Tuesday, 10 April 2012

Day 13 - Marketing Reassurance

After a long Easter weekend, the Montreal tobacco trials resumed this Tuesday with yet another former senior manager from Imperial Tobacco (ITL) on the witness stand. This time, testimony was offered by a former Vice President of Marketing, Mr. Anthony (Tony) Kalhok.

A new witness was not the only change in the line-up of courtroom principals. On the plaintiffs' side, André Lespérance (of Lauzon Bélanger Lespérance, which represents the Quebec Council on Tobacco and Health) lead the questioning for the first time since the trial began. On the industry’s side, Craig Lockwood (of Osler, Hoskin and Harcourt, which represents Imperial Tobacco) took over from his colleague, Deborah Glendinning, in playing defence against the introduction of documents into evidence.

Perhaps the long weekend had a mellowing effect, or perhaps the cache of chocolate Easter eggs at the back of the court room sweetened the mood. For whatever reason, the atmosphere in the court was mellow compared with previous sessions, and the proceeding flowed with fewer interjections.

Mr. Kalhok gave the impression of someone whom the years have treated well.  Dapperly dressed in a business suit, he stood, moved and spoke apparently comfortably as he was questioned about his work activities more than 30 years ago. 

Mr. Kalhok worked at ITL and its holding company (IMASC0) for around 2 decades, from the mid 1960s to the mid 1980s (after which he left to work at Labatts Brewery). 

Mr. Lesperance centred his questions today around the period 1975 to 1979 when Mr. Kalhok was Vice President of Marketing for Imperial tobacco. He focused on the role of Mr. Kalhok and the marketing department in the development policies on “smoking and health,” and in particular in the strategies promoted by Mr. Kalhok to respond to smoking and health concerns with new marketing approaches.

The first new document introduced to Mr. Kalhok was a paper Mr. Kalhok coauthored with his BAT colleague, P.L. Short after the two gentlemen travelled around the world on behalf of BAT to investigate the situation with respect to smoking and health issues in BAT companies. (Exhibit 113). Mr. Kalhok explained that the trip had been an attempt to understand the different circumstances in various countries a decade after the U.S. Surgeon-General’s and other reports about smoking caused disease.

"Shielding the consumer from attack"

After their trip, Mr. Kalhok and Mr. Short presented their findings to the top management of all  BAT companies at one of the biannual BAT-wide CAC (Chairmans Advisory Council) meetings. The marketers predicted that the negative pressures on smokers would lead to a decline in smoking. Among their recommendations were marketing activities “directed specifically towards maintaining the smoking habit at current levels, and if possible to increase those levels.”

This approach was a departure from traditional tobacco marketing at the time, Mr. Kalhok told the court. “The traditional view was only to increase market share – to steal from our friends, as it were.”  But the worsening environment towards smoking was causing a change in focus.  "Smokers were getting hit left, right and centre," he said. "Kids were coming home and taping closed cigarette packages"  As a marketer he had a "responsibility to generate sales", but realized that sales would "continue to decline unless some of the pressures are removed off the smoker."

Other documents entered into evidence today traced Mr. Kalhok's success in gaining support for a new approach of shifting focus on gaining market share from other companies to maintaining the market by supporting smokers with "positive" messages. These include:

  • A memo Mr. Kalhok wrote to his staff and colleagues in 1976 (Exhibit 114) to “develop recommended proposals primarily in the area of countering the effects of social unacceptability.”
  • His recommendations that BAT companies work together on research to better understand “smoker compensation,” to improve social acceptability of smoking and to “re-assure the smoker about the smoking habit” (Exhibit 115).
  • Minutes of meetings held by his marketing department (Exhibit 116), in which specific activities by the Industry and companies were identified to offer positive messages and alternative products to smokers.
  • Minutes of an 1976 ITL meeting (Exhibit 117) which endorsed the recommendations of the Kalhok/Short paper.
  • Acceptance by BAT companies to “a new policy for marketing”, using “positive” and “explicit” messages regarding smoking and health to reassure smokers, and his role in developing a strategy to research smokers' attitudes. (Exhibit 123)
Researching smokers' behaviour and attitudes

At the outset of the day, Mr. Kalhok explained that he had graduated in mathematics and physics, and had brought to the marketing department a focus on "statistically valid" research.   He described one of the research tools used by Imperial Tobacco -- 8M (also known as CMA), a regular survey of 8,000 Canadians conducted by the polling firm Canadian Facts, and acknowledged that this survey instrument tracked beliefs about smoking and health.

The relationship between smokers and their cigarettes (and their willingness to buy new products) was another area of focus for Mr. Kalhok during his period at Imperial Tobacco. Mr. Kalhok explained that smoking behavior was researched by the company by strapping monitoring devices to smokers for a lengthy period to track their actual smoking behavior.

Mr. Kalhok was questioned extensively today about his own understanding of smoker compensation and about research within BAT and ITL on this subject. He recalled that “there was no way” that smokers would be willing to switch to cigarettes which provided much lower tar and nicotine yields “since they could not compensate for such a large change.”

Although at times he did not appear to agree with Mr. Lespérance’s characterization of smoker compensation, he ultimately conceded that "smokers change smoking behavior when given a cigarette that is different than what they are used to … They smoke differently.”

The causality question

Towards the end of the day, Mr Lespérance turned to a theme of questions raised with other witnesses – the position of ITL and of its senior management with respect to the harms of smoking.  He recalled an earlier exhibit in which BAT scientist Sidney Green had characterized the public position of tobacco companies regarding smoking and disease as “dominated by legal considerations” (Exhibit 29). This version of the report has a handwritten note on the front penned by Mr. Kalhok more than 30 years ago. “Your department already has two copies of this report. Thought I would leave you this in case you couldn’t find the other. It gives a good approach to 'safety'."

Examination of Mr. Kalhok will resume tomorrow, Wednesday April 11.