What role do harm reduction products play What role do harm reduction products play in tobacco industry strategy?in tobacco industry strategy?

Geoff Ferris WayneGeoff Ferris Wayne

Harvard School of Public HealthHarvard School of Public Health

Center for Tobacco RegulationCenter for Tobacco Regulation

U Maryland School of LawU Maryland School of Law

April 20, 2007April 20, 2007

Context–the current marketContext–the current market

• Long term declines in US but continued growth Long term declines in US but continued growth internationallyinternationally

• Market consolidationMarket consolidation• Strategic acquisitions targeting new populations Strategic acquisitions targeting new populations

and markets and markets – Altria Altria Sampoerna (2 Sampoerna (2ndnd largest producer of cigarettes largest producer of cigarettes

in Indonesia, primarily kreteks)in Indonesia, primarily kreteks)

– RAIRAI Conwood (2 Conwood (2ndnd largest smokeless manufacturer in largest smokeless manufacturer in US, other cigarette companies following suit)US, other cigarette companies following suit)

Context–the current marketContext–the current market

• Accelerating movement toward regulatory Accelerating movement toward regulatory oversight, as well as greater coordination of oversight, as well as greater coordination of strategies and approaches (e.g. via FCTC/ WHO)strategies and approaches (e.g. via FCTC/ WHO)

• Heightened public awareness of health burden of Heightened public awareness of health burden of tobacco tobacco

• Heightened public mistrust of industryHeightened public mistrust of industry• Greater vulnerability in litigationGreater vulnerability in litigation

Response by manufacturers: emphasis on Response by manufacturers: emphasis on perceived corporate social responsibility and perceived corporate social responsibility and public image, dialogue and cooperationpublic image, dialogue and cooperation

Context–brand developmentContext–brand development

• Brand proliferation, particularly by expansion of Brand proliferation, particularly by expansion of popular brands (Marlboro, Camel) into new line popular brands (Marlboro, Camel) into new line extensionsextensions

• Flavored products Flavored products – KOOL Smooth FusionsKOOL Smooth Fusions

Midnight Berry, Caribbean Chill,Midnight Berry, Caribbean Chill,

Mocha Taboo, MintrigueMocha Taboo, Mintrigue

– Exotic CamelExotic CamelMandarin Mint, Twist,

Izmir Stinger, Crema, Dark Mint

– Also: cigars, bidis, smokeless,Also: cigars, bidis, smokeless,

waterpipes, rolling paperwaterpipes, rolling paper

Context–brand developmentContext–brand development

• New conventionalNew conventional

delivery technologiesdelivery technologies– Filter pelletFilter pellet

• Introduction of newIntroduction of new

smokeless productssmokeless products– RAI RAI Camel Snus Camel Snus

– Altria Altria Taboka Taboka

– Smokeless line extensions of BAT cigarette brands Smokeless line extensions of BAT cigarette brands (e.g. Lucky Strike)(e.g. Lucky Strike)

• Reduced harm products/ PREPsReduced harm products/ PREPs

Some open questionsSome open questions

• What market considerations provide the primary What market considerations provide the primary motivation behind development of PREPs?motivation behind development of PREPs?– Threat of litigation or anticipated regulationThreat of litigation or anticipated regulation

– Need to expand or develop new marketsNeed to expand or develop new markets

– Competition among manufacturersCompetition among manufacturers

• Are PREPs different from other industry product Are PREPs different from other industry product innovations?innovations?

• Are PREPs developed in response to the same or Are PREPs developed in response to the same or different market considerations from other different market considerations from other product innovations?product innovations?

One approach to answering these questions is One approach to answering these questions is to study the industry:to study the industry:

• Market/ analyst reportsMarket/ analyst reports• Public statementsPublic statements• Internal documentsInternal documents• Trial testimonyTrial testimony

Analysis of industry trial testimonyAnalysis of industry trial testimony

• How PREPs are described or presented in How PREPs are described or presented in comparison to conventional cigarettescomparison to conventional cigarettes

• How market success or failure of PREPs is definedHow market success or failure of PREPs is defined

• How PREPs are described with respect to their How PREPs are described with respect to their potential “safety” or potential for harm reductionpotential “safety” or potential for harm reduction

Do these change over time? (1996-2003)Do these change over time? (1996-2003)

Comparison to conventional cigarettesComparison to conventional cigarettes

• Language used to describe PREPs is more excited/ Language used to describe PREPs is more excited/ radical in earlier testimony than in later testimonyradical in earlier testimony than in later testimony

• Earlier testimony contrasts conventional products Earlier testimony contrasts conventional products with PREPs; later testimony tends to promote with PREPs; later testimony tends to promote similarities (continuum)similarities (continuum)

• In later testimony, difference is not a positive In later testimony, difference is not a positive attribute (i.e. “next generation”) but a negative attribute (i.e. “next generation”) but a negative (i.e. challenge to be overcome)(i.e. challenge to be overcome)

Market success and failureMarket success and failure

• Earlier testimony evaluates PREPs based on their Earlier testimony evaluates PREPs based on their market performance; later testimony avoids market performance; later testimony avoids evaluations of market failureevaluations of market failure

• Later testimony focuses on test markets as a vehicle Later testimony focuses on test markets as a vehicle for gathering information rather than as a means of for gathering information rather than as a means of demonstrating market acceptancedemonstrating market acceptance

• In later testimony, positive expectations are relied on In later testimony, positive expectations are relied on to provide a sense of progress despite the ongoing to provide a sense of progress despite the ongoing reality of continued market failurereality of continued market failure

Conclusions based on testimonyConclusions based on testimony

• At least some within the industry appear to have At least some within the industry appear to have been convinced early on that they were on the been convinced early on that they were on the verge of the “next big thing”verge of the “next big thing”

• Failures in market have curbed this enthusiasmFailures in market have curbed this enthusiasm• The new reality means protection of the The new reality means protection of the

conventional market is the primary concernconventional market is the primary concern• Introduction of PREPs is problematic because it Introduction of PREPs is problematic because it

begs the question:begs the question: If there is a radically different, safer alternative to If there is a radically different, safer alternative to

cigarettes, then why are cigarettes still around?cigarettes, then why are cigarettes still around?

Conclusions based on testimonyConclusions based on testimony

• So, the industry needs to position PREPs alongside So, the industry needs to position PREPs alongside and not separately from conventional productsand not separately from conventional products– Legitimizes the sale of conventional productsLegitimizes the sale of conventional products– Legitimizes (by association) conventional “harm Legitimizes (by association) conventional “harm

reduction” efforts (including low tar)reduction” efforts (including low tar)– Shifts responsibility for harm reduction from Shifts responsibility for harm reduction from

company to consumer, as an issue of market company to consumer, as an issue of market acceptanceacceptance

• PREPs remain in indefinite test market in order to PREPs remain in indefinite test market in order to support the illusion of “choice”support the illusion of “choice”

Another approach to answering questions Another approach to answering questions about PREPs is to study the products:about PREPs is to study the products:

• Market approachMarket approach

• AdvertisingAdvertising

• Physical and chemical analysisPhysical and chemical analysis

• Consumer responseConsumer response

• Market impactMarket impact

Marlboro UltraSmooth (MUS)Marlboro UltraSmooth (MUS)

• Test marketed in the US, specifically:– Salt Lake City, UT (Apr 2005)

– Tampa, FL (Apr 2005)

– Atlanta, GA (Apr 2005)

– As Marlboro Ultra Lights in North Dakota (June 2005)

• Uses a modified charcoal filter• Various configurations

SEM carbon slidesSEM carbon slides

MUS Carbon Bead and interior structure

Standard Charcoal Granule and interior

structure

Machine smoke constituent yields (intense)Machine smoke constituent yields (intense)

0

20

40

60

80

100

120

140

Nicotin

eTar CO

1,3

Butadien

e

Benzene

Toluene

Hydroqui

none

Rescorc

inol

Formald

ehyde

Acetal

dehyd

e

Naphthal

ene

Fluor

ene

Benzo(a

)pyr

ene

HCN Tota

l

Tampa

Salt Lake City

Per

cent

Yie

ld o

f C

onve

ntio

nal

http://tobaccodocuments.org/product_design/508026176-6283.html

Consumer sensory assessmentConsumer sensory assessment

Draw Effort

Mouth Full

Impact/ Kick*

Taste Amount*

Taste Quality*

Aftertaste Amount

Aftertaste Quality*

Mouth Drying

Acceptability*

Dashboard Findings: MUS vs. Ideal

-6

-5

-4

-3

-2

-1

0

1

2

Ideal

Irritation

* p<0.015

Perceptions of product messagingPerceptions of product messagingDemographics

Male (%) 35 % Age 34 yrs

Smoking History Daily smokers for 6 months or longer 93.9%

Perceptions of MUS Never heard of MUS 93.2%

Health effects compared to usual brand Less risk to health

More health risk

26% 56% 18%

Health rating compared to conventional cigarette (0 = no health risk, 10 = health risk of regular, FF cigarette)

8.1

MUS results in fewer cancer-causing chemicals Definitely/maybe yes

Don’t know Definitely / maybe no

19% 28% 53%

MUS useful for someone who wants to quit? Definitely/maybe yes

Don’t know Definitely / maybe no

26% 33% 41%

N = 147

Summary of findings for MUSSummary of findings for MUS

• Unique technology, but questionable value for harm Unique technology, but questionable value for harm reduction in comparison to conventional cigarettesreduction in comparison to conventional cigarettes

• Consumer response to MUS is not positive, low levels Consumer response to MUS is not positive, low levels of satisfaction and acceptabilityof satisfaction and acceptability

• MUS was not perceived as a safer product or as a MUS was not perceived as a safer product or as a quitting alternativequitting alternative

What was the objective for MUS?What was the objective for MUS?

• Why introduce a product that is clearly not ready for Why introduce a product that is clearly not ready for consumer acceptance?consumer acceptance?

• Why attach the Marlboro name to it?Why attach the Marlboro name to it?• Is this:Is this:

– Information gathering?Information gathering?– Stepping stone to a new product technology?Stepping stone to a new product technology?– Protection from litigation?Protection from litigation?– Positioning for potential regulation?Positioning for potential regulation?– Serious attempt at a competitive product introduction?Serious attempt at a competitive product introduction?

Putting it all togetherPutting it all together

• Given what we learned from testimony, MUS and Given what we learned from testimony, MUS and products like it may simply be intended to blur the products like it may simply be intended to blur the line between “conventional” and “reduced harm”line between “conventional” and “reduced harm”

• Proliferation of new products supports the Proliferation of new products supports the industry presumption that consumers are industry presumption that consumers are responsible for “choosing” harm reductionresponsible for “choosing” harm reduction

• This also defines the regulatory framework, in This also defines the regulatory framework, in which “safer” products are placed on the market which “safer” products are placed on the market within the context of a full spectrum of within the context of a full spectrum of conventional productsconventional products

Putting it all togetherPutting it all together

• Recent market acquisitions and product Recent market acquisitions and product innovations suggest continued expansion into innovations suggest continued expansion into alternative tobacco products and technologiesalternative tobacco products and technologies

• The objective of these product innovations is to The objective of these product innovations is to support and expand the current marketsupport and expand the current market– Smokeless productsSmokeless products negate impact of indoor air laws negate impact of indoor air laws

– Flavors/ kreteksFlavors/ kreteks develop alternative starter products develop alternative starter products

• At least from the industry’s perspective, there is At least from the industry’s perspective, there is no magic harm reduction bullet on the horizonno magic harm reduction bullet on the horizon

ConclusionsConclusions

• What lessons can we take from this?What lessons can we take from this?– Eliminate the false continuum of “less safe” to “safer” Eliminate the false continuum of “less safe” to “safer”

productsproducts

– Place the burden of harm reduction on manufacturer, Place the burden of harm reduction on manufacturer, not consumer “choice”not consumer “choice”

– Limit expansion of products in market and Limit expansion of products in market and development and use of new technologiesdevelopment and use of new technologies

• Harm reduction products must be evaluated on the Harm reduction products must be evaluated on the basis of their viability as a serious alternative/ basis of their viability as a serious alternative/ replacement to conventional productsreplacement to conventional products