british american tobacco p.l.c. sustainability report 2009 - How we market our products

Adherence to our International Marketing Standards

Progress on actions from our 2008 review

In 2008, we reviewed how our companies were applying our International Marketing Standards (IMS) which had been updated with further requirements to be met in 2008. The assessment reported an adherence rate of 97 per cent but also highlighted some inconsistencies in the interpretation of the Standards. We spent 2009 addressing these issues, with progress monitored by our regional audit and CSR committees and updates reported to our Board CSR Committee. Examples of actions taken include:

• Our Africa and Middle East region banning the distribution to retailers of single cigarette display pots of any kind. The region also issued guidance stating that any price for single cigarettes displayed by retailers should only be in black and white, unbranded and together with the price of a whole pack.
• Internal webinars to provide clarity on IMS interpretation in key areas, such as consumer engagement and retail display.
• Internal guidance to clarify the sanctions that can be applied to retailers who sell tobacco products to underage consumers and the circumstances in which such sanctions might be imposed.

At the end of 2009 all actions to address issues identified in the 2008 review had been completed in all but two markets. Both are expected to be complete by mid-2010.

Adherence in 2009

In 2009, 12 companies reported a total of 15 instances of non-adherence to our IMS. Action plans were in place by the year end, with the aim of achieving full adherence in 2010.

In addition, the marketing activities of the business that we acquired in Indonesia in mid-2009, and where we took control in January 2010, do not adhere to our IMS. Indonesia is not currently a signatory to the FCTC and the market is very lightly regulated. Our plans to introduce IMS have been overtaken by proposed regulations from the Ministry of Health. However, we are committed to bringing our operations in Indonesia in line with our IMS as soon as is practical and will, of course, comply with any new regulations.

IMS and local law

Where our IMS are stricter than local law, we aim to encourage our companies to lobby governments for stricter laws and embodying standards similar to our own to create a level competitive playing field and to raise industry standards more widely.

In 2009, we again asked our companies to report on how the IMS compared to local law. Information was reported for 158 markets, representing 97 per cent of our sales volume. This showed that over 37 per cent of our global volume was being sold in countries where our IMS are generally stricter than local marketing regulations. Across 34 countries, covering 29 per cent of our global sales volume, our companies reported engaging with governments to promote standards similar to our IMS or advocating their incorporation into local regulation.

Youth smoking prevention

Our primary responsibility in the area of youth smoking prevention (YSP) is to ensure that our marketing is not aimed at the underage. In 2009, our companies also reported that they ran 62 YSP programmes, in 52 countries, covering 58 per cent of our sales volume, and spending a total of £4.4 million. More than 80 per cent of the total effort was focused on retail access prevention.

Most countries now have laws for a minimum age of at least 18 for tobacco sales. However, in 2009, our companies reported that in 47 countries where we do business, covering 18 per cent of our global sales volume, minimum age laws were either less than 18 or non-existent. In 23 of these countries our companies reported engaging with governments to advocate a minimum age of 18 for tobacco sales.

During 2009, based on a review of our current approach to YSP and the results of stakeholder dialogue, we reinforced our global approach, which is for our companies to:

• Engage with governments and third parties to encourage laws for a minimum age of 18 for tobacco sales;
• Raise retailers’ awareness of minimum age laws, for example through training; and
• Measure the reach and coverage of their YSP activities, and, wherever possible, measure their effectiveness.

Twelve companies in our largest markets will also run point of sale YSP campaigns consistent with our new global approach, and, wherever possible, measure their effectiveness. None of the consumer-facing materials should have company branding, except where required by law or third parties. Where our local companies are already involved in industry campaigns, we will encourage them to advocate a similar strategy.

The goal is for all our companies to be fully aligned with our global approach by the end of 2010. Companies that do not achieve this will be required to give their reasons to our regional audit and CSR committees and develop plans to move to the new approach where possible in the future.