113 in
1984." The imposition of advertising controls in these countries plainly did not achieve their
intended purpose of reducing cigarette consumption.
Dr Eugene M. Lewit of the New jttsey Medical School's National Bureau of
Economic Research recently considered the effects of advertising restrictions in less
developed countries VLOCY). According to Dr Lewit, 'evidence from a sample of LDC's
suggests that the existence of advertising restrictions per se had little if any effect in trends in
or on the level of cigarette consumpTion: "
The Toxic Substances Board of New Zealand VTSB'? recently attempted to
contradict the conclusions of these leading studies in a report entitled Tobacco or Health.
An End to Tobacco Advertising or Promotion VTSB Report'). The TSB claimed in this
report that data from 10 countries 'shows that there is a relationship between legislation
banning tobacco promotion and reduced uptake of the habit by young persons."'
The TSB Report suffers from a variety of methodological and other flaws that
invalidate its conclusions." In many important respects, the TSB Report simply assumes its
conclusions. For example, the TSB Report asserts that aggregate demand in countries like
the United States must be affected by advertising expenditures, simply because such
expenditures aft as large as they are. Similarly, the methodology used by the TSB was to
compare trends following imposition of 2 ban in the ban countries with trends in non-ban
countries. but no account was taken of the trends in the ban countries before the ban took
place, *which is of course crucial information: "
Many conclusions therefore were based on misleading and, in some cases, self-
contradictory data.' The key conclusion of the report was that tobacco cousumption has
declined Snore rapidly in 'total ban' countries than in non-ban countries. This conclusion,
however, hinged on classifying a single country. Portugal, as a 'total ban' country and
including the supposed decline in tobacco consumption in Portugal in the overall decline in
onsumption in 'total ban' cninuries. But Portugal was misclassilied as a 'total ban' country.
:
nd consumption in Portugal has not declined. If Portugal is not counted as a 'total ban'
country, that category does not show a more marked decline in tobacco consumption than
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CONSENT JuDamENT DATED 518W IN SrATE OF Aftwssou, ET AL V. PMLP MORRIS, ET AL. CASE No. C1444MS
non-ban countrim and the key conclusion of the TSB report is invalidated. because of the
selective use of data as well as serious methodological shortcomings, the TSB's conclusion
cannot be considered valid.
Given the evidence, it is not surprising that the Quebec Superior Court recently
struck down as unconstitutional the 1988 Tobacco Products Control Act. which severely
restricted citarette advertising in Canada." The Court found 'no rational connection'
between the means chosen and the legislation's objective of reducing smoking. 'There is no
eviderrice that advertising as such entails a danger to public health,' the Court observed. 'As
Aristode said, the word *doir never bit anyone:"
The Canadian Court. which considered all of the data an this issue, including the
TS1 Report, concluded that neither the TSB Report not any scientific document
derracinstrates that a ban on advertising would affect consumption. Specifically with regard
to the TSB Report, the Court dismissed this much-tooted document with the observation
that it contains serious methodological errors and a lack of scientific rigor which renders it
for all intents sad purposes devoid of any probative value."
In summarising the available scientific evidence on whether advertising bans reduce
tobacco consumption, the Court therefore was left with little choice but to conclude that
Iche evidence of a rational connection between the restrictions and the objective sought is
deficient, if not non-existcat.'
A.
Ai
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CONSENT JUOGMNT DATED 5/8M IN STATE OF DEP0SffORY COPY PRODUCED PURSUANT TO VILD. OF
PAAMSOTA, ET AL V- PHILIP MORRIS. ET AL, CASE No. C1 4m4MS
BRITISH-AMERICAN TOBACCO COMPANY LIMITED
&M"M. K-L.6.44- ST-00TWOOIDT UK
B.A.T lNousTRiEs P.L.C. - MimEsOTA DEposffoRy COPY - PRODUCED PuRsuANr To I VILD. OF
CONSENT JUDGMENT DATED NOW IN STATE OF MINNESOTA, ET AL. V. PNLP AfORRIM ET AL. CASE No. Cl-9441565