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NOVEMBER 8, 2004

Big profits but more trouble for tobacco firms

Imperial Tobacco, the owner of McLaren sponsor West, has just announced a 13% rise in profits for the 2003-2004 financial year with an impressive profit of $1.88bn. The company sells a variety of different cigarette brands but West is its biggest seller. Other brands include Embassy, John Player Special, Peter Stuyvesant, Superkings and Lambert & Butler. The firm also owns the Davidoff cigar business, which was part of the West package when Imperial bought Reemtsma Zigarettenfabriken for $5.1bn in 2002.

It is not clear whether Imperial will continue to back McLaren until the end of tobacco advertising in 2006 and there are almost constant rumours suggesting that the West name will not be seen on the cars next year as Imperial is one of the more conciliatory tobacco firms, hoping that this will avoid further legislation restricting tobacco.

There was a blow for all the tobacco companies in Britain last week when Justice Richard McCombe of the High Court rejected an attempt by the firms to change the advertising restrictions at the point of sale which, the firms believe, was a restriction on their commercial freedom of expression. The restrictions come into force on December 21. The firms did not contest the government's ban on tobacco advertising but said that restrictions at the point of sale were going too far.

British American Tobacco is in the news again in Britain because of documents which have been published in The Times newspaper which suggest that the company was exploring ways of selling cigarettes to teenagers, despite its public opposition to under-age smoking. Internal BAT documents from 1998 and 1999 relating to Britih American Racing reveal that Tom Moser, the head of global sponsorship, received a proposal about how best to promote an unnamed member of British American Racing.

"We feel strongly (and have been advised by professional animators) that we should not follow the "cuddly/funny animal" character concept as the NFL (National Football League) pre-game show, Disney theme parks or events like the World Cup," the memo said. "We feel this concept has run its course and is probably more popular with very young children rather than "kids". Our direction will be computers. For example, a computer-rendered character, as in the characters from the PlayStation game Tomb Raider or Tekken."

There were also discussions about distributing 3m model cars with a Brazilian newspaper.