Pricing as a CSR Tactic

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At times tobacco companies have tried to portray their actions as part of being ‘responsible’ corporations.

This is illustrated by BAT’s activities in New Zealand and Australia in 2010-11.

In 2010, British American Tobacco New Zealand proposed fixed minimum tobacco prices. It made the case that this could prevent tobacco companies competing on price, and thus prevent them attracting children via cheap prices.1 This was framed as a way to protect children from smoking. It was sanctioned by David Crow, then CEO of BAT Australia and a Director of BAT in New Zealand.

Corporate Social Responsibility initiatives are used by the tobacco industry to help avoid effective regulation, by proposing voluntary measures or minor policy changes.

The New Zealand parliamentary select committee rejected fixing a minimum price on the grounds that an aggressive tobacco tax regime was a more appropriate answer. Minimum prices help increase industry profits but do not increase public revenue. An effective tax regime will bring public health benefits while simultaneously benefiting public (rather than just the industry) finances.23

A press conference in May 2011 confirmed that the company  was not serious about the minimum price proposal. BAT threatened to flood Australia with half-price cigarettes and make the government liable for billions of dollars in compensation if forced to remove branding from cigarette packets. The Australian Daily Telegraph quoted Crow saying:

“When you look at the four Ps (product, price, place and promotion), pricing’s the big one and that’s the only one we have left. We will end up fighting on price.”4

He went on to say that the cheap prices:

“basically means more people will smoke, more kids will smoke (…) It’s going to backfire and go bad and lead to more people smoking, which is just mad if you’re sitting at a government desk”.4

Australia’s Health Minister Nicola Roxon dismissed BAT’s claims as baseless, saying: “Big tobacco are fighting to protect their profits, but we are fighting to save lives.”4

TobaccoTactics Resources

For a comprehensive list of all TCRG publications, including research that evaluates the impact of public health policy, go to TCRG publications.

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References

  1. ↑ASH New Zealand, BAT NZ presentation to Maori Affairs Select Committee, March 2010, accessed March 2012
  2. ↑3news Radio, Smoking inquiry launched, Harawira wants total ban, 8 March 2010, accessed July 2011
  3. ↑Inquiry into the tobacco industry in Aotearoa and the consequences of tobacco use for Māori, Report of the Māori Affairs Committee, November 2010, Presented to the House of Representatives
  4. ↑abcThe Daily Telegraph, We’ll flood the market with cheap tobacco, says British American Tobacco chief, 17 May 2011, accessed July 2011

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