Philip Morris Takes Heat, Burns Brighter : Tobacco: The industry leader is growing despite a shrinking market, but many are upset at the way the Marlboro Man is lassoing new smokers.
With help from the Marlboro Man, an enormous advertising budget and growing demand overseas, the No. 1 cigarette maker is selling more smokes than ever despite a shrinking market at home.
In many respects, the success of Philip Morris USA reflects the scrappy tenacity of the domestic tobacco industry, which has taken an aggressive--some critics would say hostile and unethical--approach to selling cigarettes and combating health groups that want to restrict smoking.
“There are 55 to 60 million adults in this country who have made the choice to smoke,” said Steve Weiss, a Philip Morris spokesman.
“What’s frightening is that these anti-smoking groups are attempting to impose their own morality on the adult American public by trying to control the information they receive.”
Philip Morris hasn’t been immune to the growing anti-smoking movement in the United States, which has played a role in reducing the market by about 2 percent a year.
That shrinkage is partly why Philip Morris USA’s New York-based parent, Philip Morris Cos., acquired Kraft Inc. and Miller Brewing Co. years ago--to protect itself by diversifying.
Nonetheless, the tobacco arm of the conglomerate has been strengthening relative to competitors, with weapons that range from intense advertising to lobbying in Washington to a sales assault on virgin territory abroad.
Nearly half the roughly $636 million in domestic cigarette advertising in 1989 was spent by Philip Morris, the trade newspaper Advertising Age has reported.
Philip Morris held almost 42 percent of the U.S. cigarette market last year, said John Maxwell Jr., who follows the industry for Wheat First Securities in Richmond. The company had a 39.3% market share in 1988, up from 37.8% the year before.
Overseas, too, Philip Morris is doing extremely well. In Japan, for example, the company has benefited from a relaxation on imports and a demand for the mild Virginian tobacco it uses, to be blended in Japanese cigarettes.
Pavlos Alexandrakis, who follows the industry for Argus Research, an investment advisory firm in New York, predicted that bigger and better-financed tobacco companies such as Philip Morris will get even bigger.
“They can advertise more,” Alexandrakis said. “They can throw more money behind product development and research.”
By contrast, Philip Morris’ closest domestic competitor, RJR Nabisco Inc., may have little leeway in throwing money at new products, partly because it was sold last year in a record $25-billion takeover financed largely by debt.
The one major new cigarette RJR has attempted, primarily aimed at blacks, generated a storm of accusations that the company was contributing to the health problems of minorities. RJR abruptly scrapped plans to test its Uptown brand last month in what was widely seen as a marketing catastrophe.
Philip Morris’ brands are so self-sustaining that the company is not as pressured to concoct new ones, analysts say. Among the best known are Marlboro, Virginia Slims, Benson & Hedges and Parliament. Of those, Marlboro is king and is the strongest among new smokers.
“One out of four cigarettes smoked is Marlboro,” Maxwell said. “Marlboro outsells the next largest international cigarette over two to one.”
The range-toughened Marlboro Man has been an icon of Philip Morris ads since 1955, when it introduced the macho smoker with the butt dangling from his lips. The company has reacted angrily to recent efforts by anti-smoking groups to do away with him.
The American Cancer Society, for instance, is promoting legislation to be introduced in Congress this year that would limit cigarette ads to the brand name, the product and text about it.
“People are being lured into something that kills them,” said Joann Schellenbach, an American Cancer Society spokeswoman in New York. “One in six people that start smoking are going to die from something cigarette related. That’s worse than Russian roulette.”
The surgeon general estimates that cigarettes cause an estimated 390,000 deaths a year in the United States.
Weiss said he saw little chance that Congress would further restrict advertising by tobacco companies, already proscribed from peddling cigarettes on television and radio and forced to put health warnings on other ads.
“There’s a tremendous amount of opposition in this country to tinkering with the commercial free speech rights of any manufacturer,” Weiss said.
Perhaps more than other cigarette makers, Philip Morris has seized upon the free speech issue as a tool to defend its business. The company even got its name on TV with an ad campaign about its sponsorship of a Bill of Rights commemoration, which some critics saw as a subtle way of promoting cigarettes.
Philip Morris has promoted cigarettes in other unconventional ways. At the company’s cigarette factory in Richmond, for example, adult visitors are offered free cigarettes and all visitors can write friends on Philip Morris post cards with company-paid postage. The company also writes thank-you notes to visitors who sign the guest register. Hazards of smoking aren’t mentioned.
Smoking critics have become increasingly galled at what they see as the sleazy tactics used to peddle cigarettes by Philip Morris and other companies. Many say they are particularly angered by subtle appeals to the young.
The tobacco industry has agreed to a code that it will not use models under 25 to promote cigarettes. But many anti-smoking activists say the industry subverts that code by using over-25 models who appear to be kids.
Others complain that cigarette makers intentionally place advertising billboards in places frequented by children.
