british american tobacco p.l.c. sustainability report 2010 - How we market our products

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Sustainability Report 2010

International Marketing Standards

While we agree that the tobacco industry should be regulated, we want to be able to communicate with adult tobacco consumers about our products in a responsible way. This means ensuring that our marketing is targeted at adults and is not misleading about the health risks.

How we market our products

Our International Marketing Standards (IMS) give us a consistent, responsible approach to marketing across the Group. They were developed in 2001, building on our previous Advertising Principles, and updated in 2007. This approach is appropriate given the nature of the products we sell. The challenge for us is that some of our competitors do not always hold themselves to such high standards, which can give them a short-term competitive advantage.

Our IMS state that our companies' marketing should be targeted at adult tobacco consumers and does not undermine their understanding of the health risks. We adhere to our IMS wherever local law is less stringent. In 2010, 46 per cent of our companies reported that our IMS was stricter than local marketing regulation. Nearly half of these are lobbying for similar standards to be incorporated into local legislation.

In 2010, six of our companies reported instances of non-adherence to our IMS. Four of these were resolved so that by the end of 2010, all our companies, except those in Indonesia and Germany, reported full IMS adherence. The market in Indonesia is very lightly regulated and we comply with the law. However, we aim for IMS full adherence by March 2012, two years after taking control of the merged business. The non-adherence reported by our company in Germany related to the size of health warnings on some promotional items. A review of materials in use has taken place to ensure the display of health warnings is prominent.

Local adherence to our IMS is currently reported through an annual self-assessment exercise, monitored by our CSR governance bodies. We recognise the need to tighten controls, so from 2011 we will carry out IMS audits of selected markets in two regions each year.

External allegations

The University of Sydney’s 2010 paper ‘British American Tobacco on Facebook’ alleged various instances of our employees and business partners using Facebook to promote cigarette brands. It is not our policy to use social networking sites to promote our brands and our IMS include clear guidelines on age verification for any web advertising. We also have rules that our employees and business partners cannot post advertising material on user-generated content sites such as YouTube or Facebook. These rules represent the application of Group policies and standards in particular circumstances. However, with the content of the web being vast and ever-changing, no company can police it exhaustively.

A review found some of our brands to be present on these sites, believed to have been posted by the general public, consumers and some employees and contractors in a personal capacity, not by any of our companies. In the few cases where inappropriate material was found to have been posted on employees’ personal web pages, in breach of our IMS and Group internet rules, the individuals had by then already left the company. A communication was issued reminding employees of the Group’s internet rules and providing additional guidance.

Youth smoking prevention

2010 saw the roll-out of our global approach to youth smoking prevention (YSP). We expect our companies to engage with governments and third parties to encourage laws for a minimum age of 18 for tobacco sales where none exist or, where they do, to raise retailers’ awareness of minimum age laws. We also require our companies to measure the reach, coverage and, where possible, effectiveness of their activities.

Our aim was for all our companies to be fully aligned with the global approach by the end of 2010 and the majority of our largest markets, representing 85 per cent of our sales volume, were. However, this was not possible in most of our smaller markets, many of which operate in politically unstable environments or have regulation prohibiting our preferred YSP activities. In other markets, we operate through a distributor and have no personnel in the country to implement the YSP approach.

As a result of the global approach, our companies reported a 50 per cent increase in the total number of YSP programmes, from 62 in 2009 to 93 in 2010, spending a total of £4.8 million. 98 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 2010, our companies reported that in 36 countries where we do business, minimum age laws were either less than 18 or non-existent. In half of these countries our companies reported engaging with governments to advocate a minimum age of 18 for tobacco sales.

How we market our products: what's next?

In 2011, we will carry out IMS audits in selected markets in Europe. We will also review YSP in those markets that have yet to implement our global approach.

Comment from
Ernst & Young LLP

We have seen evidence of non-adherence to British American Tobacco’s International Marketing Standards being monitored by regional and Group CSR committees. We noted a significant decrease in the number of reported breaches since a review was last undertaken in 2008. From 2011, British American Tobacco will conduct annual internal audits in selected markets to assess whether local procedures to investigate and report breaches meet the requirements under IMS.

Comment from
Ernst & Young LLP

In 2010, British American Tobacco rolled out a global approach to youth smoking prevention. Despite a 50 per cent increase in programmes compared to 2009, nearly half of all local companies have yet to implement the global approach. It will be important for British American Tobacco to continue to monitor the markets that have yet to implement the new approach.