Big tobacco's new marketing push: Smartphones, style and EDM

Strict advertising rules call for fresh tactics.

This article was produced in partnership with Point, a YouTube channel for investigative journalism.

British American Tobacco (BAT) -- the third-largest publicly traded tobacco company in the world -- is engaged in an elaborate and ethically questionable online-marketing strategy across Europe and Asia.

A joint Point and Engadget investigation has found that several BAT brands sponsored music events and created entirely new lifestyle brands that initially seem unrelated to cigarettes. But on closer inspection, they are used to raise awareness of cigarette brands in markets where overt tobacco advertisements are forbidden.

Dunhill and Kent cigarettes are among the BAT labels benefitting from spinout brands in South Korea, Romania and Switzerland. However, BAT is not unique in using these tactics in the tobacco industry.

When it comes to advertising its tobacco products, BAT's own international-marketing principles are clear about its ethical approach: "We do not engage in undercover marketing activities which seek to disguise the source of the advertising message, or the fact that it is intended to advertise a tobacco brand." In the same document, BAT also promises only to market its product to adult smokers. Separately, in an article on BAT's website, the tobacco company denies pursuing nonsmokers. "We never set out to encourage people to take up smoking cigarettes, or to smoke more."

However, evidence collected by Point and Engadget and testimony from expert sources challenge BAT's claims.

Two industry insiders -- one is a current marketing expert and the other is a former marketing expert contracted by big tobacco companies -- have revealed to Point and Engadget the intricacies of how they helped BAT promote cigarette brands through the back door.

Both have requested anonymity. Their employers are not mentioned in this story, and only one is directly quoted. The name Mike is used to protect his identity.

Statistics show that despite stringent restrictions on advertising in some markets, tobacco companies are still spending sizable sums on marketing.

In the United States, for example, tobacco companies spent $9.5 billion on advertising and promotion in 2016, according to the 2016 Federal Trade Commission Cigarette and Smokeless Tobacco reports. That's $26 million per day. It's hard to find similar figures for other countries, but our sources say tobacco marketing departments around the world have significant funds at their disposal.

"Marketing budgets don't change, so at the end of the day you still have to spend that," said Mike, who no longer does marketing for cigarette companies. Indirect but connected lifestyle spinout brands are one way to spend that cash, according to both sources -- who have worked on similar campaigns.

One example of this in the European Union is the lifestyle brand Ahead, which is owned by BAT and has been used in conjunction with Kent cigarettes. Ahead participated in a music festival in Bucharest, Romania, called TimeShift 2017 by hosting parties for up to 5,000 guests that featured appearances by major British artists Orbital, Rudimental and Hot Chip. We contacted representatives of each artist and asked if they were aware of Ahead's link to BAT. None replied.

The design firm Minus5 Architects built Ahead's branded music stages and DJ booths for the parties. According to its website, the 2017 event was the third time BAT had organized such a "full party experience" with the Ahead name. Minus5 Architects also explicitly named British American Tobacco Romania as the client for its Ahead work.

A Facebook event for Ahead's stage at TimeShift made no mention of any association with BAT or any link to Kent cigarettes. But that changed inside the venue. Based on videos and photos posted to social media by the partygoers, Kent's logo was prominently displayed onstage.

The trademarks are used by Lorillard Licensing Company, LLC, which is a subsidiary of R.J. Reynolds Tobacco, which in turn is a subsidiary of BAT. The Ahead trademark filing clearly states that Ahead was created with the specific purpose of "Electronic transmission of media or information, text and images over the internet or other communications networks in the subject of art and design, fashion, technology, electronic dance music, entrepreneurship and start-ups."

"The fact that BAT initially obscured the link with its products in no way gets it off the hook."

A 2003 EU directive made it illegal for tobacco companies to sponsor events that involve or take place in more than one member state. Any cross-border effects are also forbidden.

Peter Oliver, a barrister at Monckton Chambers who has acted for the UK tobacco-control charity Action on Smoking and Health (ASH) in the High Court and specializes in EU law, is certain that Ahead's club nights would count as sponsorship.

"The fact that BAT initially obscured the link with its products in no way gets it off the hook," he said.

But the trickier part is figuring out whether the events had any cross-border effects. That's a less clear-cut question to answer. In an age when Facebook posts and Instagram photos are shared globally, it is theoretically possible to argue that the parties hosted by Ahead had a reach beyond the Romanian frontier. But that requires a legal team to prove the facts in a legal setting. Until such a test case is heard, it's not easy to say whether EU rules have been breached, according to Oliver.

We attempted to find the organizers of TimeShift 2017, but the website has not been updated since 2017, the social media pages have not posted since last year, and repeated attempts to contact the organizers went unanswered. There wasn't a TimeShift event scheduled for 2018, but the Ahead brand continues to operate in Romania at a nightclub called Kristal Club, with sponsored parties taking place as recently as November 10th, 2018.

Ahead: The early years

  • The Ahead brand has made appearances around the world, starting, as best we can tell, in 2014. The logo has taken many forms, but it often features the broken "E" found in the Kent logo.

  • An early example was Ahead Soundlab, a Vietnam initiative focused on electronic music. Featuring top Vietnamese artists, the effort culminated in simultaneous parties in Hanoi and Ho Chi Minh City.

  • A series of events titled Ahead Party took place in Kazakhstan throughout 2014 and 2015. Rather than filling the interior with Kent logos, these events featured "brand ambassadors" who wandered the party interacting with guests.

  • Ahead has also been operating in Romania since 2014, hosting and sponsoring a variety of events. Curiously, some parties used to be branded Kent Ahead, although more recently the Ahead brand has been used in isolation.

  • In 2015, Ahead first linked up with Kristal, a nightclub in Bucharest, Romania, that has appeared on DJ Mag's "top 100 clubs in the world" list several times. Ahead's 2017 showing at the TimeShift festival was in conjunction with Kristal, and the pair still puts on events to this day.

  • Advertisements for Kent cigarettes since Ahead started have included the phrases "Step Ahead" and "Be Ahead" together with fonts consistent with the Ahead brand.

While TimeShift appears to be on hiatus, the Ahead marketing strategy rumbles on in Switzerland. A music venue that was constructed for BAT called Residence K, which has more than 13,000 followers on Facebook, holds events, parties and concerts. It follows a similar pattern of not advertising its involvement with Kent cigarettes from the outside, but social media images taken by attendees clearly show the Kent label inside the venue.

A Swiss marketing agency called FS Activation has boasted on its website that it was responsible for creating the Residence K concept. In doing so, it also names Kent as the client, making clear the link between the tobacco company and its spinout brand. FS Activation also posted images of the events with the Kent logo used inside the venue.

By keeping the direct marketing of the Kent brand to the inside of the venue, BAT has managed to stay on the right side of Swiss law, said Pascal Diethelm, president of OxySuisse, an anti-tobacco NGO based in Switzerland. "As long as it's not too visible outside from the public domain, there's complete freedom to do whatever they want," he said.

Many tobacco companies have a large presence in Switzerland through either corporate offices or factories, and they use this presence to lobby through trade organizations, said Diethelm. He also alleged that tobacco companies are so influential in Switzerland that they've become part of the political process.

"Many of the heads of these trade organizations are actually members of Parliament. The tobacco industry in Switzerland enjoys this unique situation where their lobbyists are actually elected members of Parliament," he said.

Residence K and its indirect promotion of tobacco products may be legal, but these marketing tactics present a moral problem because of how effective they are, said Deborah Arnott, the chief executive of ASH.

"If you look at what's happened to smoking rates here [in the UK], where we've had a complete ban on advertising, they've gone down much faster than in the rest of Europe, where some of these tactics are still allowed to go ahead," she said.

These spinout brands attract people to a venue and then aggressively market their cigarette brands. This is done with logo advertising as well as by handing out stylized lighters and hiring women dressed in cigarette-packaging colors to actively engage attendees. Mike explained that these women are known as BA girls, where "BA" stands for "brand ambassador."

"Current tobacco advertising, especially some of the lifestyle stuff with BA girls, you're trying to get people to smoke. Especially in an environment where people drink, they're more likely to smoke, even if they don't [smoke regularly]."

Brand ambassadors are key to not only encouraging people to smoke but also opening a longer-term relationship between a tobacco company and a smoker. To do that, companies need to get contact details, so they concoct simple games with cheap prizes.

"You either give them [BA girls] your email or you have to log in to a website to retrieve your prize, and that's how they get you there," Mike said. "These prizes are little keychains or key rings or shot glasses but sometimes fancy Bluetooth speakers, that kind of thing."

Cigarette companies also act as ground enforcers, Mike continued. "They'll sponsor music festivals and not be a named sponsor, but they'll pay to have their BAs everywhere and make sure only certain packs of cigarettes are sold."

In East Asia, BAT created another lifestyle brand called Tastemakers that was affiliated with Dunhill cigarettes. It operated in South Korea between 2013 and 2017, and the marketing material describes Tastemakers as a "lifestyle platform" aimed at the "coveted millennial male audience." It existed as an active Facebook page, YouTube channel, Instagram account and app, which featured daily fashion tips along with local bar and restaurant recommendations.

But restaurant recommendations and fashion tips are a smoke screen, and there's a more direct goal for Tastemakers: to reach younger audiences in a heavily regulated and tightly watched marketplace. Because it isn't openly associated with Dunhill cigarettes, Tastemakers can operate on platforms and in venues where its tobacco brand can't.

Tastemakers allowed BAT to promote a Dunhill-aligned brand in mainstream media and, therefore, indirectly promote its adjacent cigarette brand. Tastemakers formed a partnership with major men's magazine GQ in South Korea and even had its own TV show, The Style Class, on Korean channel XtvN (formerly XTM), which pulled in an average of 2.2 million viewers. These figures are courtesy of Germany-based designer Andrew Berglund, who claims in his Behance portfolio to have worked on Tastemakers, describing the marketing initiative as "the most audacious project for BAT in any market." Multiple attempts to contact Berglund were unsuccessful.

Tastemakers allowed BAT to promote the Dunhill brand in mainstream media and, therefore, indirectly promote its adjacent cigarette brand.

The app, which was given a PEGI 3 rating (meaning it's available to all ages), boasted multiple partner organizations and venues in South Korea while more-direct tobacco brand advertising and sales of tobacco took place behind closed doors.

Social media numbers for Tastemakers show the success of this initiative. As part of our investigation, Point and Engadget discovered what appears to be an internal-presentation video, which explains in detail the purpose of Tastemakers and how its success has boosted sales of Dunhill cigarettes. The video was hosted on Vimeo by someone called Soon, who confirmed that they worked on the Tastemakers project but did not answer any further questions by the time of publishing. The video was removed from Vimeo a few days after contacting Soon.

The Tastemakers app was promoted on Dunhill cigarette packs, at the point of sale, in magazine adverts and online with a Facebook, YouTube and Instagram presence. It was a coordinated effort, and it paid off.

In total, the entire marketing drive reached 5.8 million young, trend-conscious men. More than 77,000 people downloaded the app, and it reached the top 20 lifestyle apps on the Google Play store in its first week. These figures come courtesy of the video, which also states that the Tastemakers campaign achieved in three weeks what would have taken two years with traditional marketing, which appears to refer to marketing reach.

Understatement is key to the success of this kind of advertising. "They try to make just enough association with the brand," said Mike. But critically, they don't overdo it.

Tastemakers: Going global

  • Korea: In 2014, BAT began a broad Tastemakers campaign involving social media accounts, a cable TV show and a smartphone application.

  • Romania: Tastemakers was a partner and sponsor of Romanian Design Week, a 10-day festival that "promotes design as a pad for cultural, social and economical growth." Other partners included UniCredit bank, Absolut, Rompetrol and BAT e-cigarette brand Glo. The brand held a party in Bucharest called Nuit Sociale during the show.

  • Dubai: Tastemakers was a sponsor of Fashion Forward, which describes itself as "the definitive fashion platform for Dubai and the Middle East." It held an adjacent party in Dubai called Tastemakers X Disconekt. Other category sponsors included MAC Cosmetics, Evian, L'Oréal, Coca-Cola and Emirates.

In the promotion of other products like a vintage champagne or a well-cut suit alongside a Dunhill-aligned brand, the hope is that the audience will make the connection for themselves. The idea is to make Dunhill cigarettes feel high end and desirable, Arnott explained.

This clearly demonstrates Dunhill's ambition to attract new customers rather than to simply stem the loss of current smokers through cessation success or death, said Arnott.

"My view would be that because of the aspirational nature of the promotion that it's aimed very much at a youth audience and people who are not yet smoking -- not just existing smokers.

"To survive [tobacco companies] have got to get new smokers, because they're killing globally 6 million people a year," she said. "Those are smokers they need to replace in order to carry on making profits."

In response to our request for comment on this article, a British American Tobacco spokesperson said:

"It is extremely important to us that all of our products are marketed responsibly, particularly in respect to ensuring that our activities are only directed towards adult consumers. Consequently, in addition to the strict compliance with all local laws and regulations in the 200 markets where we operate, all of our marketing activities are also required to comply with our own International Marketing Principles, one of main pillars of which is our commitment to conducting our marketing activities in a transparent way.

"In some markets, we hold or sponsor age-verified events at which we are legally able to conduct marketing activities. One of key benefits of holding or sponsoring such events is that we are able to communicate about our products to consumers that we know are all age verified adults.

"Where we are made aware of examples where our Group Principles are not being adhered to or there has been a breach of local law, we immediately review the activity in question and take remedial action."

But that doesn't sit well with Arnott. "We're allowing British companies to export death around the world, and that's just not acceptable."

Reporters: Benjamin Plackett, Jay McGregor, Aaron Souppouris
Additional reporting: Richard Lai, Chris Ip
Editors: Aaron Souppouris, Jay McGregor, Megan Giller
Illustrations: Koren Shadmi

Video by Point
Presenter: Jay McGregor
Producers: Jay McGregor, Aaron Souppouris
Editor: Anton Novoselov