Alliance between tobacco and alcohol industries to shape public policy

Abstract

Aims

The tobacco and alcohol industries share common policy goals when facing regulation, opposing policies such as tax increases and advertising restrictions. The collaboration between these two industries in the tobacco policy arena is unknown. This study explored if tobacco and alcohol companies built alliances to influence tobacco legislation, and if so, how those alliances worked.

Methods

Analysis of previously secret tobacco industry documents.

Findings

In the early 1980s, tobacco companies started efforts to build coalitions with alcohol and other industries to oppose cigarette excise taxes, clean indoor air policies, and tobacco advertising and promotion constraints. Alcohol companies were often identified as a key partner and source of financial support for the coalitions. These coalitions had variable success interfering with tobacco control policymaking.

Conclusions

The combined resources of tobacco and alcohol companies may have affected tobacco control legislation. These alliances helped to create the perception that there is a broader base of opposition to tobacco control. Advocates should be aware of the covert alliances between tobacco, alcohol, and other industries and expose them to correct this misperception.

INTRODUCTION

Tobacco and alcohol products have many similar promotional strategies,¹ including specifically targeting minority populations.² Both products face product-specific taxes³ and are subject to expert recommendations on health warning labels. Tobacco taxes, clean indoor air laws, and restrictions on tobacco advertising have been key tobacco control policies in the US,^4–14 and internationally for many years. Alcohol companies often propose similar arguments to those made by the tobacco industry opposing tax increases and marketing constraints.³

Tobacco and alcohol companies coordinated their marketing efforts, including event co-sponsorship and joint promotion,¹⁵ and tobacco companies may own or hold economic interests in alcohol companies. For example, R.J. Reynolds (RJR) owned the Heublein Spirits and Wine Company from 1982 to 1987,^16–20 and Philip Morris owned Miller Brewing Company between 1969 and 2002.^21–24 Altria Group, Inc. (“Altria”), the current parent company of Philip Morris USA, US Smokeless Tobacco Company, and John Middleton Company,^25–28 also owns Ste. Michelle Wine Estates, and as of 2010, retained 27.1% economic and voting interests in SABMiller plc (“SABMiller”), the world’s second largest beer company.^25–28

While tobacco and alcohol industries may share a policy agenda, it is not known if coordination between the two industries has influenced tobacco legislation. The Tobacco Institute (TI), the principal tobacco industry trade association representing the US tobacco manufacturers,^{29, 30} developed coalitions with labor unions, minority groups, and hospitality organizations during the 1980s and 1990s, and succeeded in opposing cigarette tax increases^31–33 and smoking restrictions.^34–38 For this study, we used internal tobacco industry documents to explore (1) if there has been any alliance between the tobacco and alcohol industries to affect policy and if so, (2) how these industries worked together to influence tobacco legislation. The term “alcohol industry” refers to the many groups involved in the production and sale of alcoholic beverages, including producers, wholesalers and distributors, point-of-sale operators, and hospitality providers that sell alcohol.

METHODS

We systematically searched internal tobacco industry document electronic archives using the Legacy Tobacco Document Library (http://legacy.library.ucsf.edu/) between December, 2009 and April, 2012. Tobacco industry document research includes unique methodological challenges,³⁹ and we followed standard techniques combining traditional qualitative methods⁴⁰ with iterative search strategies tailored for this data set.⁴¹ Initial keyword searches combined terms related to tobacco and alcohol policies (e.g., “excise tax”, “advertising restriction”), (b) tobacco companies and organizations (“Tobacco Institute”), and (c) alcohol companies and organizations (“Miller”, “Beer Institute”). Initial searches yielded thousands of documents. Documents were reviewed by both authors to discern the themes and context, such as the time line or objectives of alliances. We wrote summary memoranda and proposed additional search terms based on related information (e.g., key individuals, organizations, third parties, meeting dates or locations).

Snowball searches were used to find related documents using reference (Bates) numbers, file locations, dates, and associates. Additional questions were resolved by triangulating data from the documents library and from other sources, such as online search engines or news coverage (e.g., Google News or Lexis-Nexus) to validate and contextualize activities discussed. Triangulation is a previously described standard method used to check for validity and consistency of information across sources.⁴² We repeated iterative searches until we reached saturation of keywords and documents. This analysis is based on a final collection of 193 documents related to cigarette excise taxes, 135 documents related to clean indoor air laws, and 127 related to advertising restrictions, ranging in date from 1981 to 1999, and limited to policy activities in the United States. We wrote memos including all relevant documents and direct quotes to build a comprehensive picture of how activities were related to each other historically and conceptually.

RESULTS

Alliances between the tobacco and alcohol industries were identified in three policy arenas: tobacco taxes, clean indoor air laws, and advertising/marketing restrictions (Table 1).

Table 1.

Examples of alliances between tobacco and alcohol industries in different policy arenas

Type of Policy	Year(s)	Name of Alliance	Scope of Policy	Tobacco Industry Representative	Alcohol Industry Representative	Other (proposed) industry allies
Tax increases	1983	Consumer Tax Alliance43	California	Tobacco Institute	Beer: United States Brewers Association Wine: Wine Institute, California Association of Wine Grape Growers, Wine and Spirits Wholesalers Distilled spirits: Northern California and Southern California Retail Liquor Dealers Associations, Bay Area Retail Liquor Dealers Association, Distilled Spirits Council of the United States	Oil Video games Soft drinks Candy/gum
	1983	Consumer Tax Forum44	National	Tobacco Institute	Beer: United States Brewers Association, Stroh Brewery Wine: Wine and Spirits Wholesalers of America Distilled spirits: Distilled Spirits Council of the United States, National Association of Beverage Importers	National small business organizations(s) Heavy-duty trucks Sporting goods/firearms Oil Jewelers
	1989	Consumer Tax Alliance45, 46	National	Tobacco Institute	Miller Brewing Company Joseph E. Seagram & Sons, Inc. Sazerac Company, Inc. Guinness America, Inc.	Alliance membership was limited to labor unions and public interest groups. But corporations financially supported the alliance Supporting corporations: Philip Morris, American Truckers Association, Coalition Against Regressive Taxation
Clean indoor air law	1986	Partisan Project47–50	National	R. J. Reynolds	National Licensed Beverage Association National Liquor Store Association Club Managers Association of America	American Hotel and Motel Association National Restaurant Association
Advertising restrictions	1980s and 1990s	NA	National	Tobacco Institute	Beer Institute51, 52 Distilled Spirits Council of the United States51–56	Tobacco and alcohol organizations were affiliated through a third party, the American Advertising Federation’s Inter-Association Council51, 52, 56

Anti-tax Coalitions

Throughout the 1980s, cigarette tax increase bills were introduced at the federal, state and local levels.^{6, 7, 13, 14, 57–60}

Consumer Tax Alliance (January, 1983)

In California, a 5–10 cents per pack cigarette tax increase was proposed in 1982 and 1983.^{6, 7, 57, 61–66} In early 1983, the TI hired Nelson-Padberg Consulting to start building an organization called the Consumer Tax Alliance (CTA) to oppose this tax. Nelson-Padberg mentioned that “A vital part of the beer industry’s potential contribution to the cause is the 250 member California Beer Wholesalers Association. They are politically active and very savvy.”⁶⁷ To bring alcohol and other industries on board, the issue was framed broadly for taxes on “consumer goods”:

The Consumer Tax Alliance is being formed to address the growing tax threat on consumer goods. CTA is an alliance of business leaders and California consumers. The organization’s purpose is to gather data about the abuses and affects of excise taxes and provide this information to legislators, the news media, community and taxpayer organizations, and other opinion leaders.⁶⁸

The fact that the proposed tax was limited to cigarettes decreased alcohol industry enthusiasm for the CTA: “with beer, wine, and liquor not included in the proposed [tax increase] legislative package, a ‘no excise tax’ coalition is difficult to initiate.”⁶¹ The TI expected the alcohol industry to pay 50% of the total budget of $228,000, three times the tobacco industry contribution.⁴³ Other industries such as oil, video games, soft drinks, candy and gum were proposed to pay 8.3% of the budget. The TI failed to establish the CTA primarily because the alcohol companies were not interested.⁶⁹

Consumer Tax Forum (May, 1983)

In May 1983, the TI started building a national anti-tax coalition called the Consumer Tax Forum (CTF) to oppose cigarette taxes. The CTF was defined as a non-profit corporation⁴⁴ and “a broad-based coalition of trade associations, corporations, and nonbusiness organizations which will oppose the general concept of excise taxes.”⁷⁰ Gray and Company, the consulting firm hired by the TI, suggested nine industries for the CTF board, including tobacco, beer, distilled spirits, wine, small business organizations, heavy-duty trucks, jewelry, oil, and sporting goods/firearms.⁴⁴ Gray and Company recognized the alcohol industry as “the greatest opportunity for a favorable response”:

Because this [alcohol] industry is so crucial to the success of the [CTF] project, you may want to consider the active use of the Tobacco Institute and its members in soliciting participation. If there are tobacco industry contacts with corporate CEO’s and other senior level management in the alcoholic beverage group, they could be very helpful in generating support for the [CTF] project.⁷¹

Similar to the prior CTA plan, the alcohol industry was expected to contribute substantial funds to CTF, with $255,000 of the total proposed budget of $885,000 paid by the beer, distilled spirits, and wine industries (each industry paying $85,000). The tobacco industry (represented by the TI) would pay $85,000, and the other five board members (e.g., trucks, jewelry, oil) would pay $85,000 each.⁴⁴ The proposal also included plans to “bolster the credibility of the Forum” by inviting, “non-business organizations, (e.g., senior citizens and veterans groups)” to join for free. The TI failed again to establish the coalition. Samuel Chilcote, President of the TI reflected on why efforts failed in a letter to Gene Knorr, Vice President of Philip Morris:⁷²

1. Cost. …. Other organizations were unwilling to make the financial commitment or were waiting to see if others would make the commitment first…

2. Trust. In many instances, business coalitions have been formed to fight tax packages. These coalitions are strong only as long as the tax package holds together…

3. Timing. We wanted to get ahead of the curve by forming a coalition before it was needed. Most organizations respond only to emergencies…⁷³

Consumer Tax Alliance (1989)

Between 1983 and 1989, numerous proposals to increase the federal cigarette excise tax were put forward.^{74, 75} In1989, the TI started another national coalition, also named the Consumer Tax Alliance (CTA), described as “a coalition of public interest groups and labor unions with business support, dedicated to fighting increases in consumer excise taxes.”^{45, 46} The CTA included a broader base of members (Table 1),^{45, 46, 76} and its goal was to persuade “members of Congress that the American public, when educated about the range of alternatives for deficit reduction, will oppose excise taxes.”^{77, 78} The TI planned a television advertising campaign to oppose federal excise taxes on gasoline, alcoholic beverages, and tobacco^{77, 79} in order to “complicate leadership’s efforts to obtain within their party caucuses a majority vote for any budget package that includes consumer excise taxes.”⁸⁰

The TI claimed that CTA’s membership was limited to labor unions and public interest groups with no corporate members, but corporations financially supported the CTA.^{45, 46} Four of the seven supporting corporations were alcoholic beverage companies (i.e., Seagrams, Miller Beer, Guinness, and Sazerek). Unlike the previous two anti-tax coalition plans, tobacco companies were by far the biggest financial contributors to the CTA. In 1989–1990, the TI and groups established by the TI^{34, 35} contributed 82.6% ($4.009 million) of the CTA budget, and alcohol organizations contributed 12.5% ($0.607 million).⁸¹

The TI aired anti-excise tax advertising,^{82–85, 86} that claimed that working class people were disproportionately affected by excise taxes and suggested that taxes on the wealthy or eliminating government waste were preferable.⁸⁷ No advertisement showed tobacco use images – instead, people drinking beer or pumping gas were shown. This CTA succeeded in mobilizing public opposition to increased consumer excise taxes.^{84, 87–89} On November 5, 1990, President Bush signed a law which included a total increase of eight cents per pack in the federal cigarette tax,^{60, 90–94} half of what the tobacco companies had originally anticipated.^{95, 96}

Coalition to Oppose Clean Indoor Air Laws

Between 1980 and 1986, the number of clean indoor air policies proposed increased from 98 to 140 at the state level, and increased from 60 to 255 at the local level.^{4–8, 13, 14} The number of approved clean indoor air laws also increased dramatically between 1980 and 1986 at the state and local level.^{4–8, 13, 14}

The Partisan Project (1986)

In 1986, RJR developed a program called the Partisan Project “to foster an informed and visible ‘public voice’ comprised of individuals nationwide speaking out on an ongoing basis and on their own volition in opposition to biased and emotional rhetoric and unfair discriminatory harassment of smokers.[emphasis in the original]”^{49, 97–99} To recruit partisans, RJR started the newsletter, “Choice” in December 1986 and the newsletter, “Regulatory Watch” in March 1987,¹⁰⁰ and distributed the newsletters using their marketing database of smokers who used coupons or completed surveys in the past.^{97, 101–106} Through Choice, RJR publicized company views on secondhand smoke, smoking restrictions, and tax increases.^{100, 107} Regulatory Watch alerted smokers about pending antismoking legislation, and how to contact government officials and newspapers to express their opinion.^{100, 107} Both newsletters included surveys on attitudes toward clean indoor air laws, tax increases on cigarettes and alcoholic beverages, cigarette advertising bans, and the respondent’s propensity to take action.^{97, 101–106} RJR defined partisans as individuals who agreed with RJR on at least one of the three key issues (i.e., clean indoor air laws, tax increases, and cigarette advertising bans) and stated that they would like to speak out.^{97, 98, 100, 107–109} RJR saw the role of the partisans as:

A deterrent to discriminatory actions before they gain momentum – particularly at the local level.

Communication to legislators that they have a vocal constituency opposed to unfair anti-smoking measures.

Communication to the media and other opinion makers of rising vocal opposition to the current environment…

Communication to employers and providers of goods and services that smokers want their rights protected and that they are a significant economic force.

Encouragement to millions of other smokers to openly speak out to protect their rights.⁹⁷

RJR planned to reach 50 states and develop five million partisans by December 31, 1989,^{47, 49, 97, 99} and fostered the formation of “independent, local grass roots groups/organizations [emphasis in the original]” to push for the protection of smokers’ rights.^{47, 49, 97, 108–110} RJR planned to build coalitions with the distilled spirits industry, including the National Licensed Beverage Association (NLBA, the largest trade association in the alcoholic beverage industry^{47–49, 111, 112}), the National Liquor Store Association (NLSA),^{47, 48} Club Managers Association of America (CMAA),⁴⁸ and hospitality organizations like the American Hotel and Motel Association^{47, 49} and National Restaurant Association,⁵⁰ with a total membership from these groups of over 60,000.^{49, 108, 109, 113, 114}

To build a coalition with the distilled spirits industry for the Partisan Project, RJR hired Frank Cascio, the Trade Relations Vice President of Heublein Spirits and Wine Company, which had been owned by RJR from 1982–1987.^16–20 RJR utilized Cascio’s contacts to create opportunities for TI representatives to speak at alcohol industry gatherings, develop relationships, and to distribute communications materials to their constituencies.¹¹⁵

These efforts were successful. In 1987, John Burcham, executive director of NLSA, mentioned his willingness to make the NLSA membership list available for inclusion in the Partisan Project,⁴⁸ and RJR secured approval to mail booklets on responding to smoking restrictions to NLBA’s 25,000 members.^{111, 116–118} From 1988 to 1990, RJR presented three times at NLSA’s annual conventions,^119–126 and presented at NLBA’s^{125, 127, 128} and CMAA’s national conventions.^129–132 At these meetings, RJR emphasized that (1) tobacco and alcohol industries share the same customers because “close to half of all people who are high volume buyers of distilled spirits are smokers”,^{122, 133} (2) they share similar challenges in the political arena because public smoking restrictions affect alcohol customers^129–132 and “today tobacco is the focus of prohibitionists. Alcohol follows close behind”,¹²⁷ and (3) RJR’s Partisan Project could help distilled spirits industry members preserve their customers’ rights.¹²⁷ RJR documents stated they “greatly enhanced the hospitality industry’s influence in 1989, evolving from leaders learning about issues to actively supporting smokers’ rights,” and “secured their [NLSA and NLBA] executive leadership’s endorsement of RJR’s Partisan smokers’ rights program.”¹³⁴

Coalitions to Oppose Advertising and Promotion Restrictions

In the 1980s, US cigarette advertising and promotion expenditures grew,¹³⁵ while legislation limiting tobacco advertising increased at the state and local level between 1981 to 1990.^5–14 Bill proposals included (1) bans on tobacco advertising and promotion, (2) elimination of tax deductions for tobacco advertising expenses, (3) limiting tobacco to tombstone advertising, (4) enactment an industry advertising code, (5) enacting counter-advertising programs, (6) elimination of federal preemption of state regulation of tobacco advertising, (7) mandating warning labels, and (8) authorization of FDA to regulate tobacco advertising.¹³⁵

In May 1987, Samuel D. Chilcote, the President of the TI, discussed strategies to oppose these proposals, including:

to position the advertising and publishing industries in front on this issue; to emphasize the First Amendment considerations; to demonstrate that advertising restrictions are ineffective; and to show that the industry is acting responsibly by not promoting products to youth.¹³⁶

The free speech argument (that emphasized First Amendment considerations) was regarded as the most effective and important to attack advertising bans.¹³⁷ The tobacco industry reached out to advertising trade associations such as the American Advertising Federation (AAF).^{136, 138, 139} The AAF’s Inter-Association Council (IAC) included over 20 trade associations,¹⁴⁰ including advertising trade groups (e.g., Association of National Advertisers, American Association of Advertising Agencies, Outdoor Advertising Association of America), and tobacco and alcohol trade groups such as the TI,^{51–56, 140–144} Smokeless Tobacco Council,^{52, 54, 56} Distilled Spirits Council of United States (DISCUS),^51–56 and the Beer Institute.^{51, 52} The TI was one of the nine largest affiliated associations in the IAC.¹⁴⁵ The AAF continued to oppose legislation limiting tobacco and alcohol advertising from the 1970’s through at least the 1990s.^{51, 146–165} The AAF argued that the bills were an advertising issue instead of a tobacco issue, and that selective tax policies were unconstitutional and discriminatory.⁵¹ In June 1986, Congressman Mike Synar introduced a bill prohibiting all consumer sales promotion of tobacco products.¹⁶⁶ As an IAC member, DISCUS opposed these bills,^167–169 and the bills died in the 99^th Congress committee.¹⁶⁹

DISCUSSION

The tobacco industry has repeatedly sought to build direct or indirect alliances with the alcohol industry and to use their financial resources and lobbying power in the policy arena. To oppose cigarette tax increases, which the public generally supports,¹⁷⁰ the tobacco industry broadened the cigarette tax issue to include alcoholic beverages and other consumer goods. The tobacco industry consistently identified the alcohol industry as a key partner and often the largest financial source for the anti-excise tax coalitions they created. In addition to alcohol, the tobacco industry also built alliances with groups representing low income and working class people, and anti-tax organizations to broaden the issue to consumer excise taxes in general.^{84, 87–89} Balbach and Campbell³¹ have also described how the tobacco industry combined cigarette taxes with those on gasoline, beer, wine, liquor, airfare, telephone calls, and “more than 10 other products” between 1987 and 1997, and built partnerships with labor unions to oppose tobacco taxes. Tobacco taxes should be separated from combined consumer goods tax packages, and tobacco control advocates should communicate with labor unions and minority groups about the benefits they would gain from tobacco taxes.

For clean indoor air laws, RJR argued that the tobacco and alcohol industries share the same customers and challenges in governmental regulation. RJR built connections with alcoholic beverage groups and broadened opposition to clean indoor air laws. Previous research has described how the tobacco industry allied with hospitality associations to oppose smokefree environments.³⁶ The coordination of tobacco and alcohol interests also helps to explain why bar venues continue to be a key battleground for smoke-free policies.

For tobacco advertising and promotion restrictions, the tobacco industry framed the restrictions as a violation of the First Amendment to make them relevant to the alcohol industry and advertising industries. The tobacco and alcohol industries were able to work in concert by affiliating with a powerful third party, the advertising and publishing industry, which took the lead in opposition to advertising restrictions. Although it is hard to conclude if the alcohol industry’s specific efforts in opposing tobacco advertising bans were associated with the failure of such bills in the Congress, the lobbying efforts around this legislation were elaborately planned. Advocates for tobacco advertising restrictions should be prepared to face the tobacco industry acting through the advertising and publishing industries and their other affiliates.

For all the three cases, the tobacco industry broadened the tobacco issues to include other industries to create the perception that there is a broader “public” base to oppose tobacco control policies. Efforts to denormalize tobacco use and the tobacco industry may impair this process, and could limit the tobacco industry’s ability to build coalitions with other organizations.

Historically, tobacco companies have owned alcohol companies, and these relationships enhanced their alliances. Co-ownership of tobacco and alcohol companies still exists today, and allows the two industries to share resources and lobbying power. Both previous ownership of alcohol companies and alcohol and tobacco membership in third party organizations, such as the AAF’s IAC may be used to oppose tobacco control policies.

This study is limited in that the documents we located were primarily from the 1980s and 1990s. However, it is likely that the relationships formed decades ago continue today, and the strategy to broaden tobacco issues to include other industries continues to have an important influence on tobacco policy. The analysis was also limited to describing policy activities in the US because the Legacy tobacco documents collection primarily consists of documents from US tobacco companies. Based on these findings, we recommend that, first, tobacco control advocates be aware of and oppose alliances between tobacco and alcohol industries, including via third parties. Second, advocates need to separate tobacco control policies from comprehensive legislation packages. Third, organizations that appear to be alliances of trade unions, employees, and groups representing minorities opposing tobacco control policies may in fact be largely financed by tobacco and alcohol companies serving their own interests, and these financial relationships should be disclosed.