View source for Ceylon Tobacco Misleading Shareholders: The Beedi Issue

==Background==
[[Ceylon Tobacco Company PLC (CTC)]], a subsidiary of [[British American Tobacco (BAT)]], holds the monopoly of cigarette manufacturing and sales in Sri Lanka. [[Ceylon Tobacco Company PLC (CTC) | CTC]] has shown a great interest in beedi use in their annual reports claiming an interrelationship between the two market shares in Sri Lanka. This post is based on an analysis of their statements related to beedi in the annual reports for the past 10 years (2009- 2018).<Ref name= AR2009> Ceylon Tobacco Company PLC. [http://archive.tobaccounmasked.com/document/ctc-annual-report-2009/ Annual Report 2009], 2010, Accessed June 2019 </Ref><Ref name= AR2010> Ceylon Tobacco Company PLC. [https://web.archive.org/web/20190604032400/http://www.ceylontobaccocompany.com/group/sites/sri_9pmjn9.nsf/vwPagesWebLive/DO9PMKN2/$FILE/medMD9RPL5K.pdf?openelement Annual Report 2010], 2011, Accessed June 2019 </Ref><Ref name= AR2011> Ceylon Tobacco Company PLC. [https://web.archive.org/web/20190604032916/http://www.ceylontobaccocompany.com/group/sites/sri_9pmjn9.nsf/vwPagesWebLive/DO9PMKN2/$FILE/medMD9RPL4E.pdf?openelement Annual Report 2011], 2012, Accessed June 2019 </Ref><Ref name= AR2012> Ceylon Tobacco Company PLC. [https://web.archive.org/web/20190604033104/http://www.ceylontobaccocompany.com/group/sites/sri_9pmjn9.nsf/vwPagesWebLive/DO9PMKN2/$FILE/medMD9RPL3E.pdf?openelement Annual Report 2012], 2013, Accessed June 2019 </Ref><Ref name= AR2013> Ceylon Tobacco Company PLC. [https://web.archive.org/web/20190604040205/https://cdn.cse.lk/cmt/upload_report_file/460_1394531695844.pdf Annual Report 2013], 2014, Accessed June 2019 </Ref><Ref name= AR2014> Ceylon Tobacco Company PLC. [https://web.archive.org/web/20190604041622/http://www.ceylontobaccocompany.com/group/sites/sri_9pmjn9.nsf/vwPagesWebLive/DO9PMKN2/$FILE/medMD9UGEWA.pdf?openelement Annual Report 2014], 2015, Accessed June 2019 </Ref><Ref name= AR2015> Ceylon Tobacco Company PLC. [https://web.archive.org/web/20190604041946/http://www.ceylontobaccocompany.com/group/sites/sri_9pmjn9.nsf/vwPagesWebLive/DO9PMKN2/$FILE/medMDA7UEUE.pdf?openelement Annual Report 2015], 2016, Accessed June 2019 </Ref><Ref name= AR2016> Ceylon Tobacco Company PLC. [https://web.archive.org/web/20190604042130/http://www.ceylontobaccocompany.com/group/sites/sri_9pmjn9.nsf/vwPagesWebLive/DO9PMKN2/$FILE/medMDAKWEUJ.pdf?openelement Annual Report 2016], 2017, Accessed June 2019 </Ref><Ref name= AR2017> Ceylon Tobacco Company PLC. [https://web.archive.org/web/20190604042545/http://www.ceylontobaccocompany.com/group/sites/sri_9pmjn9.nsf/vwPagesWebLive/DO9PMKN2/$FILE/medMDAZFHVF.pdf?openelement Annual Report 2017], 2018, Accessed June 2019 </Ref><Ref name= AR2018> Ceylon Tobacco Company PLC. [https://web.archive.org/web/20190604043112/http://www.ceylontobaccocompany.com/group/sites/sri_9pmjn9.nsf/vwPagesWebLive/DO9PMKN2/$FILE/medMDBBCBNG.pdf?openelement Annual Report 2018], 2019, Accessed June 2019 </Ref>
In these last 10 annual reports, CTC started to mention beedi from their [https://web.archive.org/web/20190604040205/https://cdn.cse.lk/cmt/upload_report_file/460_1394531695844.pdf 2013 report] onwards.<Ref name= AR2013/> 
Our investigation revealed that the beedi related information in the studied Annual Reports:
*did not mention the sources or the research methods used to obtain the data
*contradicted with contemporary scientific research findings on beedi use and
*contradicted with their own statements in different reports
as described below.    

==Arguments without an Acceptable Basis==
We found four arguments by CTC related to beedi in their annual reports. None of them were backed by adequate citations for the supposed information sources or supported by giving the research methods employed to yield such conclusions. 
*False Argument 1: Progressive increase in percentage of beedi market share
::CTC annual reports from 2015 indicate an increase in the percentage of beedi market share of the total smoking market from the figure of 20% they reported in an early annual report in 2007. They do not mention any information source or research methods that yielded these values.<Ref name= AR2007> Ceylon Tobacco Company PLC. Annual Report 2007. Colombo:CTC</ref><Ref name = AR2015/>
*False Argument 2: Beedi volume has doubled over last decade
::In 2018 annual report, CTC states that beedi volume consumed has doubled over the last decade, again without mentioning any information source.<Ref name = AR2015/> 
*False Argument 3: Price increase of cigarettes leads to growth of the beedi market
::CTC annual reports constantly mentioned that price increase of cigarettes led to the growth of the beedi market share (Image 1).<ref name = AR2014/><ref name = AR2015/><ref name = AR2016/><ref name = AR2017/><ref name = AR2018/> 
*False Argument 4: There is an increase in tobacco consumption due to the growing demand for beedi 
::Contradicting contemporary research and without mentioning any sources of scientific evidence, CTC claims that the tobacco consumption in Sri Lanka is growing,  because of the growing demand for cheaper alternatives such as beedi.<ref name = AR2014/><ref name = AR2015/><ref name = AR2016/><ref name = AR2017/><ref name = AR2018/>

[[Image:Diagram.JPG|600px|thumb|centre|Image 1: Diagram showing CTC arguments on the price increase of cigarettes leading to the growth of beedi market in annual reports from 2014-2018.<ref name = AR2014/><ref name = AR2015/><ref name = AR2016/><ref name = AR2017/><ref name = AR2018/>]]

==Contradicting Findings in Contemporary Research==
Contemporary scientific findings contradict the aforementioned arguments of CTC as mentioned below:
===Beedi Share of the Market Remains less than 10%=== 
The most recent trend survey [http://adicsrilanka.org/wp-content/uploads/2018/12/Tobacco-report-2017-July.pdf Spot Survey in 2017] conducted by the [http://adicsrilanka.org Alcohol and Drug Information Centre (ADIC) Sri Lanka] on a representative sample of 2,999 Sri Lankan males above 15 years showed that only 5.5% of smokers were smoking beedi.<ref name = ADIC> Alcohol and Drug Information Centre (ADIC) Sri Lanka. [http://adicsrilanka.org/wp-content/uploads/2018/12/Tobacco-report-2017-July.pdf Spot Survey July 2017], 2018, Accessed June 2019</ref> In 2017 CTC annual report, they claimed that beedi accounts for 51% of the total smoking market, a figure 10-fold higher than the Spot Survey finding.  
Please see our TobaccoUnmasked page [[Industry Arguments: Increase of Beedi Consumption]] for further details on contradictions with beedi user rates from contemporary research.

===Beedi use Prevalence has Decreased===
Verite Research, a think tank specialised in tobacco related economics, found that CTC premium brands account for the majority of the market and the price of premium brands are twice the price of the lowest priced brand in CTC. Therefore, they argue it is illogical for consumers to switch to beedi from the premium brands, but they are more likely to switch to CTC’s own lowest priced brands. [http://www.dailymirror.lk/article/Who-s-responsible-for-Alternative-Facts-on-tobacco-taxation--130007.html Their article] which critically analysed three ‘Alternative Facts’ on cigarette taxation showed that Tendu leaf imports (an imported leaf used for wrapping beedi and an indicator of volume of beedi production) has gradually decreased over the last 25 years (Image 2).<Ref name= Verite> Daily Mirror. [https://web.archive.org/web/20190604044935/http://www.dailymirror.lk/article/Who-s-responsible-for-Alternative-Facts-on-tobacco-taxation--130007.html Who’s responsible for ‘Alternative Facts’ on tobacco taxation?], 1 June 2017, Accessed June 2019 </Ref>

[[Image:VeriteResearch.jpg|400px|thumb|centre|Image 2: Verite Research’s comparison on the number of cigarettes and amount of Tendu leaf imported in Sri Lanka for the past 25 years.<ref name = Verite/>]]

===Tobacco use in Sri Lanka is Decreasing===
Alcohol and Drug Information Centre (ADIC) Spot Survey, conducted annually in a representative sample of males to examine trends of smoking among males aged more than 15 years in Sri Lanka, shows a fluctuating but decreasing trend of tobacco consumption from 2009 to 2017 (Image 3).<ref name = ADIC/>
 
[[Image:Trends.jpg|600px|thumb|centre|Image 3: Trends of Tobacco Smoking Among Males in Sri Lanka.<ref name = ADIC/>]] 

==Incompatibilities in Different CTC Annual Reports==
===Incompatible Data===
In the 2014 report, beedi market share was mentioned as 42%.<Ref name= AR2014/><Ref name= AR2015/> However, in 2015 annual report, they have shown that 2014 beedi market share was 45%, which contradicts their own 2014 annual report data (Image 4).<Ref name= AR2014/> 

[[Image:Graph.jpg|600px|thumb|centre|Image 4: The graph (on the left) on proportionate beedi consumption published by the CTC in their Annual Report, 2015 and the statement (on the right) in CTC 2014 annual report on beedi market share.<ref name = AR2015/>]]

===Contradictory Statements===
In the statement of the Managing Director and Chief Executive Officer, of the 2015 CTC annual report, it is mentioned that beedi consumers have migrated to the CTC brands (Image 5). This contradicts their own statements on increasing beedi use and migration to beedi from CTC brands.<Ref name= AR2015/> 
 
[[Image:CTCMD.jpg|400px|thumb|centre|Image 5: MD and Chief Executive Officer’s Statement in 2014 CTC annual report on the migration of beedi consumers to CTC brands.<ref name = AR2014/>]]

== Tobacco Unmasked Resources==
Other relevant TobaccoUnmasked entries: 
*[[Ceylon Tobacco Company PLC (CTC)]]
*[[Industry Arguments: Increase of Beedi Consumption]]
*[[Exposing ‘Alternative Facts’ on Tobacco Taxation]]

The local language translations
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==Notes==
<references/>
[[Category:Tobacco Industry Arguments]]
[[Category:Tobacco Tax and Pricing Related Issues]]