How Marlboro Used a Network of Young Smokers to Skirt the Laws Against Tobacco Promotion

17 January 2016

The Juvenile Justice (Care and Protection of Children) Act 2015, which amended the Juvenile Justice Act of 2000, was passed in the winter session of the parliament in December 2015, and came into effect on 15 January 2016. The act allows juveniles between the ages of 16 and 18 years, charged with heinous crimes, to be tried as adults. It was passed amidst the public outcry that followed the release of the juvenile accused of the rape of Jyoti Kumar Pandey in 2012, and was widely criticised for being passed in haste.

The act also makes it illegal to serve children any tobacco products, alcohol, narcotic drugs, and psychotropic substances. The amendments make these offenses punishable by upto seven years in jail and a fine of upto one lakh rupees. The new law is the latest addition to many laws that govern tobacco products and their sale in India. Tobacco is one of the most regulated industries in the country, and promotion and advertisement of tobacco products is illegal. The strict laws make it harder for tobacco companies to access the market, putting them perpetually on the lookout for new ways to reach new customers. In this excerpt from her September 2014 story, Smokescreen, Nikita Saxena investigates how Marlboro, an international brand of cigarettes manufactured by the Philip Morris company, skirts the laws by leveraging a network of young smokers to promote their product, and offers these “brand ambassadors” considerable inducements to get their friends and peers to smoke with them.

Marlboro’s youth marketing programme, of which the connectors were a part, is something of an industry secret. It is little covered in the media, even though the workings of the brand and the entire tobacco industry are, at least notionally, open to public scrutiny. The Cigarette and Other Tobacco Products Act of 2003 is one of the most comprehensive laws ever enacted by the Indian government to check tobacco consumption. The COTPA prohibits smoking in public places, and the sale of tobacco products to minors; it also mandates, among other things, pictorial warnings on cigarette packs. Arguably its most formidable provision is Section 5, which prohibits almost all advertising or promotion of tobacco products.

This strict legal intolerance for tobacco promotion has put the industry perpetually on the lookout for ways it can still reach new consumers. The brand ambassador programme was one such method, helping bring Marlboro to the attention of young, hip smokers. And, for the duration of their participation, it changed the lives of the ambassadors themselves, who were offered considerable inducements to get their friends and peers to smoke with them. The secrecy that still shrouds the programme was effected in spite of its scale; for the first two years, Philip Morris India outsourced the logistics entirely to a Delhi-based company, Envisage Marketing and HR Solutions. In 2011, as the programme grew in scope and expense, it was handed over to a division of the advertising firm Leo Burnett India, the local chapter of the famous agency that designed the iconic “Marlboro Man” half a century ago.

Over the course of eight months, I spoke to over a dozen people who had participated in or helped organise the programme. I also met a number of lawyers and public-health activists battling the tobacco industry, and trying to counteract young Indians’ growing dependency on tobacco products, with all the health problems it entails. Activists told me India’s anti-tobacco legislation is as comprehensive as it is byzantine; but, they also pointed out, the government has largely failed to implement the laws in any sustained way. Several activists cast doubts on the legality of the programme when they heard of it. Repeated requests for clarification on the programme’s legal status from the companies involved produced either evasive answers, or outright denials of having done any wrong. One senior Philip Morris India official, who tried to convince me that this story was not worth my time, was happy to inform me that there were much larger violations of the law in the Indian tobacco industry—an indirect admission that the programme could not be said to obey the spirit of the law.

Between 1980 and 2012, the number of smokers in India grew from 74.5 million to 110 million, according to a 2014 study by the Washington DC-based Institute of Health Metrics and Evaluation. The IHME’s Global Burden of Disease report, released in 2013, also stated that a million Indians died every year as a result of tobacco use. Most consumers of tobacco in India use smokeless tobacco exclusively, or use smokeless tobacco in addition to smoking. This means that large tobacco brands capture relatively little of the market share. It also means that such brands have good reasons to increase the country’s absolute number of smokers—rather than converting existing smokers from one brand to another—as the most reliable way of raising their revenues.

A study released last year by the research firm Edelweiss found that 83 percent of India’s adult cigarette smokers picked up the habit between the ages of 15 and 25. Today, about half of India’s population is under 25 years old. It’s not hard to see why Marlboro decided to specifically target college students with a rewards programme that encouraged “social sharing.” Former connectors—also described as ambassadors, and, in later cycles of the programme as “brand associates”—all students or young professionals, remembered their time in the programme as a haze of parties and privileges. In a country where it is illegal to promote tobacco by linking it to the glamour of the high life, the programme, for a brief time, allowed the ambassadors to indulge in that life simply by asking others if they wanted a cigarette. By showing them how to party, Marlboro-style, the brand was able to promote its cigarettes while just skirting the boundaries of formally, commercially and thoroughly illegally advertising them.

BY ALL ACCOUNTS, the Indian tobacco industry is thriving. In the quarter ending in June 2014, Godfrey Phillips India, the company that partners with Philip Morris India in manufacturing Marlboros in the country, reported a 13.86 percent increase in net sales. Last year, a London-based market research firm found that Marlboro was India’s fastest-growing cigarette brand, and that its brand value in the local market between 2008 and 2012 increased by a staggering 330 percent. The British brand Benson and Hedges, which came in second, grew by a mere 113 percent in comparison.

And yet, Marlboro’s market share in India is just about half a percent, largely because it was a late entrant into a field dominated by native tobacco giants. Godfrey Phillips India, a joint venture between Philip Morris and the diversified KK Modi Group, produces popular local brands such as Four Square, Red and White, Cavenders and North Pole. ITC Limited, a Kolkata-based conglomerate, looms large over the industry—it makes Classic, Gold Flake and Navy Cut cigarettes, among others. A behemoth which began life as the Imperial Tobacco Company in 1910, ITC is not just India’s biggest seller of cigarettes; it also has interests in consumer goods, hotels, and information technology. Its cigarette business grew by 19 percent in the last quarter.

Marlboro was launched as an imported product in 2003, five years after the Indian cigarette market opened to foreign direct investment. (In 2009, the brand came under the control of a license agreement between Philip Morris India and Godfrey Phillips India.) While it may be easy to ascribe Marlboro’s rise in India to the overall growth in the tobacco market, the brand’s triple-digit growth, and the fact that its nearest competitor trails it by over 200 percent, makes it hard to attribute its success solely to a rising tide that lifts all boats. Interviews with officials and former employees at Philip Morris India never yielded clear answers about the correlation between the youth ambassador programme and Marlboro’s extraordinary success, but the amount of time and effort invested in it for a full six years imply that it was considerably important to the company.

A former programme manager and Leo Burnett India employee, on condition of anonymity, explained to me that ITC’s methods of dominating the market were impossible to emulate. Its equation with retailers around India was unbeatable; because of its comparatively low production costs, the company offered them the highest profit margins. The programme manager recalled that when Marlboro approached street vendors and stall owners in parts of north India, they were told point-blank that any special treatment, such as preferential placement of Marlboro products on shelves or displays, was out of the question. He attributed this to ITC’s ability to strong-arm shopkeepers. If anyone gave a non-ITC brand particular prominence, the company could simply withhold its own wares, and no vendors could afford to see Wills, Classic or Gold Flake cigarettes disappear from their shelves. I spoke to six vendors and stall owners in and around Delhi, who all said they gave ITC brands greater visibility. Two of them also admitted that they would not give Marlboro any preference because they feared being denied ITC products.

A number of the anti-tobacco activists I spoke to claimed that ITC’s ability to lobby politicians was also unmatchable. In April 2010, citing reasons of public health, the government again banned all foreign investment in the tobacco products market. This was a major blow to the ambitions of companies such as Japan Tobacco, maker of brands such as Winston and Camel, which withdrew from the country. But, a Delhi-based health activist claimed, the retraction was actually a consequence of ITC’s fervent lobbying with the health and finance ministries, meant to thwart attempts by its foreign investor, British American Tobacco (which currently has about a 30 percent stake in ITC), to become the majority stakeholder. The government’s selective use of the health card drew disapproval from both multi-national companies and critics of the tobacco industry. As several publichealth activists pointed out, domestic tobacco products were just as likely to injure consumers’ health as those sold by foreign companies.

This was the environment in which Marlboro, the world’s best-selling cigarette brand, set out to play catch-up. Its Indian adventure did not begin successfully. A former Leo Burnett official—not one who had doubled up as programme manager—told me that the “grey” market for counterfeit Marlboro cigarettes, routed into India via Nepal, Bangladesh and China, was then already well established. But the low quality of the fake Marlboros hawked to Indian smokers had damaged perceptions of the brand. The former Philip Morris India official concurred. By his account, changing this perception once the company started manufacturing in India was an arduous challenge. It needed to communicate, to both existing and potential consumers, that Indian Marlboros were authentic and of high quality—and it had to do so without violating the country’s plethora of regulations.

According to the former Philip Morris official, the ambassador programme was conceptualised when the company hit a dead end in trying to give its products prominence in locations classified as “point of sale”—which included places that were not just dedicated tobacco retailers, but had permission to sell tobacco. “There was a huge problem in marketing to nightclubs and pubs,” he explained, “because ITC is present everywhere, and it was almost impossible to get into these outlets. That’s when we ideated on the implementation of word-of-mouth marketing through a brand ambassador programme.”

In 2009, the company started an experiment with “seven to eight guys,” he said, and ran it for between eight and ten months. Happy to be able to “start conversations with legal-age smokers,” the company soon scaled the programme up. By some accounts, through 2010 there were sixty ambassadors each in Delhi and Mumbai, exerting their influence among their peers at Delhi University campuses, and at Mumbai colleges such as St Xavier’s and Jai Hind.

The programme ran in cycles of three to four months, and the size of each cohort varied from twenty to forty. The former programme manager remembered that they once even ran it with just four ambassadors. The 2009 pilot was designed and executed entirely by Philip Morris India, but later cycles were outsourced. When we spoke, the former Leo Burnett official called himself a “big fan” of the whole idea. He was responsible for running the project in Delhi and Mumbai in 2012, with fifty “campus ambassadors” and five team leaders, also called “programme managers,” in each city. Indian tobacco regulations, he explained, are “such that you can only reach the smokers, your audience, at the point-of-sale, where the interaction or time spent is very little.” This made it impossible to gauge customers. “You look at other cafes and pubs, where you tend to meet smokers. Again, the engagement is very small. So, how could you improve the quality of engagement? Now, a conversation with friends is more detailed, more open-ended. The other person is receptive. That’s the whole premise of the programme—how can we bring a brand into a friendly conversation?”

Nikita Saxena is a staff writer at The Caravan.

Keywords: Delhi University Marlboro youth ambassadors Juvenile Justice Smoking