Tobacco is widely considered to be a uniquely harmful product for human health, warranting a unique policy response. Since the mid-1990s, the strategies of transnational tobacco corporations (TTCs) to undermine effective tobacco control policy has been revealed through access to internal industry documents. Consequently, the sale, use and marketing of tobacco products are subject to extensive regulation and formal measures to exclude the industry from policy making have been adopted in the Framework Convention on Tobacco Control (FCTC). In contrast, alcohol is subject to less stringent forms of regulation in countries such as the UK and the US, and the alcohol industry continues to play a central role in policymaking at the national and global levels. For those working in the field of alcohol policy, this raises important questions about why alcohol – and the industry which produces and promotes it – is treated so differently to tobacco. With colleagues I sought to address this question. From a political economy perspective, we hypothesised that market structure and the market and political strategies pursued by these industries to see if there was evidence of sufficient divergence in these areas to provide a rationale for the different approaches taken to product regulation and industry engagement. We began, however, by comparing and contrasting the nature of the products in each sector and the health harms associated with their use may cause.
Products and Harms
Tobacco has been identified as a uniquely harmful product, when consumed precisely as intended by their manufacturers, tobacco products kill 50% of their long-term users prematurely. Alcohol producers, by contrast, contend that their products can be consumed safely in moderation and that harms result from misuse and overconsumption by consumers. The logic of tobacco exceptionalism has been deployed by public health advocates to great effect, and has become a key pillar of the tobacco control community’s policy discourse. However, the tobacco exceptionalism argument has perhaps undermined attempts to draw attention to other health harming products and industries which have much in common with big tobacco and is now being called into question by actors in other areas, including alcohol policy.
There is an increasing recognition of the substantial health harms caused by alcohol. While tobacco remains the leading cause of avoidable death globally, responsible for around 5.4 million death per year (8% of global mortality), alcohol causes an estimated 3.3 million deaths per year (5.9% of global mortality) and accounts for 5.1% of the global burden of disease measured in disability-adjusted life-years (DALYs). In addition, alcohol is responsible for a range of socio-economic as well as health harms. Thus, while tobacco harms exceed those of alcohol, the latter is harmful enough, and similar enough to tobacco, that the current divergences in regulation and in approach to the industries seem unwarranted. The main difference which sustains the others appears to be the possibility of safe alcohol use at low levels, which appears prominently in alcohol industry policy discourses.
Market structure, particularly the degree of concentration and trans-nationalisation of a sector, affects the ability of corporations to execute both their market and political strategies. Both the tobacco and alcohol industries are highly concentrated around a small number of large, trans-national producers. Four companies – Philip Morris, British American Tobacco, Japan Tobacco International and Imperial Tobacco – now control over 50% of the world tobacco market (by volume) outside of China. The most commonly accepted measure of market concentration is the Hirschman–Herfindahl Index (HHI). This suggests that the tobacco industry in almost all countries has very high concentration ratios, with tobacco often the most concentrated sector in the economy. It is more difficult to assess the concentration ratio of the alcohol sector given its split among different product categories (e.g. beer, cider, wine and spirits). Global and national market concentration in the alcohol industry remains much lower than in tobacco, but there is an ongoing trend towards consolidation in all segments of the alcohol industry, particularly the beer sector. Many non-European markets are significantly more concentrated than those in Europe.
Similarities exist in terms of the size, profitability and trans-nationality of corporations in both sectors. Three tobacco companies and two alcohol companies, both brewers (ABInBev and Heineken), are listed in Fortune magazine’s Global 500 list of the world’s largest companies by revenue. While tobacco companies rank among the world’s most profitable corporations (measured by EBITA ratios), spirits producer Diageo boasts comparable profit margins. Finally, both TTCs and TACs are among the most world’s most trans-national corporations, as measured by the United Nations Conference on Trade and Development’s trans-nationality index.
The market strategies pursued by corporations have important implications for both public health and regulation. There are marked similarities between the market strategies pursued by transnational corporations in the tobacco and alcohol sectors. Both sectors are heavily reliant on branding and marketing to differentiate their products, and to establish and retain customers. Concentration of ownership market grants companies a high level of control over product pricing. ‘Premiumisation’ in both sectors maximises profits by encouraging affluent consumers to trade up to more expensive brands, while ultra-low-price categories and have discounted products target lower income groups. Cheaper products, meanwhile, create entry points to drinking and smoking and deter quitting. Recent decades have seen marked increases in the affordability of alcohol as producers and retailers compete on price to achieve greater sales volumes and market share, with significant profits derived also from heavy drinkers consuming cheaper products. TTCs have aggressively entered low and middle income (LMIC) markets with large populations of potential smokers and limited capacity for effective tobacco control policies. The alcohol industry has followed suit, seeking to recruit new consumers in populous and increasingly affluent LMICs with attendant consequences for health.
Access to internal documents, and monitoring and cataloguing of TTCs’ strategies by scholars and public health actors, has led to a fuller understanding of the political strategies pursued by TTCs than other industries. TTCs’ attempts to influence policy included lobbying key decision makers, donations to political parties and campaigns and the provision of various gifts and corporate hospitality. In addition, tobacco industry actors sought to shape wider social perceptions of smoking and the emerging policy debates through the subversion of science, and the deliberate creation of doubt about the effects of smoking and the effectiveness of tobacco control measures.
While analyses of the political activities of the alcohol industry remain relatively limited, existing studies indicate a highly similar pattern of policy-influencing direct and indirect strategies employed by TACs, including extensive lobbying and attempts to shape public perceptions of alcohol and the scientific content of regulatory debates. In part, the similarity in tactics may be due to the co-ownership of alcohol and tobacco industry actors, and the transfer of strategies between sectors, but the similarities extend beyond co-owned enterprises, suggesting a wider set of cross industry strategies employed.
Like TTCs, alcohol industry actors attempt to exert influence at all stages of the policy-making process, from agenda setting to implementation and evaluation, and at all levels of decision making, including attempts to frame the terms in which policy debates are couched. Their objective is to develop long-term relationships with policy-makers, positioning themselves as key stakeholders in the regulatory process. CSR activities help to define them as responsible corporate citizens who are part of the policy solution, not the problem.
One key difference between the two industries is that partnership-based approaches can no longer be pursued by TTCs in many environments due to restrictions on government engagement with the tobacco industry under FCTC Article 5.3. There remains significant scope for policy influence afforded to the alcohol industry through this form of engagement. However, when the partnership-building approach fails, like the tobacco industry, alcohol companies are prepared to resort to more confrontational methods such as legal action.
The harms attributable to tobacco and alcohol suggests that the very different regulatory approaches, and forms of engagement with industry actors in each sector, is anomalous. The claim that alcohol can be used safely while tobacco cannot must be called into question given the widespread use of alcohol in harmful ways and the apparent inability of the industry to ensure their products are not ‘misused’ in the way they claim. Whilst the tobacco industry remains more concentrated and profitable than the alcohol industry overall, sectors of the alcohol industry closely resemble big tobacco in important respects. The beer sectors in particular is undergoing a significant process consolidation. Moreover, alcohol companies such as Diageo are approaching levels of profitability seen in the tobacco industry and significantly above those in comparable consumer good sectors (eg cosmetics). The marked similarities which exist across sectors in terms of market and political strategies also provide scant grounds on which to justify such divergent regulatory regimes and forms of engagement with industry actors.
The similarities in political strategies pursued by the tobacco and alcohol industries raise important questions about the appropriateness of current forms of engagement between policy makers and the alcohol industry. And the logic of tobacco exceptionalism. They appear to provide solid grounds for arguing that more robust and effective forms of regulations are needed to tackle alcohol related harms, along with significantly more circumscribed forms of engagement with the alcohol industry in policy making. This should be done in ways which calls for more similar approaches are not used by the tobacco industry to undermine the hard won gains in the field of tobacco control are not undermined, however. Alcohol policy makers may look to tobacco control, and the range of policy measures implemented in this area, as a source of effective and justifiable regulatory approaches (eg on pricing, promotion and availability) and a basis for global level action approximating the FCTC. Likewise, alcohol policy advocates may seek to learn from the success of the tobacco control community, and the successful policy influencing strategies they have employed, in their efforts to bring these changes about.
Written by Dr Benjamin Hawkins of the London School of Hygiene and Tropical Medicine.
All IAS Blogposts are published with the permission of the author. The views expressed are solely the author’s own and do not necessarily represent the views of the Institute of Alcohol Studies.
 Our analysis is most applicable to countries in Europe, North America and Oceania with high levels of alcohol consumption (and production). A more nuanced analysis is needed to take account of the differences in the status of alcohol in other context where alcohol and tobacco occupy different social positions on the basis of religious or cultural factors.
 The Chinese market is almost completely controlled by the government Chinese National Tobacco Corporation with around 2% of the market held by TTCs.
 HHI is calculated by squaring the market share of all the firms competing in a particular sector and then summing the result. For instance, if four companies have market shares of 40, 25, 20, and 15% respectively, the HHI is40² + 25² + 20² + 15² = 2,850.
 Figures presented in this section are the authors‘ calculations (based on 2013 Euromonitor data).
 Figures in this section are authors’ calculations (based on 2013 Euromonitor data).