ASSOCIATION OF MARKETERS
COMMENTS ON THE TOBACCO PRODUCTS CONTROL AMENDMENT BILL
The Association of Marketers (ASOM) represents the major marketers and advertisers in South Africa and has 188 members (membership list attached). Our members are responsible for 82% of the total above-the-line advertising spend in South Africa.
We are gravely concerned about certain aspects of the Tobacco Products Control Amendment Act recently approved by Cabinet and we urge the Minister to re-consider the Act.
We wish to stress that our concern does not arise out of a desire to lobby on behalf of the tobacco industry, but we believe that the Act, if passed as proposed will have far-reaching and negative effects on the whole marketing and advertising industry in this country and on the economy as a whole.
Our Constitution enshrines the right to freedom of speech which includes commercial speech or advertising. It also protects the right to give and receive information. We firmly support the tenet that if a product is legal then it has the right to be promoted responsibly and that consumers have the right to information in order to make informed choices. This applies to all products.
We share the Minister's concern relating to under age smoking but doubt whether her proposed total ban on all types of legitimate communication by tobacco companies will have the desired effect. Experiences from around the world have, without exception, failed to demonstrate a decline in youth smoking in countries which have enacted advertising bans. In fact, in some countries the converse has been the case.
What is required to prevent youth smoking is education coupled with an increase in the age at which cigarettes may be purchased and effective enforcement of this regulation.
At present all tobacco advertisements carry a health warning equal to 10% of the advertisement. Should all advertising be banned this method of warning the population against the dangers of smoking will be lost to the Minister. On a conservative estimate the cost of purchasing tile same space in media as is utilised by the warnings would be R13 000 000 per annum.
The Act seeks to ban all use of 'tobacco trade marks' on any product other than tobacco. This has far reaching effects and is in contravention of aspects of international intellectual property treaties to which South Africa subscribes.
In addition, the Act will unlawfully remove intellectual property rights belonging to third parties who are not and have no connection whatsoever with tobacco companies. An example of this is Albany: this is a tobacco trade mark. It is also used by Nestlè as a trade mark for chocolate and by Albany Bakery as a trade mark for bread. Both of these uses will be unlawful in terms of the Act.
It is our sincere belief that the Act will have severe and negative impact on the economy and on various business sectors. Financially the tobacco industry will not be the first to suffer -an advertising and sponsorship ban will not result in a dramatic, over-night drop in tobacco consumption and sales. If in fact such a ban has any effect on total market consumption, it will take place gradually over a number of years.
However, such a ban will have an immediate affect on advertising agencies, all forms of media, production houses, sporting and cultural codes etc. It will have a ripple effect through the whole communications industry which we believe may not have been anticipated or taken into account when drafting the Amendment Act.
The question must be asked - Can the South African economy afford to have close to R500 000 000 taken out of it?
This figure, which is believed is conservative, is arrived at as follows (December 1997 estimated figures)
Tobacco advertising spend - R196 000 000
direct to sporting codes: R 64 000 000
leveraged advertising & promotions: R 53 000 000
Broadcast rights: R 10 000 000
Below the line: R100 000 000
Production costs: R 58 000 000
R481 000 000
Included in this is commissions payable to advertising agencies which total close to R16 824 000.
It will also mean a loss of R2 000 000 from the Marketing Industry Trust. This represents the total funding of the Advertising Standards Authority.
Companies will go out of business (advertising agencies and print houses - not tobacco manufacturers), media will suffer - smaller newspapers and magazines may have to close down, jobs will be lost. This will result in flintier revenue losses to government in lost taxes.
We are aware that the argument advanced above is often countered by the claim that 'other' advertisers or sponsors will be found to replace tobacco and therefore the media, sporting codes etc, wilt not suffer. Unfortunately this is a fallacy.
Yes, it is true that some of the more prestigious sponsorship events or advertising positions may be taken up - but at a cost elsewhere. It is true that Standard Bank took over the Benson & Hedges cricket, but it only did so by using money from within its existing sponsorship or marketing budget. This was not 'new' money that suddenly became available. The marketing 'pie' is only so big - companies will take over certain events but only by diverting budget funds from elsewhere, often from developmental or grass roots level.
Our members - South Africa's major advertisers - all operate with limited marketing budgets. The total amount available for advertising and sponsorship is finite. There is no shortage of advertising space - all media have available inventory. The mix may change but the total available funds remain R7 500 000 000.
We are also concerned by reports in the media that certain government Ministers have already been obliged to make statements that certain aspects of the Act "will not be implemented -one example relates to the question of the future of a possible International F1 Grand Prix race in South Africa.
We question -
- the legality of the Minister being able to 'selectively' enforce sections of the Act. To our mind this is ultra vires;
- the wisdom of passing poorly drafted legislation which is deemed necessary to start 'amending' by press release even before it becomes law.
On behalf of our members we strongly urge the Minister of Health to reconsider the Tobacco Products Control Amendment Act as currently drafted in light of the severe impact that it will have on the economy of the country.
We request the Minister to engage in a process of open consultation and co-operation with ourselves and other stakeholders in the communications industry to work towards a policy of balanced and reasonable tobacco control (and indeed for other products as well).