british american tobacco p.l.c. sustainability report 2011 - How we market our products

 
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Sustainability Report 2011

Like any business, we want to grow our market share. But we do this responsibly, not by trying to increase the number of smokers or how much they smoke, but through competitive and innovative product offers to encourage existing adult smokers to choose our products over our competitors.

How we market our productsWe apply a consistent, responsible approach to marketing across the Group by requiring our companies to follow our International Marketing Standards (IMS) wherever local law is less stringent. Our IMS state that our companies’ marketing should be targeted at adult tobacco consumers and not undermine their understanding of the health risks.

Until now, our companies’ adherence to IMS has been monitored through self-assessments and as part of internal company audits. We have now introduced additional IMS-specific on-site audits in selected markets. In 2011, 21 incidents of non-adherence were identified. These included the size and position of health warnings on promotional items; insufficient age verification during promotional activities; and the use of video in a non-age-verified environment. We believe these to be isolated incidents and actions are being taken to address them, but they highlight the need to continually reinforce the Standards and monitor our companies’ adherence closely.

We took management control of our company in Indonesia in January 2010 and planned to achieve full IMS adherence by March 2012. However, this target has not been met.

We have always stated that IMS should be applied in full where local regulation is less strict and that we will accept the competitive disadvantage of doing so. However, in the case of Indonesia this has not been possible. While we comply with Indonesia’s light regulation, implementing our IMS without other industry players following similar standards would be a severe threat to our relatively new and small business there.

There is much disagreement within the industry in Indonesia about what sensible tobacco regulation should look like. So we are engaging with other tobacco companies and the Indonesian Government on implementing stricter regulations to ensure a level playing field and hope to reach an industry consensus.

This has been a difficult decision to take and one we understand many of our stakeholders will disagree with. But we commit to resolving the situation as soon as possible and to keeping stakeholders informed of our progress.

Youth smoking prevention

We have a global approach to youth smoking prevention (YSP). In countries where there are no laws stopping retailers selling tobacco products to under 18s, we expect our companies to encourage governments to adopt them. Where minimum age laws do exist, our companies are expected to raise retailers’ awareness of them. We also require our companies to measure the reach, coverage and, where possible, effectiveness of their YSP activities.

Following the launch of our global approach to YSP, we found that it could not be applied in certain countries that are politically unstable; have regulation prohibiting our preferred YSP activities; or where we operate through a distributor and have no employees in the country to implement the approach. In total, markets representing only 10 per cent of our sales volumes fell into one of these categories. These markets will be reviewed annually to monitor changing situations.

Of the reporting markets that are currently able to implement our YSP approach, 96 per cent stated they were compliant in 2011. The remaining non-compliant markets are expected to achieve adherence by the end of 2012.

RELATED INFORMATION

ASSURANCE COMMENT FROM ERNST & YOUNG LLP

In 2011, British American Tobacco carried out internal audits in 16 markets to monitor compliance with the Group’s International Marketing Standards (IMS). Although an increase in the number of non-compliance incidents was identified compared to the two previous years, these had varying degrees of severity and only a few raised concerns about control issues. We have seen evidence of work undertaken to develop guidelines that further clarify IMS and British American Tobacco will need to continue to reinforce the Standards across the Group and monitor adherence.

OUR COMPANIES' YOUTH SMOKING PREVENTION ACTIVITIES IN 2011

  • 16% of our reporting markets stated they have no minimum age law of 18 for tobacco sales in place, 86% of which are engaging with stakeholders for its introduction.
  • 73% reported running youth smoking prevention programmes, spending a total of £4.7 million.
  • 88% of these programmes are focused on retail youth access prevention.
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