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Here is the project Yesmoke is planning to implement to neutralise Big Tobacco, first in Italy and then around the world.
Italy, “The ideal country”
Yesmoke has left Switzerland and moved to Turin, and on the 31st of May, just a few days ago, became Italian. A new high-tech production plant with a capacity of 10 billion cigarettes a year has been under construction for the past eight months and it will be ready to start up next April2007.
“How in the world can you hope to produce cigarettes in a country like this?” the sceptics immediately asked. Italy, in fact, is the "free hunting preserve" of Philip Morris; it's the country where just recently the so-called "Minimum Price" was set for cigarettes. This Minimum Price effectively wiped out the last residual competition of the cigarette-manufacturing cartel, so-called “Big Tobacco”.
Philip Morris has freewheeled in Italy for over 30 years: it swept over the country with contraband and it has a bill to pay of billions of dollars in tax evasion. What's strange is that we never hear anything about it.
But Yesmoke is used to speaking out, because we believe there is nothing more constructive than truthful and open conflict. And we expect this is about to begin very soon; in fact, Italy is the ideal country for it.
Settimo (literally Seventh) today is a town in the Turin suburbs; in Roman times it was the seventh mile of the road that went from Turin to Piacenza. At Settimo the assembly has begun of the brand new G.D 121 X3 lines that will produce 10,000 cigarettes per minute (the same plant is used by Philip Morris). The serene tobacco world is about to discover something new for our days: free competition.
Here, in a few words, is the project Yesmoke is planning to implement to neutralise Big Tobacco, first in Italy and then around the world.
Let's Talk about Prices
According to a Report of the World Health Organization, although cigarette prices have risen continually, the percentage share that goes to the State has dropped; today it averages less than one half of what it was in 1965 (the Report refers to developed countries in the year 2000).
Today Philip Morris's earns, with its Marlboros, almost as much as a tax collector, and benefiting from this income is an army of occult supporters and parasites of all species and of all political colors.
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| Henry Ford: "There must be one rule for an industrialist: make products of the best possible quality at the lowest possible cost, paying the highest possible wages" |
Henry Ford used to say: "There must be one rule for an industrialist: make products of the best possible quality at the lowest possible cost, paying the highest possible wages".
Today a person who buys a pack of Marlboro is giving away his money to a private company with no possibility of having any influence on its disproportionate profits; and this is outrageous.
Yesmoke believes that when smokers pay higher prices for their cigarettes, the increase should go to the State, back to all of us, and not to producers who are already making enormous profits. It's not necessarily true that if a producer reduces his prices he is encouraging people to smoke more. In fact, he is creating a base on which the State can increase taxes and its fiscal revenues for the benefit of all of us.
The recent introduction of the so-called “Minimum Price”, on the other hand, totally neglects State tax benefits. With the pretext of “protecting public health" by raising prices, it obliges those cigarette producers who offer more economical brands to raise their prices up to a minimum cost set by the State. It would seem that they should be happy to do this as they would earn more.
But in fact, with all cigarette prices almost the same, most smokers choose to smoke the most famous and publicised brands, that is, those of Big Tobacco, whose prices remain the same as before. So, we find that raising the prices of so-called "cheaper" cigarettes, in fact only increases the sales volumes and income of Philip Morris. The competitors, and the State, are left without any benefits.
A simple generalized tax increase, on the other hand, would have increased the prices of all cigarettes; it would have directed more funds to the State and it would have obliged Philip Morris to reduce its profit margin to remain competitive. And, in the end, cigarettes would have cost exactly what they cost today.
The “Minimum Price”, which Philip Morris is promoting all over Europe, is a bizarre proposal that can only harm the collectivity. We are surprised by the superficial and shortsighted way Big Tobacco has launched itself into this losing battle.
But besides the Minimum Price, there is another big obstacle to free competition: the ”Accisa Minima” (minimum excise duty), a levy as grotesque as the Minimum Price, that fiscally penalises those who sell at more competitive prices. In synergy with the Minimum Price, it has allowed Philip Morris to make profits on its Marlboros in Italy that reach up to 500%.
Let's Talk about Image
The Marlboro Cowboy, who, together with Joe Camel, succeeded in increasing the number of smokers of all ages all over the world, was useful also to push up the prices, which today are no longer tied to product quality but to advertising messages, icons and slogans.
And today, after years of war against its competitors, minor producers always on the defensive and today almost wiped out by the Minimum Price, the giant is saying that it is willing to abolish advertising altogether, including Formula One. Why is that?
For Big Tobacco, abolishing advertising is a double bargain; because the price of their most popular cigarettes, which has climbed also thanks to their "mythical" slogans, is not likely to go down in the future. In fact, there is no need: because there is no competition left.
And without advertising, the game will be over before it starts for any small enterprise that dares to appear on the market, because it seems impossible that a company could reach Marlboro's success without investing immense sums in slogans and icons.
The final outcome is that no one will be able to bother that exclusive group of companies, Philip Morris first of all, who have divided up the world's cigarette market.
But will Marlboro's slogans always be “mythical”? Are they perhaps not destined to become obsolete wall coverings, a costly burden that Big Tobacco won't be able to get rid of?
Yesmoke, for example, in Switzerland succeeding in gaining noteworthy popularity without any slogans at all, thanks only to its debates on issues that consumers were interested in: first of all safeguarding their rights and health.
Newspapers and televisions wrote and spoke abundantly about Yesmoke, everyone knew about the "Yesmoke case" and about its battles with Philip Morris. In a short time, Yesmoke managed to make a good space for itself without spending a single dollar. Has Tobacco advertising become unnecessary and obsolete?
Leaving aside the mythical slogans, Big Tobacco has always lied about the real damage to health that smoking causes, and if today it admits that nicotine is addicting, it is only because it has been forced to do so.
But, for Yesmoke the market picture is entirely different: "If tomorrow 50% of the world's smokers decided suddenly to give up smoking, we would be happy. That's why wère going to present clear and truthful information on the harm caused by cigarette smoking, and that's why wère going to tell the entire truth … and even more."
Today, safeguarding consumers and providing information on the world of tobacco is becoming fashionable, and certain trite slogans and business techniques are becoming unpresentable and unacceptable for modern democracies and their informed consumers.
"You've came a long way, baby" … "Come to Marlboro Country" -- this is an example of their tasteless wallpaper.
“Those who smoke Marlboros are coglioni*" -- this is an example of a slogan for the future!
*Fool, moron, asshole etc.
"The monster"
Philip Morris is hanging on to very weak defensive positions: “They are forced to find some way to feed the monster they have created", this was the analysis of Marketing Week in 1998, that concluded that Big Tobacco is not in a position to withstand a drop in its sales and a consequent profit loss.
Today “quit smoking” campaigns are showing results; smokers of all ages are becoming fewer. Big Tobacco won't be able to withstand the loss of its market because it has a gigantic structure and enormously high fixed costs. These costs are made up of advertising, lawsuit expenses, all kinds of political parasites that have to be fed, and all the waste that afflicts a company of this size.
That 500% profit comes from accounting based only on industrial costs. If the manufacturer loses his market share and its profits drop, but the fixed costs do not drop in the same proportion. This is another reason why it attacks its competitors with such brutality; in order to survive, it must eliminate them from the market.
Yesmoke has very low fixed costs, thanks to a family-type business management; it has no middlemen and no parasites to feed. Its structure is efficient and reduced to the indispensable minimum so that there is no waste.
The Winning Weapon: The “Political Price”
Starting in Italy, where the European Commission has already started up violation procedures against the Minimum Price, and then in the other countries where Philip Morris has succeeded in imposing this policy, Yesmoke will battle for the elimination of this rule, and its lawyers say the chances of success are excellent.
As it is unthinkable that a country should give up tax revenues to help a foreign company, as Italy has done. We expect that price reductions will lead to a transitory situation, and that the Minimum Price will be substituted very soon by a generalised tax increase on all cigarettes.
These taxes, which also help to safeguard public health by preventing smoking costs from being too low, will bring the prices of the economic brands to their present levels, the ones dictated by the Minimum Price. But what is important is that the taxation will raise, without distinction, the prices of all cigarettes, including the most expensive ones, like Marlboros.
This will force Philip Morris to significantly reduce its profits to keep its prices at the previous levels in order to compete with other brands and not lose its market share.
Yesmoke, on the other hand, could even allow itself not to make profits, aiming only at acquiring market share. And as the profits of big cigarette manufacturers today, free of competitors, are disproportionate and inconceivable in any other market sector, Yesmoke is planning to make a strategic and demonstrative choice: it will put on the market a product of top quality at a price that will seem trifling.
This is our winning card, that will create an unclosable gap with our competitors: a "Political Price", a price light years away from what Philip Morris could ever consider.
And at this point, we come to the sacrosanct battle against the Minimum Excise Duty, which, if it goes into effect, will determine, together with the Political Price, the collapse of the cartel of cigarette makers in the European Community, benefiting the coffers of the States and free competition.
Success with the Excise Duty and the consequent, we could say, “mathematical” collapse of Big Tobacco is an ambitions and challenging objective; we need a great deal of optimism to predict a positive outcome. But if we consider that great collapses have occurred in the past: the Roman Empire, the East India Company and the Soviet Union… why shouldn't we be optimistic?
Conclusion: "The Physiological Factor"
In the past, the United States Trade Representative (USTR) threatened foreign countries with sanctions on products that they exported to the USA if American cigarette manufacturers were not given free access to their markets. And apparently all the countries capitulated.
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| This is the multinational effect: aggressiveness or blind fear |
All these goings-on have always taken place without the citizens hearing anything about them, even though the issues involve them directly and the amounts of money involved are not far from Italy's so-called government “financial manoeuvres”. Why do we never hear about these events?
Is Big Tobacco, perhaps able to "tame" information? And if it is, which televisions and which newspapers does it tame? Are political organs also involved?… and which parties?
The only thing we can be sure of today is that Big Tobacco cannot tame the consumers, who, thank God, are free to buy the cigarettes they prefer. From being sponsors, consumers are going to become judges of the situation.
Getting rid, one by one, of that host of more or less illustrious parasites who are supporting Big Tobacco, and the defeat of the cartel of cigarette manufacturers, starting with Philip Morris, will turn out to be nothing more than a normal physiological evolution of the market…
Is anyone ready to collaborate with the necessary enthusiasm in the attack against the great cartel of cigarette giants, a battle to be fought meaningfully, without the sterile and self-gratifying violence typical of no-global demonstrations? We are optimistic on the possibilities of Italy.
And it will be the task of that optimistic Yesmoke to produce an excellent cigarette and this is not an insignificant detail.
Is anyone out there prepared to bet that Yesmoke will not succeed in this detail?
More info
To find out more about the United States Trade Representative (USTR) and American cigarette manufacturing companies, see:
- The Tobacco Trade War - multinationalmonitor.org
- United States Press Coverage of Cigarette Export Talks and Policy - leaonline.com
- International Tobacco sales - fpif.org
- U.S. Aided Cigarette Firms in Conquests Across Asia - washingtonpost.com
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