Ban of Tobacco Ads by the Government of India

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Case Details:

Case Code : BECG002
Case Length : 8 Pages
Period : 1981-2001
Pub. Date : 2001
Teaching Note : Available
Organization : Indian Tobacco Company Philip Morris
Industry : Food, Beverages & Tobacco
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"We should have no illusions about the seductive power of modern marketing techniques as a factor in why children and adolescents take up Smoking. This is an area where Governments have an especially important role to play..."

- Carol Bellamy, Executive Director, UNICEF.

"From an ethical standpoint, it would be wrong to try to cause people to take the risk of smoking.But even beyond the moral issue, for a product such as cigarettes well known to have serious health risks, it would be difficult even to understand how an advertising campaign could be devised to convince people to smoke."

- Brown & Williamson Tobacco Corporation.

Introduction

On Feb 6, 2001 Government of India (GOI) dropped a bombshell on the tobacco Industry when it announced that it would shortly table a bill banning Tobacco Companies from advertising their products and sponsoring sports and cultural events. The objective of such a ban was to discourage adolescents from consuming tobacco products and also arm the Government with powers to launch an anti-Tobacco Program.

This decision seemed to have sparked an intense debate, not just over the ethical aspects of Government's moral policing but also over the achievability of the objective itself. Reacting strongly against the proposed ban, Suhel Seth, CEO, Equus Advertising said, "The ban does not have teeth.

It is a typical knee-jerk reaction by any Government to create some kind of popularity for itself. The Legislation has not been thought thorough". In its reaction to the GOI's decision, ITC Ltd¹. announced that it would voluntarily withdraw from all of the sponsorship events, irrespective of the legal position on the subject.

The Ayes'

The ban was not unusual keeping in view the international precedents. Countries like France, Finland, and Norway had already imposed similar bans. Advocates of free choice opposed to these bans, saying these amounted to unwarranted intrusion by the state in the private lives of its citizens. But, others pointed out that the state had the right to intervene in the overall interest of the citizens. They cited the example of drugs like cocaine, which was, banned the world over.

In 1981, the Supreme Court (of Appeal) in Belgium gave its ruling that a ban on tobacco advertising was not unconstitutional.

In 1991 the French Constitutional Council declared that the French ban on advertising tobacco products was not unconstitutional as it was based on the need to protect public health and did not curtail the freedom of trade.

There were many precedents of restrictions being imposed on the advertising of dangerous or potentially dangerous products even if these products remained in the market (e.g. firearms, pharmaceutical Products).

According to the World Health Organisation (WHO), tobacco accounted for over 3 million deaths in 1990, the figure rising to 4.023 million deaths in 1998. It was estimated that tobacco related deaths would rise to 8.4 million in 2020 and to 10 million in about 2030.

There was an increasing fear that tobacco companies were inducing children and young people to begin experimenting with tobacco products, and in this way initiate regular smoking, as this held the key for the industry to flourish. Internal industry documents² released in the United States, described 14-24 year olds as 'tomorrow's cigarette business.'

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1] ITC was one of the biggest spenders on advertising spending about Rs. 185 crores (The tobacco industry on the whole, spent about Rs 276 crore in Year 2000) It was actively associated with various sports events. It sponsored the 1996 World Cup cricket tournament. The company promoted horse racing in India by sponsoring many Derby Classics. ITC extensively used cultural events to promote its brands across the country. ITC also sponsored stalls for Durga Pooja in West Bengal, Ganesh Pooja in Maharashtra, and for similar, popular festivals in other parts of the country.

2] Internal document from R J Reynolds, reported in Newsweek, 26th Jan 1998.