Wednesday, 9 October 2013

Day 172: Asked and answered. (Again)

For the second day in a row, Imperial Tobacco called one of its former senior marketers to testify in its defence at the Montreal Tobacco trials. For the second day in a row, the witness was someone who had already testified at length at this trial -- and for the second day in a row their testimony greatly resembled what they had said before.

But today there were no surprises about the lack of surprises!

Imperial Tobacco counsel, Craig Lockwood, began by warning Justice Riordan that "there will be repetition of some issues that have been raised previously." Justice Riordan smiled as he relaxed the usual rules against rehashing testimony, inviting the plaintiffs to put a blanket objection on the record.

But that is not to say that there were no differences between the answers that Ed Ricard gave today and those he provided during the 7 days he testified in 2012!  His memory of documents and events, for example, seemed much sharper than it had been when questioned by the opposing side. And his concerns for the confidentiality of Imperial Tobacco's secret research has also apparently abated.

(Last year Mr. Ricard was part of a failed attempt by Imperial Tobacco's lawyers to prevent the public release of several marketing documents. Today the same legal team ironically volunteered more information from the CMA research surveys they fought to keep secret - i.e. Exhibit 20298.)

Mr. Lockwood asked many of the same questions put yesterday to the more animated and loquacious Mr. Kalhok. The side-by-side comparison emphasized the highly polished witness skills of Mr. Ricard.

"Who is the target of imperials marketing initiatives?"
"Adult smokers. Smokers who are 18 years and over."

"Did you ever target non-smokers?"
"No, I did not."

"What was the purpose of marketing?"
"To grow our market share. To improve market share on an annual ongoing basis and to increase the value of our brand."

You get the picture!

The recapitulating (but not capitulating) Ed. Ricard:

Non smokers were of no interest to ITL. Mr. Ricard explained that there was no business case to be made for targeting marketing to non smokers in the face of "a tidal wave of anti smoking sentiment." "We knew we would get a better return in investment on something we knew how to do and that we were equipped to do – to grow market share. We did not have information or expertise to try to influence such established fundamental trends." 

Starters were of little interest to this tobacco company, except as data for its long term forecasting. "We ran across starters in our information gathering in response to our questions on brand usage and whether they had a previous brand." There was much more money to be made by focusing on switchers than starters -- "20 times more brand switching than starting."  (Exhibit 20298)

The company did not try to influence quitters. The decision to quit stemmed from social pressure, health concerns and cost. These "were not things we could address in any meaningful way."

Light cigarettes were not a device to stall quitting. "The introduction of light cigarettes was in response to a consumer trend. .. Consumers were already looking for milder products." And they certainly were not promoted as safer, although admittedly "there was a certain percentage of people who viewed light cigarettes as potentially healthier."

No health claims were ever made for ITL products, including light cigarettes. Consumers understood that "the term light in and of itself was a relative term." Proof of this was offered in the comparison of the perceived strength of brands and the actual machine tar yields. (Exhibit 2030020300.120301).

Plans to move away from focusing on brand share went nowhere. What then about exhibits that show ITL marketing executives reflecting on how to reach pre-starters or to get quitters to start smoking again - like Exhibit 1110? Mr. Ricard explained this memo was written by the intellectually curious Mr. Bexon when he was between positions and had a lot of time on his hands. "He spent a lot of time in 84 reflecting and philosophizing about the industry... Thinking outside of the box - he was a big proponent of that."  

The major project spearheaded by Bob Bexon, which was aimed at establishing whether the trend away from smoking could be reversed (Project Viking) had concluded "that nothing could be done."  The question was never revisited.

The company was not responsible for the views of contractors. Research firms engaged by ITL were "not constrained" in what they submitted, but "often they lacked context or complete information.... we did not blindly accept what they had to say." 

Mr. Ricard said that ITL did not target youth
Their market research firm must have got it wrong
Exhibit 520-CRY27
It was the outside supplier, for example, who thought up the name and design of the Youth Target survey. Although these and other ITL reports on youth carry the label CRY (which has been thought to mean Consumer Research Youth), Mr. Ricard said he had never heard such a term while working at the company. He thought perhaps it had been coined by the Library staff.
Even internal ITL research findings should not be taken at face value -- such as the long term measurements of how many smokers believed that smoking was harmful.

Although the company paid for these questions to be asked twice a year, the results were understood to be "not a good measures of magnitude of anything." Because they were unreliable in this way, the supplier had proposed changing them, but a decision was reached to keep them the same so as to better compare trends over time.

Nicotine was never an issues for smokers, said Mr. Ricard. "They compared brands based on the tar level." And "satisfaction?" - consumers understood that only to mean a cigarette that they liked. The company never used nicotine as a metric to guide their product development.

Older smokers are worth more to tobacco companies than younger smokers.  Smokers were less likely to switch brands as they got older (Exhibit 20299) so recruiting them when they were "25 was better than [when they were] 18."  Because smokers increase the number of cigarettes they use per day during middle age "it is the 35-49 demographic that drives the volume." 

Underage smokers had little to offer the company compared with older smokers, he said. The "15 to 19 year old smokers represented less than 6% of the total volume of sales" - and most of those were taken up by those who were of legal age to smoke.

The decision to drop raise the ages of survey respondents for the company resulted from political pressure by the Non-Smokers' Rights Association and others (Exhibit 20302). Mr. Ricard saw this change as a major compromise to the value of the multi-year data collection.  "We lost a lot of the usefulness and value of the information." But even though this change made no difference to how they marketed, "our president, Don Brown, was insistent. He did not want to deal with this any more."

The company did the best it could to prevent children from smoking. Children under 16 or 18 might have purchased kiddy packs, or seen advertising billboards, or purchased cigarettes - but these marketing activities were never intended to reach youth. "We did the best we could. I don’t think [the measures in the voluntary code] were 100% effective. I know there was some exposure of our advertising - but I feel that we did what we could and put the steps in place to minimize that exposure."

"We would sometimes get proposals from our ad agencies for images that we would reject because we thought they were too appealing to youth." These, he said, were turned down - but intriguingly no documentary evidence of such a decision was presented.

The company took proactive measures to prevent youth access. "Project ID was an initiative to work with our retailers to make sure they did not sell cigarettes to children under 18."  This was no PR effort, he said - although "there may have been some positive public relations fall-out as a result of it.'

Brand share based on national sales is misleading. The companies failed to provide an historic brand share to Justice Riordan when asked, and the only version entered into evidence was one compiled by the plaintiffs.(Exhibit 1437) Mr. Ricard said that Imperial Tobacco's market share in Quebec was lower than the national figures, and that JTI-Macdonald's was higher. (Again, no documents were provided to support this).

By mid-afternoon, Mr. Lockwood had finished his questions. The decision was that there would be no cross-examination, and this witness left the stand  - for the eighth time .

Tomorrow, the plaintiffs will conclude their cross-examination of Gaetan Duplessis. Next week is a short week, with one witness from Imperial Tobacco on each of Tuesday (Mr. Wolfgang Hirtle)  and Wednesday (Mr. Neil Blanche).