[Congressional Record Volume 143, Number 110 (Wednesday, July 30, 1997)]
[Extensions of Remarks]
[Pages E1559-E1560]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E1559]]



         R.J. REYNOLDS STILL TARGETS OUR YOUTH AND YOUNG ADULTS

                                 ______
                                 

                          HON. HENRY A. WAXMAN

                             of california

                    in the house of representatives

                        Wednesday, July 30, 1997

  Mr. WAXMAN. Mr. Speaker, I rise today to share with the Members of 
this House an article that appeared in the May 28, 1997, edition of the 
Cleveland Free Times concerning R.J. Reynolds' new strategy to lure 
young people to smoke Camel cigarettes.
  Given the retirement of Joe Camel, you may have thought that RJR was 
going to put an end to its promotional campaign aimed at our kids. But 
this Cleveland Free Times article discloses that R.J. Reynolds has 
developed a multimillion-dollar cigarette marketing campaign that 
targets bars and clubs frequented by youth and young adults. The goal 
of the program is to create an alternative marketing campaign and 
cigarette distribution network that operates under the radar. The 
campaign's targets include clubs--some of which are all-age concert 
clubs--and coffee houses. In exchange for cash, these bars and clubs 
give RJR exclusive rights to promote and sell Camel cigarettes in their 
establishment. As part of this promotion strategy, RJR-paid personnel 
mingle in the clubs to associate Camel cigarettes with what is cool.
  This insightful Cleveland Free Times article gives us fair warning 
that the tobacco industry will continue to use its own particular 
marketing genius to target our kids. This must be foremost in our mind 
as we begin to consider tobacco legislation and how we can best achieve 
our goal of reducing the deadly toll exacted by tobacco on the people 
of our country.
  Mr. Speaker, I ask that the full text of the article be printed in 
the Record so that my colleagues may have an opportunity to read about 
RJR's club marketing strategy.

                             Camel Clubbing

                            (By Mark Naymik)

       They do not wait in lines, show IDs, pay cover charges or 
     purchase concert tickets to gain access to Cleveland's most 
     popular bars and clubs. Once inside these venues, they are 
     treated like low-budget celebrities, sometimes drawing a 
     small crowd, several handshakes, and admiring nods from bar 
     and club staff members.
       They are Cleveland's Camel Club kids, a small group of 
     twenty-something clubgoers, including Twig, Sheff, Ma-Ma, 
     Frankie Boy and Don Vega, as they are known.
       On most nights, these fashionable men and woman, each armed 
     with a black canvas bag filled with Camel cigarettes, slip in 
     and out of more than thirty area bars and clubs, from the 
     Grog Shop, a small East side concert club, to the Phantasy, 
     Lakewood's industrial-music dance club, to Ufia, Cleveland's 
     largest gay club located on the West Side. Their job: blend 
     in with the bar and club patrons, make friends with the bar 
     staff and offer smokers free Camel cigarettes, R.J. Reynolds' 
     premium brand.
       These Camel Club kids should not be compared to those 
     candy-striped cigarette girls or miniskirt-clad alcohol 
     peddlers, who attract a lot of attention but can be more 
     annoying than effective in enticing bar patrons to try their 
     product. Camel Club kids look like they belong. They are R.J. 
     Reynolds' ambassadors of cool. And they are the front-line 
     workers in a relatively new, multimillion-dollar cigarette 
     marketing campaign known as the Camel Club Program.
       The goal of the Camel Club Program--beyond the obvious aim 
     to increase sales of Camel cigarettes--is to create an 
     altenative marketing campaign and cigarette distribution 
     network, one that will not be affected by changing federal 
     regulations or the scores of tobacco-related lawsuits 
     clogging the courts. In other words, R.J. Reynolds wants to 
     create a sales program that no longer relies on Joe Camel, 
     obnoxious givaways and promotions, or even vending machines 
     to move its smokes.
       Cleveland is only one of about a dozen cities in which R.J. 
     Reynolds has begun to market its cigarettes through bars and 
     clubs frequented by the twentysomething smoking crowd.
       A Free Times examination of the Camel Club Program in 
     Cleveland reveals that R.J. Reynolds already has a near 
     monopoly on the sale of cigarettes in most of Cleveland's 
     bars and clubs that cater to young crowds. R.J. Reynolds 
     created this monopoly by spending more than $120,000 on 
     marketing agreements with club owners, who, in turn, give 
     Camel Club kids exclusive access to their establishments. 
     R.J. Reynolds also has targeted coffeehouses--havens for 
     young smokers--and concert clubs that feature all-ages 
     shows.


                           Money For Nothing

       Several months ago, representatives from R.J. Reynolds and 
     KBA Marketing, the young and progressive Chicago-based 
     marketing firm that manages the Camel Club Program, came to 
     Cleveland in search of trendy bars, restaurants, coffeehouses 
     and concert clubs. About forty area nightspots made the 
     scouting team's hit list.
       Next, KBA hired two Cleveland clubgoers with a knowledge of 
     the city's nightlife scene and rented for them an office in 
     the Bradley Building in Cleveland's Warehouse District. These 
     clubgoers became KBA's Cleveland ``city managers.'' Their job 
     was to contact club owners on the hit list and sign them to a 
     one-year contract giving R.J. Reynolds exclusive rights to 
     promote and sell Camel cigarettes in their establishments.
       By mid-February, the city managers easily signed thirty 
     bars and clubs to the program. Bar and club owners would have 
     been foolish not to sign. First, R.J. Reynolds offered them 
     cash, between $1,000 and $18,000, depending on the club's 
     size and traffic flow. For instance, the Drip Stick, a sleepy 
     coffeehouse in the Warehouse District, received $1,000, while 
     the Odeon, a concert club that features local and national 
     rock and alternative acts, received $17,800, according to 
     club industry insiders. R.J. Reynolds puts no restrictions on 
     how the money can be used.
       On top of the cash, R.J. Reynolds agrees to supply the bar 
     owners with Camel beverage napkins, ashtrays, personalized 
     matchbooks and bar paraphernalia like neon lights, a 
     marketing tactic similar to promotions traditionally done 
     with beer and liquor products through local distributors. 
     R.J. Reynolds also buys regular full-page advertisements in 
     an entertainment publication in each city to collectively 
     promote the clubs and helps in the printing of expensive 
     glossy flyers featuring their concerts and special events.
       After the city managers signed the Cleveland bar and club 
     owners to a contract, they arranged a meeting with staff 
     members of each venue to outline what they would get out of 
     the program.
       Every bar or club staff member who smokes receives free 
     Camel cigarettes, usually a couple of packs, each time a 
     Camel Club kid visits. The staff receives Camel promotional 
     items like Zippo lighters, MagLite flashlights, T-shirts and 
     hats. In return, R.J. Reynolds expects these bar staffers to 
     promote Camel cigarettes by smoking Camel products while they 
     work, and by displaying individual Camel cigarettes behind 
     the bar. ``You notice more people asking to purchase 
     cigarettes from you, increasing your tips.'' the city 
     managers are supposed to tell the bar staff at their 
     orientation meeting, according to KBA marketing materials.


                       Death Of Vending Machines

       Another goal of the Camel Club Program is the elimination 
     of vending machines, which display competitors' cigarettes, 
     such as Philip Morris' Marlboro brands. To do this, KBA's 
     city managers encourage bar and club owners to discontinue 
     selling cigarettes in vending machines, and instead, 
     exclusively sell Camel cigarettes displayed in small lighted 
     kiosks placed behind their bars. Nearly all of the bars and 
     clubs in the program have placed Camel kiosks, which hold 
     forty packs of cigarettes, behind their bars. Here, too, R.J. 
     Reynolds' sales pitch was hard to refuse: Eliminate the 
     cigarette and vending machine distributors--the middle men--
     and pocket more cash.
       Using vending machines, bars and clubs earn roughly between 
     25 and fifty cents on a pack of cigarettes that retails in 
     the machine for about $2.75. R.J. Reynolds charges the clubs 
     $1.52 per pack. So clubs that sign on with R.J. Reynolds can 
     earn 97.5 percent profit on a pack of cigarettes that retails 
     for $3 behind the bar. That's $60 profit every time they 
     empty a kiosk. R.J. Reynolds also offers better service than 
     traditional vendors. The Camel Club kids are on call to 
     service the kiosk at all hours. If, for example, the club 
     runs out of cigarettes in the middle of a concert, the bar 
     manager can call one of the club kids, who will deliver fresh 
     packs immediately.
       If a bar owner has a pre-existing contract with other 
     cigarette companies and vending machine distributors, R.J. 
     Reynolds expects the bar's owner to request from the vending 
     machine operator that it ``convert the top 11 columns'' of 
     the machine to Camel brands.
       New FDA regulations that will take effect later this summer 
     prohibit all bars, clubs and restaurants that serve patrons 
     under 21 from selling cigarettes in vending machines. By 
     getting club owners to agree now to sell Camel exclusively, 
     R.J. Reynolds is effectively locking out other cigarette 
     makers from entering the bar when the regulations take 
     effect.


                    The ``Under the Radar Approach''

       KBA launched the Camel Club Program in late 1994 in 
     Chicago, and quickly introduced

[[Page E1560]]

     it into New York, Dallas and Los Angeles. The Camel Club 
     Program's style has a lot to do with KBA and its founder, 
     Kevin Berg, a former club owner.
       Berg does not hire ``suit and tie'' corporate types; he 
     hires men and women who have nightclub experience and who are 
     on the cutting-edge of fashion and pop culture. People with 
     such experience and style are easily accepted into the club 
     scene and carry far more ``credibility'' than the often stiff 
     corporate cigarette representative.
       Twig, for instance, on a recent visit to the Odeon concert 
     club, wore thick, black-rim, retro-styled glasses, a leather 
     coat that hung below his waist, wide-leg blue jeans, and red 
     shoes. His demeanor was relaxed, as he made little effort to 
     distribute the cigarettes. He gave a few packs of Camel 
     cigarettes to Odeon staff, laughing with them as if he were 
     an old fraternity buddy. He then took a seat for the show. 
     During a recent visit to the Brillo Pad, a dimly lighted 
     lounge with a soothing beat, Camel Club kid Don Vega walked 
     behind the bar and served himself an orange juice, passed a 
     few packs of cigarettes to friends and the bartender, played 
     a game of chess with the owner, and left.
       Being associated with a ``cool'' scene is the image R.J. 
     Reynolds wants to build. ``By operating in the nightlife 
     scene, the objective is to directly reach trend influencers, 
     the people that start and maintain trends. Our association 
     with trend influencers * * * will have a lasting impact on 
     clubgoers who will begin to associate Camel with what is 
     `cool' '' reads KBA's marketing material.
       KBA believes by using the Camel Club kids and ``interacting 
     with the club patrons using a low-key, under the radar 
     approach, is our best way to establish that we understand and 
     are a part of the scene.''
       Once in the scene, Camel Club kids, who are paid hourly and 
     typically work 4 to 6 hours a night, try to convert smokers 
     to Camel by offering smokers fresh, full packs of Camels in 
     exchange for their remaining non-Camel cigarettes. In return, 
     the smokers are supposed to fill out an address card, known 
     as the ``name generation'' card, which is passed back to R.J. 
     Reynolds.
       According to KBA's marketing plan. ``This personal approach 
     to selling is designed to, if executed effectively, convert 
     the smoker to Camel and show the adult smoker that Camel is 
     `cool' by the way we establish this subtle interchange.''
       KBA declined to comment for this story and instead, asked 
     R.J. Reynolds to respond to the Free Times. R.J. Reynolds did 
     not contact the paper before deadline.


                        Big Hair and Bubble Gum

       If R.J. Reynolds' stated goal is to influence trendsetters 
     and be associated with ``cool,'' one has to wonder why KBA 
     city managers targeted and signed Club 1148, a discotheque in 
     the Flats.
       Club 1148 is anything but hip, the only trendsetters that 
     hang out here are those left over from the '80s. On a recent 
     Saturday night, for example, hairsprayed women in tight 
     frosted jeans flounced around the dance floor as bare-chested 
     men in vests watched form the sidelines. Many of the club's 
     smokers chewed gum while they took long, rehearsed drags on 
     Camel cigarettes.
       So why is R.J. Reynolds paying Club 1148 $5,000 for the 
     right to distribute its cigarettes? The answer may lie in the 
     club's demographics. The club is open to 19-year-olds. And 
     while KBA marketing materials state its goal is to ``convert 
     adult smokers at least 21-years-old,'' R.J. Reynolds needs to 
     influence existing young smokers because they are less brand 
     loyal, and therefore, more willing to try and then possibly 
     stay with Camel cigarettes.
       Reaching young smokers is perhaps the same reason R.J. 
     Reynolds is interested in coffeehouses, which attract young 
     smokers. Coffeehouses are far more trendy than Club 1148.
       The clubs that receive the most money from R.J. Reynolds 
     are the concert clubs, including the Agora, Peabody's 
     DownUnder, Grog Shop and the Odeon, which often feature all-
     ages shows. It also invests heavily in promoting bands on 
     behalf of these venues. Club tie-ins and joint sponsorship of 
     bands are the cornerstones of the Camel Club Program. This is 
     R.J. Reynolds' way of reinforcing the message that it is 
     supporting the ``scene.''
       ``Camel events are the single most important way that we 
     leverage our relationship with [Camel Club Program] venues,'' 
     says the KBA marketing plan.
       Dan Kemer, senior director of advertising and marketing for 
     Belkin Productions, the concert promotion company that owns 
     the Odeon, says the Camel Club Program helps promote artists 
     he wants to showcase. ``It's another good marketing tool . . 
     . the biggest bonus to us is the program helps get the word 
     out on the street,'' says Kemer about the additional 
     advertising dollars and printed flyers he receives through 
     the program.
       Asked if he thought R.J. Reynolds could reach minors by 
     promoting all age-shows, Kemer says he uses the program to 
     tie into events that appeal to an older population, like the 
     recent Me'shell Ndege'ocello concert.
       ``It's a great program for us,'' says Kathy Simkoff, who 
     runs the Grog Shop on Coventry and received $7000 from R.J. 
     Reynolds. She says the Camel Club Program's primary goal is 
     to help clubs with promotion, not distribute cigarettes to 
     patrons. Simkoff says the Camel Club kids have been ``very 
     careful'' not to distribute cigarettes to minors attending 
     concerts and she often does not know they are in the club.
       ``They don't get in your face like the Jagermeister 
     girls,'' she says, referring to hired models who troll 
     Cleveland bars, pushing the sweet alcoholic Jagermeister 
     shooter.
       Similarly, John Michalek of Peabody's DownUnder, an all-
     ages concert club in the Flats which reportedly received 
     $9,000 from R.J. Reynolds, says the program helps him promote 
     shows and he ``has not seen any problems'' with the 
     distribution of cigarettes to minors.
       But anti-smoking groups see the Camel Club Program as a 
     campaign to attract underage smokers.
       ``R.J. Nabisco's Camel Club Program is just another 
     strategy to seduce young people both over and under the age 
     of 18 to use their deadly product, and is another indication 
     as to why independent oversight of tobacco industry 
     advertising and promotion is essential,'' says Lucinda Wykle-
     Rosenberg, research director for INFACT, a national corporate 
     watchdog organization. INFACT is currently sponsoring a 
     boycott of products made by R.J. Reynolds--which owns Nabisco 
     foods--because of its cigarette marketing campaigns. Wykle-
     Rosenberg says the Camel Club Program is a campaign to get 
     around anticipated regulations.
       What has long upset this group and other dedicated anti-
     tobacco groups are the alarming death rates associated with 
     smoking and the rate of addiction among teenagers. The 
     Centers For Disease Control says 400,000 Americans die every 
     year from tobacco-related diseases, and has reported that 
     smoking rates for students in grades 9-12 increased from 27.5 
     percent in 1991 to 34.8 percent in 1995. A 1996 University of 
     Michigan study released in 1996 showed smoking among high 
     school seniors has increased to the highest level in 17 
     years. And it is the demographic group, anti-tobacco 
     advocates worry, that is attracted to such campaigns as the 
     Camel Club Program.
       ``It's the Camel blitz,'' says one local bartender and 
     Camel Club Program participant, who does not smoke. ``The 
     Camel kiosks are everywhere.''
       Editors' note: In the spirit of full disclosure, we want to 
     point out that the Free Times has run cigarette ads 
     periodically. But as Mark Naymik's piece demonstrates, our 
     business policy to accept such ads has had no impact on our 
     editorial policy.
       Area bars and clubs participating in the Camel Club program 
     include: Agora, Euclid Tavern, Grog Shop, Peabody's 
     DownUnder, U4iA, Odeon, Phantasy Complex, Club Visions, 
     Whisky, Wilbert's, 6th Street Under, Galaxy Lounge, Brillo 
     Pad, Club 1148, Edison's Pub, Lincoln Park Pub, Treehouse, 
     Market Avenue Wine Bar, Red Star Cafe, Literary Cafe, 
     Firehouse Brewery, Uptowne Grille, Hi & Dry, The Last Drop, 
     La Cave du Vin, The Humidor, The Drip Stick, Rhythm Room.

     

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