How effective is an EU ban on tobacco advertising likely to be for reducing smoking? What measures could governments take to bring about a significant reduction in smoking?
Theban on tobacco advertisement imposed by the EU has not done much incurbing smoking as expected. This is because most tobacco companiesin Europe had already established brands, which do not rely onadvertisement. Although the rate of smoking has declined in developedcountries such as in Europe, more women are getting into smoking,which is advantageous for tobacco companies. The companies have alsobeen able to promote their brands through other channels other thanadvertising such as collaboration between BAT and Ministry of Soundto promote its Lucky Strike brand. The only way that the EU wouldhave achieved tobacco use reduction is through imposing significantlyhigh taxes on the commodity making it unappealing for novice smokers,such as teenagers, considering that smoking habit develops inteenage. In addition, compelling tobacco companies to takeresponsibility for the health of smokers through insurance can reducesmoking (Cummings, 2002).
What factors could explain a booming share price at the same time as Europeans` attitudes toward smoking are becoming more hostile?
Tobaccocontains nicotine which is addictive. As such, with all the hostilitythe EU has shown towards tobacco companies, there is very little thatcan be done for consumers to withdraw their smoking habit (Cummings,2002). In addition, during difficult economic times, job loss andother frustrations that come with economic crisis positively affecttobacco companies as most people turn into smoking.
How would you defend a western tobacco company in its attempts to develop the Chinese market for cigarettes?
First,there is minimal regulation on tobacco use in the Chinese market thanin the EU, which makes it easier for a company to grow. However, thehigh import duty of 240% in a market dominated by state owned PagodaCompany, controlling about 98% of the market share is a challenge.Even though, there is high demand for foreign brands, which westerncompanies can leverage on. The Chinese market is also vast ascompared to other markets in terms of volume. For instance, everyyear the Chinese smoke 1.7 trillion cigarettes as opposed to 77billion cigarettes in the UK.
Cummings,M.K. (2002). Programsand policies to discourage the use of tobacco products,Oncogene,21(48), 7349-7364.