Tobacco Industry: Definitions

These terms are used on TobaccoTactics. Different terms may be used by other people and organisations working in tobacco control or other areas. We aim to simplify and use non-technical language where possible. We indicate where to find more information on TobaccoTactics and relevant external resources.

The tobacco industry

Central to the tobacco industry are companies which are involved in the manufacture and distribution of tobacco products.¹  Manufacture and distribution are maintained and promoted by the companies through marketing, research and development, finance and business services, and lobbying.

The same companies may also be involved in tobacco leaf growing and processing, or different companies may be contracted to do this.  Other industries support the tobacco supply chain, such as the makers of cigarette paper and packaging, and manufacturers of machinery for tobacco factories.

• See the Tobacco Supply Chain page and database on TobaccoTactics

Tobacco company

A tobacco company sells cigarettes and may sell other tobacco products, such as cigars or rolling tobacco. Some tobacco companies also sell nicotine products, including e-cigarettes and nicotine pouches.

Heated tobacco (sometimes called ‘heat-not-burn’) is a tobacco product and therefore a company selling heated tobacco is described as a tobacco company, even if they do not sell other tobacco products.

• See Tobacco Industry Product Terminology for more information on how tobacco companies describe their products and the terms used on TobaccoTactics.

Transnational tobacco company (TTC)

A tobacco company, or corporation, operating in more than one country. ² Transnational companies may specialise their operations in particular countries. For example, the head office may be in one country, research and development functions in another, and financial services in a third.² . Transnational subsidiaries  have some decision-making powers and can adapt their activities to local needs.³ The term ‘multinational’ is also used to describe companies  operating  across borders, but company management operations are centralised in the country where they are headquartered,² and their subsidiaries have less autonomy.³

TobaccoTactics uses the term transnational tobacco company (TTC) and features the ‘Big Four’:

• Philip Morris International (PMI)
• British American Tobacco (BAT)
• Japan Tobacco International (JTI)
• Imperial Brands

The TTCs are limited liability companies or corporations (Public Limited Company, or PLC in the UK).⁴⁵⁶⁷ It is possible for the public to buy shares but the company is controlled  by a Board of Directors (who may also be shareholders).  Limited liability means that shareholders’ personal wealth is not at risk to pay company debts.  The TTCs are ‘listed companies’ which means their shares are listed, bought and sold on a particular stock market.⁸

Company Structure

Parent company

This is a company that controls other companies but does not sell products or services itself.  Sometimes these are called a ‘holding’ or ‘umbrella’ company.⁹¹⁰ For example, Imperial Brands is the parent company of Imperial Tobacco among others.

Subsidiary

A subsidiary is a company which is controlled by another company (its parent).¹⁰¹¹¹²

A company may be a wholly owned subsidiary with the parent company owning 100% of the shares sometimes through an ‘intermediate parent’ if the immediate parent is also a wholly owned subsidiary.  TTC company structures can involve many intermediate parents.¹³

A company can buy shares in another company. If it owns the majority (>50%) of shares, and therefore more voting rights than other shareholders, it can appoint or remove the Board of Directors. A majority share of over 50% is sometimes called a ‘controlling share’.  Buying more shares can be a way to take over a company (see for example PMI’s acquisition of Swedish Match)

The US National Securities Agency (SEC) requires that companies report only on ‘significant subsidiaries’, for example where the subsidiary is responsible for more than 10% of the parent company’s assets or income.¹⁴   PMI is headquartered in the US and so follows these guidelines in its Annual Reporting.

Tobacco companies have multiple subsidiaries in other countries. For example, in the early 2020s BAT had tobacco growing subsidiaries in 23 countries and as of 2023 has tobacco product (i.e. cigarette) factories in 44 countries (see the Supply Chain Database).

Some TTC subsidiaries have been set up to develop or invest in products other than cigarettes. These are sometimes named ‘Ventures’ although they are not external companies.¹⁵

For example:

• BAT owns Nicoventures and BTomorrow Ventures (see BAT)
• Imperial Brands owns Fontem Ventures
• PMI owns a venture capital company called PMI Equity Partner

Joint venture

A company set up by more than one company. Depending on the percentage shares each holds, the relationship is either between equal partners, or a senior and junior partner (in some cases partners).¹⁶ For example:

• BAT joint venture with China National Tobacco Corporation called CTBAT, based in Hong Kong
• JT Group and Altria joint venture to market heated tobacco products through their subsidiaries, JTI and Philip Morris USA respectively
• SMPM International, a failed joint venture between PMI & Swedish Match, dissolved in 2015

Associate

When a minority share (under 50%) is held in another company, that company is described as an ‘associate’, rather than a subsidiary.¹⁷ BAT and Imperial Brands, headquartered in the UK,  list associates in their Annual Reports. For example, BAT describes Kamaran in Yemen, and ITC in India, as its associates, stating that it owns 31% and 29% respectively.¹⁸ Imperial Brands lists Lao Tobacco among its associates incorporated overseas stating it owns 44%.¹⁹  In the US, the legal definition is direct or indirect ownership of 10% of a company.²⁰

Affiliate

This is a broad term which can include:  parent companies; sibling/sister companies controlled by the same parent; subsidiaries; and associates.²¹²²  In their annual reports both BAT and PMI refer to companies which they, and their competitors, own as “affiliates”.¹⁸²³

Commercial relationships

Partnership

Partnership has multiple meanings. A business partnership is an arrangement between two or more individuals or companies, who jointly oversee business activities.²⁴²⁵ Tobacco companies do not usually have partnerships with other tobacco companies, although they may have partnership type agreements to collaborate in specific areas.

They may also have partnerships which indirectly support their business interests, for example with international bodies, or civil society NGOs (part of the ‘third sector’ in the UK) organisations.

• See also Tobacco Industry Tactics: Corporate Social Responsibility

Licensing agreement

TTC subsidiaries make money by receiving royalties from licensing trademarks to overseas subsidiaries. For example, one of BAT’s UK based subsidiaries, Rothmans of Pall Mall, owns Rothmans of Pall Mall and Royals trademarks and receives royalties from licensing these to BAT subsidiaries globally.

Some companies sell the products made by other companies under a licence agreement (or ‘under licence’). For example:

• PMI’s Marlboro cigarette is sold by multiple companies, including Altria (US)and Godfrey Philips (India)
• Between PMI and South Korean company KT&G to market heated tobacco products
• US e-cigarette company Kaival brands produces PMI’s VEEBA single use product
• BAT had a licencing agreement with Kind Consumer to market its E-Voke nicotine inhaler, which BAT later abandoned

Sponsorship

This is a financial arrangement between a company and another company, project or activity.²⁶²⁷ The sponsoring company usually has their logo or brand name displayed on public-facing material. One example of this kind of corporate marketing used by tobacco companies is motorsport sponsorship.  Sponsorship can also be related to companies Corporate Social Responsibility (CSR) activities.

• See the page on Tobacco Industry Tactics for more details and examples of marketing and CSR.

Sectors

Public, private and third sectors

The public sector is that controlled by the state.

Private sector (companies) are privately owned and not directly controlled by the state, although the state may hold shares or interests.

The third sector includes ‘not-for-profit’ organisations like charities and voluntary organisations.² Many non-governmental organisations (NGOs) come into this category. The third sector is also referred to as civil society.²⁸

State-owned company

A company or enterprise owned by the Government of the country.²⁹ In some cases the company may not be wholly owned, but the government holds a majority share or controlling interest.³⁰³¹

For example, the Japanese government owns a one third share of Japan Tobacco Inc., the parent company of JTI, but this is not primarily a state owned company.³²

If a company is the only one in that market, it is referred to as a monopoly.³³ Examples of tobacco companies which are state-owned monopolies include:

• China National Tobacco Company (CNTC, which also sells products outside China)
• Thai Tobacco Monopoly³⁴³⁵
• VINATABA, the Vietnam National Tobacco Corporation
• Various tobacco companies in the Eastern Mediterranean region ³⁶

Monopolies do not prevent TTCs operating in a country. For example, in Vietnam the TTCs produce their brands locally through joint ventures with VINATABA.³⁷

Tobacco Control

The World Health Organization Framework Convention on Tobacco Control (WHO FCTC) defines tobacco control as:

“a range of supply, demand and harm reduction strategies that aim to improve the health of a population by eliminating or reducing their consumption of tobacco products and exposure to tobacco smoke”¹

Parties to the WHO FCTC are required to apply tobacco control measures in relation to all types of tobacco company including state-owned.

• See the WHO Framework Convention on Tobacco Control (WHO FCTC)

For WHO FCTC definitions see Article 1 of the WHO FCTC.¹

Product Regulation

For up-to-date information on tobacco regulation around the world, see the Tobacco Control Laws website, published by the Campaign for Tobacco Free Kids (CTFK).

Since the early 2000s transnational tobacco companies (TTCs) have developed interests in newer nicotine and tobacco products, including e-cigarettes, heated tobacco products and nicotine pouches. Companies have referred to these types of product as ‘next generation products’ although product terminology changes over time. The Policy Scan Project, by the Institute for Global Tobacco Control (at Johns Hopkins University) tracks and reports regulatory approaches to these newer products.

Relevant Links

Detailed explanations of Types of Corporations,  Investopedia website

What is Tobacco? STOP blog, available at exposetobacco.org

Tobacco Tactics Resources

Companies & Products (topic list)

Tobacco Industry Product Terminology

Tobacco Supply Chain

Tobacco Industry Tactics

TCRG Research

Defining and conceptualising the commercial determinants of health, A. Gilmore, A. Fabbri, F. Baum et al, The Lancet, 2023, doi:10.1016/S0140-6736(23)00013-2