How Tobacco Companies Incentivize Retailers to Promote Addiction 

In some retail environments, tobacco marketing is front-and-center.

Walk into your local corner store and you might see a large and brightly colored “power wall” of cigarettes behind the counter, or branded signs and displays near the cash register. You might have even passed by colorful banners brandishing tobacco logos as you approached the door. 

This kind of marketing in the retail environment is harmful to public health. It helps the tobacco industry hook more people on its products and keeps people addicted (and its profits protected). 

But there is another kind of tobacco marketing happening in the retail environment that you don’t see: retailer incentives. These are behind-the-scenes actions tobacco companies take to ensure stores stock their brands, display them prominently and sell as many products as possible. 

Especially in places with tobacco advertising, promotion and sponsorship (TAPS) bans, retailer incentive programs offer a more covert way to continue advertising. Tobacco companies invest heavily in these programs. For example, in the United States in 2022, over 97% of the tobacco industry’s total marketing spend for cigarettes and smokeless tobacco went to promotions in retail environments. 

Even though these incentive programs aren’t visible, they cause substantial harm to public health and need to be regulated as part of comprehensive TAPS bans. 

What do retailers get out of incentive programs? 

Incentive programs, sometimes framed as “partnerships” by tobacco companies, can seem appealing to retailers. As part of a contract, tobacco companies might offer stores:  

• cash payments; 
• free tobacco products to give away or sell; 
• free branded merchandise to give away or sell, such as ashtrays, calendars and umbrellas; 
• vouchers to purchase more cigarettes; 
• points to redeem for cash and gifts; and 
• expenses-paid excursions and invitations to exclusive parties and events—some of which are used as opportunities to train retailers on promoting tobacco products.  

Each contract stipulates what the store must do in order to earn these perks. Some earn rewards for putting large banners at the store’s entrance, marketing a tobacco company’s brands. Sometimes, stores must follow specific tobacco display layouts that prioritize a tobacco company’s brands over its competitors. Stores may also need to maintain a certain level of product in stock, meet specific sales goals or even verbally promote brands to their customers. 

Retailers often don’t have access to a copy of the written contract they signed, making it difficult to track the benefits that had been promised and know when they should be entitled to those rewards. A study involving 513 small retailers in four cities around Jakarta, Indonesia, found that 80% of retailers who had signed contracts did so after receiving just a brief verbal explanation and cash. The signed contracts were then kept by the tobacco company sales representatives.

Others only have verbal agreements. Another study found that the majority of retailers in Cambodia, the Philippines, Malaysia and Vietnam who enrolled in incentive programs did not have a signed contract at all and had only agreed to terms verbally. 

What do tobacco companies get out of incentive programs? 

All of the actions stores must take to earn their rewards serve the tobacco industry’s ultimate goal: to sell as many tobacco products as possible to as many people as possible. 

A particularly insidious function of these programs is to help tobacco companies work around regulations that have been proven to reduce tobacco use. For example, in places with partial TAPS bans, branded shelving and cigarette displays behind the counter effectively advertise tobacco to every single person who walks into the store, including children. And in places where tobacco taxes have made tobacco less affordable, incentivizing retailers to offer discounts or promote lower-priced brands helps keep cigarettes accessible to price-sensitive consumers, such as young people and people with low incomes. 

Tobacco companies can also use these programs to target young people. They may recruit stores that are in prime locations, such as near schools, to participate in incentive programs. They can then incentivize these stores to put up tobacco ads near the entrance and throughout the store. A 2019 study of industry incentive programs in five ASEAN countries found that 37% of retailers in Indonesia and 18% of retailers in the Philippines involved in an industry incentive program were located less than 100 meters from schools. 

Tobacco companies also use these programs to boost their public image. They frame the programs as corporate social responsibility activities, claiming they are helping small businesses. This kind of publicity can foster goodwill towards the tobacco industry among the public and policymakers, despite its products killing more than 8 million people around the world every year. 

What does public health get out of incentive programs?

The group that pays the highest price for these programs is the public. Tobacco advertising works: When tobacco companies can incentivize stores to promote their products and offer price discounts, more young people start using tobacco and current tobacco users are less likely to quit. 

Studies have shown that young people who were frequently exposed to point-of-sale marketing were twice as likely to try smoking than those who weren’t. Point-of-sale marketing also spurs impulse purchases of tobacco, with young adults (ages 18-24) most likely to make these unplanned purchases. 

Increased tobacco use also worsens social inequity and further destroys the environment, both of which contribute to poorer public health. 

If these incentive programs continue, this type of marketing will not stop. To fully protect people from the tobacco industry’s deceitful tactics, governments should implement the WHO Framework Convention on Tobacco Control, and fully enforce Article 13, which restricts the use of direct or indirect incentives that encourage the purchase of tobacco products.