The Decibel - The Decibel presents: Lately

Episode Date: November 15, 2024

The Decibel presents ‘Lately’, a Globe and Mail podcast taking on shifts in business, tech and economy with newsmakers and thinkers.In this episode, award-winning journalist Luc Rinaldi takes us behind the curtain of Big Tobacco’s machinations to report on how an industry built on addiction is looking to reinvent itself for the wellness age. His cover story on the topic appears in this month’s edition of the Globe and Mail’s Report on Business Magazine.New episodes of ‘Lately’ hosted by Vass Bednar are available every Friday.

Hey, it's Menaka. Today, we're sharing an episode of Lately, a Globe and Mail podcast. It's a show that looks at the latest shifts and headlines in business and tech. Every week, host Vas Bednar interviews newsmakers and big thinkers. You can listen to new episodes of Lately every Friday, wherever you get your podcasts. Hope you enjoy this episode. I'm Vas Bednar, and I host this Globe and Mail podcast. And I'm Katrina Onstead, the show's executive producer. Vas? Yes.

Do you have a light? Actually, I do. I do. I know. I know that you do, because this is one of your funny social strategies. Please tell. I like that you've pluralized strategies. You know, I typically carry a lighter because it's handy in instances when someone cool asked me for a light. I used to always make sure I had one because you didn't have to commit to being a smoker or even having cigarettes, but you could say, oh yeah, I've got a light and you're cool and you asked me for one. So I'm happy to give it to you. There was a time when I would have been you asked me for one so I'm happy to give it to you there was a

time when I would have been harassing you for a cigarette in earnest not just to make friends because yes I did smoke when it was significantly cheaper and I was significantly stupider like we were allowed to smoke in the basement of the library what what university yes this is back in the 90s it's hard to to remember how normalized smoking was back then and how much things have changed in such a short period of time. Yeah, I guess it was a different time. Pelmel's famous length of fine tobaccos with a filter tip. Now filter cigarette smokers can say... I know what I like and I like the taste of Pelmel Gold.

That luxury length I like. That Pelmel taste I like. I like, too. Oh, my gosh. Yeah. So that's from a black and white 1950s Pal-Mal ad. It might make it seem like smoking is yesterday's issue. Oh, my gosh. has tightened and sales and access have dropped, but tobacco maintains a very strong foothold in other markets. 80% of the world's 1.3 billion tobacco users live in low and middle income countries. Meanwhile, in Canada and the US, the industry is trying to rebrand with harm reduction products, appealing to this wellness vibe, goopifying its offerings, if I may, positioning

hemp products and vapes and nicotine pouches as a smoking off-ramp. Well, the government is trying to put that goopified genie back in its bottle. So, in August, there was a ministerial order here in Canada to crack down on those nicotine pouches that you mentioned and restrict both their flavors and how you can get them. They're only available at pharmacies. So that story of how those little tiny pouches sent the government and Big Tobacco into a frenzy is told in the cover story of this month's Report on Business magazine. The article is called Blowing Smoke. And in it, journalist Luke Rinaldi gets into the belly of the beast, asking some hard questions in the C-suite of

Imperial Tobacco. Now, Big Tobacco is saying that they do want to phase out the cigarette, but it's still their most popular product. So really, is the cigarette going to be replaced by energy drinks and nicotine pouches? Or are these new products just a way of hooking a new generation? And that rebranding is happening while we're still reckoning with the devastating effects of the smoking era. So we recorded this interview early in the week, and then there was a really big announcement. Three large tobacco companies are readying to pay $32.5 billion to settle decades-old legal claims in Canada. So that money is going to go to provinces and territories, compensation for the billions that smoking costs the healthcare system. The details haven't been

released at the time we're recording this, but according to one of the class action lawyers quoted in The Globe today, a settlement like this has never happened anywhere in the world. It looks like tens of thousands of Canadians are going to get cash compensation for the suffering they and their loved ones endured from tobacco. So that's something, but it also was 25 years in the making. And sadly, many of the plaintiffs and the class actions have died in the interim. Well, this feels like a good time to take a peek behind the curtain at the machinations of big tobacco. Let's talk to award-winning journalist Luke Rinaldi, whose cover story in the Globe and Mail's monthly report on business magazine, also called ROB, is out this week and available online. It is not a puff piece. This to Lately. Thanks for having me, Vas.

So, for generations, everyone had a story about the first time they tried a cigarette, whether or not they ended up being a capital S smoker. Can you tell us yours? I think I was outside the Rex Jazz Hotel. It felt appropriate that I would be smoking a cigarette there. And it was more recent than you might imagine. I think it was like within the past four or five years. Really? Yeah. And I don't think I had the whole thing either.

I just had like a few puffs and I was like, all right, I get it. Who gave it to you? My now wife. Oh, that. Bad influence. Yeah, she sounds like a terrible influence. Okay, so that's so cool that it's recent. On the one hand, I think we kind of assume that the cigarette age is behind us, right? For the generation raised on vapes and $20 packs of cigarettes. My mind was blown how expensive they are. They may not have that kind of stealing my big cousin's cigarette story, which is kind of a good thing. But your piece in The Globe and Mail throws a wrench in that perception. How big is

big tobacco in the world right now? Who's still smoking? So there's this idea that cigarettes are maybe going away. And in Canada, there's maybe a case to be made that they're not as popular as they once were. But if we're being real, plenty of people are still smoking. I mean, cigarettes are still very much at the heart of the tobacco industry. And, you know, all the fanfare about vaping and nicotine pouches aside, cigarettes are still king. Okay, and a little bit of history. Back in 1952, Reader's Digest put out a cover story. It was called Cancer by the Cardinon and it brought forward this

health crisis and the cost of cigarette addiction and it's viewed as kind of a hinge moment a lot changed from that story can you take us back to that time and walk us through how Big Tobacco responded? Yeah, so Big Tobacco reads this piece, like many people do, and sees that cigarette sales start to decline as a result. And they're asking themselves, okay, what can we do? Like, this is a threat to our business. And it almost is tempting to imagine them in like, very sinister fashion, meeting in a smoky boardroom and like discussing this crisis and asking themselves, what can we do? And what they settle on is putting out a statement in almost 500 newspapers, and it's called Frank's Statement to Cigarette Smokers. And it's signed by all the big tobacco CEOs. And they're saying, hey, look, we saw that Reader's Digest piece too. But we actually really

care about your health. And we promise we're going to be super committed to prioritizing your health. And this sort of was engineered to get some goodwill for the tobacco companies and make it seem as if they're on your side. But if you look at their behavior after they put out that statement, it's sort of contrary to what they're saying. You know, they're continuing to deny that cigarettes cause cancer, and they're fighting regulation and investing in lobbying and litigation and trying to discredit good science while funding their own science that obviously makes their products look great. And they're emphasizing personal choice. You know, if you want to smoke a cigarette, that's your choice. You're an adult. You can figure it out.

And so they go about a marketing campaign essentially to deal with this and start introducing new products as well, like quote-unquote safer cigarettes. And then that would sort of foretell the dawn of the new kinds of products that we're seeing in the market today. Yeah, and we've seen the industry shift its emphasis from tobacco to nicotine, kind of repackaging the smoking experience into that harm reduction umbrella. Can you walk us through some of the low harm products that the industry has come up with? Yeah, I mean, it goes back to, you know, the 50s, 60s, 70s, like it started with low tar cigarettes and light cigarettes and filtered cigarettes. And they all sort of had their own marketing angle, like gear towards women, because apparently women can't handle cigarettes in the

same way or gear towards people who wanted a little less nicotine. And over time, they switched to things like snus, which might not be familiar to listeners in North America, but Swedish people know all about them. They're like little tobacco pouches that you put between your upper lip, right up in your gum, and you sort of absorb the tobacco through there. And the tobacco industry likes to say, you know, hey, look at Swedish men, they smoke much less because they're on these little pouches, and the health effects of that are so much lower. And I mean, to be fair, that is absolutely true. Like Sweden has the lowest rates of smoking in Europe and smoking related mortality. But you know, it's still like tobacco in your mouth. It's not exactly good for you.

So that led from snooze to nicotine pouches, which are sort of like a synthetic version. These little white things that are about the size of a piece of gum, and you stick them in there, and they deliver nicotine straight into your gum. And then the last big one is vaping, which, you know, in Canada, like I don't need to explain to you, it's everywhere. If you snooze, you lose. Well, the people who tend to vape are younger people and their

cartridges can come in sugary flavors that appeal or, you know, feel candy-like. Has that outcry in reaction to younger people vaping changed anything in this landscape? It obviously is appealing to a younger demographic. And so that is essentially where the big criticisms come in. It's like, yes, these things can help adult smokers quit, and that's how they've been framed. But at the same time, when you've got like Baja Blast and like Fuzzy Peach vape juice. Creme brulee. digits, low single digits. And so for the industry that sort of relies on smoking as its revenue maker, they're asking themselves, how can we get new customers on board if they're not taking up

smoking, and that involves getting them to vape. And in my reporting, I found that British American Tobacco, which is one of the biggest tobacco companies on the planet, they know from their own stats that about half of the people who vape are not adult smokers who are trying to quit, but new entrants to the market. And so their argument sort of falls apart at that point when they know that they're bringing people in and getting them addicted to nicotine, even if it's less harmful. It's like you're still getting people addicted to a substance that's not particularly good for them. Well, the guardrails for tobacco regulation often play out in advertising regulation. But advertising has really changed since 1952. The early days were all about banning Marlboro Man TV ads, which was relatively easy to do. Can regulators ever catch

up to today's marketing culture, or is that just a fool's errand now? They're certainly trying to catch up. I'll give you an example, which is Zonic, this nicotine pouch. And essentially, when it came out, there were no regulations as to how it could be marketed or publicized. And so Zonic was suddenly like, on social media, it was being advertised in stores. And so Health Canada did crack down on the ads. It took them, you know, less than a year, but it still did get out there. So that's one example.

That's pretty fast for a government. Yeah, yeah, I'll give them credit for that. It was pretty fast. But I think the bigger problem is not necessarily the ads that the tobacco company's out there saying that these like nicotine pouches are making them more libidinous or helping them be more focused and more productive. Like the government can go after Marlboro, but it is not going to be like cracking down on every 16 year old who's got a nicotine pouch under their lip. Have you ever used a nicotine pouch?

Yes. As research. As research. What did it feel like? It has a burning sensation. It's like an icy burning, like an icy hot back patch, but for your mouth,

which I wasn't super fond of. Like I had one and I was like, all right. And then later in the day, I was like, I think I'm going to have another one. And I was like, ah, that's how these work. You sort of unconsciously want another one, even though you didn't fully enjoy the experience. Tell me more about that story

because why are we kicking Zonic to the curb and not these other products? What's the concern? and buy it, like including an 11 year old, there was sort of instruction from the tobacco company that made it not to give it to minors. But legally speaking, there was there was nothing preventing that from happening, other than, you know, a clerk who is willing to sacrifice a sale. And so that didn't sit well with many people, including Mark Holland, who's the federal Minister of Health. He's the Heart and Stroke Foundation, which doesn't like smoking very much. And so he heard the outcry from parents and teachers and dentists who are seeing the problems arising from these things. And he essentially said several months later, you got to get those things out of here. And he issued a ministerial order saying we're going to relegate these things

to pharmacies and we're going to eliminate any flavors but mint and menthol and so essentially it's only going to be available to people who go and seek it out from a pharmacist and his hope was that that would essentially wipe out the youth market for these kinds of things but at the same time it's sort of too late like a lot of young people are already on the pouch train and they can just go online and order Zinn and Zonic and Velo and Rogue and On and like all these different brands and those brands are going to be in all kinds of crazy flavors and they're going to be on all kinds of strengths. And that's like the black market that is out there. And I asked Mark Holland, I was like, well, what do you think about this black market?

Like the industry says, if you take these zonic pouches out of convenience stores, the kids are just gonna go online. And he didn't have like a particularly satisfactory answer for that question, but he did make the point that like, isn't it ironic that the tobacco industry is complaining about a black market that

they essentially created and blaming the government for enabling that market? Earlier, you flicked at the virility myth around pouches. And I want to come back to that for a second, because one of the surprise champions of nicotine pouches is actually Tucker Carlson. Can you connect the dots between Zin and Zonic and others and kind of conservative bro culture, which is a trend that I think has been labeled, now I get to say funny words, mascusinity? And like, how did that happen? Yeah, it's kind of odd. But if you think about it a little more, and like, pay attention to who's promoting it and talking about it, it starts to make sense in a very odd and extremely online way. Tucker Carlson and his ilk, like the Nelk Boys, Joe Rogan, Andrew Tate, like not necessarily those guys, but that world is really into Zinn and says like, oh, it's really helping with my focus. It helps me be more productive. It heightens my creativity.

And yes, it's like improving my libido. And it's like falling within this greater trend of masculinity. If it's within this like greater environment that's like obsessed with sort of supplements and you know cold plunges and bodybuilding and and some sort of weird corner of wellness that's like rise and grind hustle culture and of course it's sort of all nonsense like i don't think there's any reliable science that Zonic or Zinn or any of these creatively named pouches is actually doing any of the things that these people claim it is. But nonetheless, you know, these guys are out here promoting it. cool with these non-combustibles. Cigarettes have always also been about culture and associated with, you know, music, rebellion. There's something performative about smoking a cigarette, right? You have something that you can share, then it kind of still is an enduring signal of coolness

in a way, right? How can any of these products, ridiculous names aside, possibly compete when you can't really see that nicotine pouch between your gum and your upper lip? So like, what's the point? Yeah, I mean, the point is to get nicotine. Like, I really do think it's just sort of about that more than anything else. I do think there's probably sort of about that more than anything else. I do think there's probably a cool factor to sort of evading detection, like to have one on your teacher or to like fool your parents.

Like, oh, I was in class and my teacher didn't know I had a pouch under my lip the whole time. Aren't I cool? The like sort of mischievous aspect of it, the bad boy aspect to it. But you could just have a piece of gum. Yeah. But certainly vaping has like a culture around it, like vape-nache. Yeah. I get the appeal of vaping, but I don't find it particularly cool to be like sucking on a USB stick that's flavored like diet blue Pepsi or something.

Big Tobacco feels like it should operate in that old-fashioned smoky boardroom. I can't help but picture men in suits. There's also lots of like big wooden desks, definitely not standing desks, total madman vibes. But you actually went to the Imperial Tobacco head office in Montreal. Can you paint me a picture and kind of walk me in with you? What was it like? Yeah, imagine like going to the Nestle office. Imagine going to like Canadian tires at office. Like just sort of a bland corporate office.

And that's kind of what it's like. I mean, I stepped in and you're in a traditional lobby with a security guard and there's like a banner touting the building's environmental bona fides. And, you know, I got a tour through the office and there's, you know, pride balloons. There's lots of people smiling and doing their job and cigarettes just sort of feel very distant from their culture right now, despite the fact that that's how they make most of their money. But essentially, they've sort of tried to rebrand from within. They're like a great place to work, several years running. I was told, and I do believe, that they have low turnover.

People tend to stick around. They've got like a nice cafeteria and a gym. It's like not what you might imagine. Like, there's no smoke. There's no smoke. There's no smoke. So you went there to interview Imperial Tobacco CEO Frank Silva. Why do you think he agreed to be interviewed? He was pretty forthright about how the industry is like, not super well received right now, which is a bit jarring because like, you think of a CEO,

and you would think of that person as sort of like the biggest cheerleader for their company. And he's essentially saying like, hey, look, we know we did bad. But we're trying to change, you know, we're like a boyfriend that, you know, did something that you didn't like, but give us another chance. And give us another chance. No Ben Affleck. We are investing in these other products. And like, we're really serious about it. Like we have invested in these vapes, and we're investing in these pouches, and we're approaching the government with goodwill. And we are going through all the regulatory review processes. And you can trust us because we want to get everybody off cigarettes the same way that the government does. And in fact, they make a very

interesting argument, which is that the government, not them, are the reason that smoking rates are not falling further than they are. So there's this thing called Canada's tobacco strategy, which aims to get the smoking rate below 5% by 2030. And the tobacco industry says, yeah, hey, we love that. Like, let's go smoking right down 2030. Perfect. We're on board. But that's never going to happen if you clamp down on vapes and pouches and these things that are helping smokers quit. We're never going to get those public health benefits if the government keeps regulating this stuff super strictly. And so they essentially say, we're trying to transform for the better, and the state is getting in our way. But they were very welcoming. And it became clear to me why that was the case.

It's because they have a story to tell about where they are in their company lifecycle right now. And not a lot of people are particularly interested in listening to them because I think the industry has a very big lack of public trust and lack of public goodwill. But I wanted to hear that story. Do you buy that story? No. The truth is like the beyond nicotine category as they call it accounts for such a tiny, tiny, tiny piece of their revenue that like it's basically impossible to imagine that ever being anything more than sort of a token investment for them. And then the vapes and the pouches and heated tobacco products, those are like less than 20% of their revenue as well. It's not to

say that they're not important to them. And they are growing unlike cigarette smoking, which in Canada is continuing to go down. But for the most part, like, it's sort of a smokescreen, pardon the pun, for the fact that cigarettes are still their bread and butter. Like it's four fifths plus of all the money they make all over the world. And that is not changing in a meaningful way. Well, and then at the same time, kind of coloring that with this pivot to wellness that you've mentioned, and that is in your piece, right? Shifting to non-nicotine products, but suggesting that the absence of tobacco is the equivalent of something that's healthy. As part of that repositioning, you had a few sips or maybe more of an energy drink called Ride. I do want to say that's with

a Y. What was that like? Is it going to do the job of a cigarette? No, come on. Like, it's a five five hour energy drink that doesn't give you any energy. Essentially, that's like what it felt like to me. I just tasted it and I was like, I would rather orange juice. And it was supposed to energize me. It was supposed to relax me. There's like three different flavors and help me focus. And I tried them all at separate times and they didn't do a whole lot but essentially it's like is this going to be the future of big tobacco like these little shots and and yeah you know supplements and hemp products like is that really going to compete with cigarettes like of course not um for one there are all kinds of companies already out there making all kinds of companies already out

there making these kinds of things. And they're nowhere near as big or as profitable as tobacco companies. And they're not addictive. Like, that's how the industry makes its money is it gets people addicted to a product and continues to sell that product to them while raising the prices. And that turns out to be a really, really good business model in terms of making money, not super good in terms of public health. But the ride shots are just not going to do it. One kind of wonders after a century of science and a century of lobbying and sponsored research, why isn't tobacco just illegal at this point? Yeah, I mean, some countries are trying to get there. Like the UK is exploring this idea of

outlawing cigarette sales to people born after 2009. So essentially, the legal age to smoke a cigarette would increase every year by one year. And so anyone born after 2009 would never be able to legally smoke a cigarette. Whether that works, I mean, let's see. It feels like the kind of thing that like one government would be a really big fan of, and then the next one would come and just be like, forget that. In Canada, in particular, like Newfoundland is considering that kind of thing. But I think the bigger point to consider is, we're in a sort of odd situation now where you've got like millions of people who are smoking. And so you can't just like, make that product illegal, all of a sudden, it's going to have like severe effects, like anyone who's tried to quit smoking knows that that would be pretty bad.

There's also the fact that cigarettes are taxed so heavily. And so the provinces and the federal government now receive billions of dollars every year from the sale of cigarettes. And if they outlawed cigarettes, they would be essentially passing up on all that money that is probably going to get spent on the black market anyway. You have this amazing phrase in your piece, litigation Ponzi scheme, where you're gesturing at these huge payouts that certain provinces are anticipating. Could you tell us a little bit more about those?

Yeah, I don't want to take credit for that phrase, litigation Ponzi scheme, because it was a quote from Cynthia Callard, who runs Physicians for Smokery Canada. But what Cynthia is describing there is this phenomenon happening right now where the tobacco companies as a result of like decades long litigation now owe the provinces tens, maybe hundreds of billions of dollars to pay back the healthcare costs that we've spent as a country to take care of smokers and deal with the illnesses brought about by cigarettes. And so you might think like, isn't that going to bankrupt these companies? Apparently not, because they have really rich multinational parent companies that could bail them out.

But the Ponzi scheme aspect of it is that to pay those penalties back to the provinces, these companies are inevitably going to have to continue to make money. And right now, that means selling their very addictive and harmful products. And so you pay back the last generation of smokers by hooking a new generation of smokers or nicotine pouch users or vapors. And that's how you get that Ponzi scheme. So what do you think the future for big tobacco is? The one thing that could make a huge difference is those decades long lawsuits that I was talking about. And it seems like we're about to sort of reach a resolution. And there are various things that could happen as part of that resolution.

Like, you know, some of this money that they have to pay back goes into, you know, public health campaigns. There could be something as, you know, ambitious as a phase out of commercial cigarette sales over time. But like, Frank Silva said this thing to me at the end of our interview that felt like both sort of depressing, but super true, which is that nicotine has been used for thousands of years, and it's probably going to continue to be used for thousands of years. And whether that's like in the form of a cigarette or in the form of a vape or some other product that hasn't been invented yet. I think like humans, you know, if we get addicted to something, we're going to try to feed that addiction. And so long as that's legal for us to do, we're going to probably keep doing it. And so long as there's money to be made, shareholders are going to continue to invest in

those kinds of companies. And, you know, hopefully it can have a lesser public health impact over time. But I'm not super optimistic that we're going to solve the cigarette problem, like even in my lifetime, you know, maybe some podcaster in 2074 is going to be talking about the podcast we're doing right now, and asking about how the tobacco industry responded to the backlash. It's a fascinating business. These are really important evolutions. We so appreciated your piece. You can read Luke's piece, Blowing Smoke, in the Globe and Mail's report on Business Magazine. Luke, it was so great to talk to you. So great to talk to you, Bess.

I had a pouch in my lip the whole time. You are so cool. You've been listening to Lately, a Globe and Mail podcast. Our executive producer is Katrina Onstad. The show is produced by Jay Coburn, and our sound designer is Cameron McIver. And I'm your host, Vas Bednar. In our show notes, you can subscribe to the Lately newsletter. That's where we unpack just a little more of the latest in business and technology. A new episode of Lately comes out every Friday,

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