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Canada goes global?
International brands come to town
The Canadian tobacco market has, historically, been
isolated from several global trends. Canadians smoked cigarettes that were made
in Canada, that were sold under brand names that were mostly familiar only to
Canadians, that were made of (virginia flue-cured) tobacco grown in Canada, and
that were sold to them by Canadian subsidiaries of multinational companies that
made every attempt to appear 'home-grown.'
Most of the international brands available in other
countries -- Lucky Strike, 555, Mild Seven, Pall Mall -- are not distributed in
Canada. Nor is the world's leading brand - Marlboro - available in
its usual form. (A trademark arrangement reached in the early part of the 20th
century precluded Philip Morris from marketing its leading Marlboro cigarette in
Canada, although a look-alike brand
was recently
launched). International brands that are available - Benson and
Hedges, Camel, More -- have very low share of the current tobacco
market.
All this may be about to change. Over the past
decade, the activities of Canadian subsidiary of transnational tobacco companies
have become increasingly integrated with their parent organizations. BAT, for
example, reorganized IMASCO-Imperial Tobacco to gain greater control over the
Canadian operations, and to dispose of non-tobacco holdings. It then
closed Canadian manufacturing, and moved it to Mexico, where labour costs were
lower. It also reduced the amount of Canadian-grown tobacco used in its
cigarettes sold in Canada at the same time that it moved to consolidate global
leaf supply. Further details on BAT's strategies of consolidating global
leaf operations to reduce costs and increase profits can be found in their
"investor presentations".
Recently, two multinational companies (BAT and
Philip Morris) introduced international brands to the Canadian market. BAT
launched its discount-priced Viscount, and Philip-Morris (through its subidiary
Rothmans Inc), launched Parliament.
Neither company has yet supported these new products
with direct advertising in Canadian media. Among the advantages of international
brands is the ability of tobacco companies to market them across borders through
transnational media (internet, movies, magazines and other cultural products).
Such campaigns for these brands have not yet reached Canada.
(Advertisements from other countries are shown below).
An attempt by BAT to launch
KOOL cigarettes in Canada with the same marketing campaign used in other
countries apparently failed (the brand is no longer distributed in Canada).
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