Philip Morris Image a Tough
Sell
The top cigarette maker says it has changed. Many tobacco foes are not impressed.
By Myron Levin | Los Angeles Times | December 19, 2004
See also:Exec Says Joe Camel Aimed at
Adults | Judge
Calls Tobacco Exec's Testimony 'Self-Serving' | Pretty
in Pink: Camels Targeting Women
The reaction was passionate and swift when Western Michigan University crowned
tobacco king Philip Morris USA its "Employer of the Year."
About 400 protest letters poured in from the U.S. and 37 foreign countries. Honoring
Philip Morris "is not only a mistake but a terrible blow to humanity,"
fumed a writer from Nigeria. "I think to be able to teach and preach to your
students about good moral, this robust romance with PHILIP MORRIS should stop."
Defending the award, bestowed in October, university officials said they weren't
endorsing smoking, only recognizing the company's exemplary support for student
job fairs and recruitment programs.
The uproar over an obscure award underscores what Philip Morris is up against
as it seeks to bury its past and craft an image as a good corporate citizen.
The company and its parent, Altria Group Inc., have moved aggressively to separate
themselves from the rest of the tobacco industry. Philip Morris has spent $500
million over the last five years on programs to fight underage smoking, such as
paying incentives to retailers to keep cigarettes behind the counter. The company's
TV commercials state flatly that smoking is dangerous and addictive.
Altria is the only major tobacco company to voluntarily stop advertising its brands
in magazines. And it has broken ranks with its competitors by joining top health
and anti-smoking groups in seeking authority for the Food and Drug Administration
to regulate tobacco products.
Long known for charitable giving, Altria has donated about $60 million this year
to 1,200 nonprofit groups involved in its pet causes: the arts, hunger relief
and curbing domestic violence.
But many aren't buying Altria's new look. Tobacco foes — and some neutral
observers — say there's a disconnect between the image it presents and the
way Altria makes its living as the world's largest and most successful marketer
of a deadly product. They contend that the company still promotes its brands in
foreign markets by methods long banished here. And they say that in the U.S.,
the company continues to resist measures that would cut the death toll from smoking.
"The whole thing is sort of a semi-charade, in my opinion," said Alan
Siegel, chairman of Siegel & Gale, a strategic branding and consulting firm.
"You can do all the cause marketing and philanthropic things you want. It
still doesn't overcome the fact that you're making money with a product that can
kill you."
Still, there are signs that hostility toward the company may be softening. For
example, state attorneys general credit Philip Morris with sticking faithfully
to marketing curbs contained in the 1998 agreement that settled anti-tobacco lawsuits
by the states.
"In terms of keeping their agreement, Philip Morris has done a much better
job of staying in compliance than … some of the other companies," said
California Atty. Gen. Bill Lockyer.
And the Reputation Quotient, an annual corporate image rating, suggests Altria
is gaining in esteem. This year, the company rose to 48th place in the ranking
of the 60 most visible U.S. companies, according to the survey developed by the
Reputation Institute and Harris Interactive Inc. In previous years, Altria had
ranked as low as 60th and never above 52nd.
"We assumed and believed that it was going to take a while before people
accepted our actions for what we think they are," said Steven C. Parrish,
Altria's senior vice president of corporate affairs. "It is not part of a
public relations strategy, but I'm fully aware that me saying that is not going
to convince longtime critics of what our motives are.
"The fact is, things have changed."
Altria's holdings include 84.6% of Kraft Foods Inc., the largest U.S. food company,
and a 36% stake in SABMiller, a global brewing concern. But cigarettes still provide
more than half the company's operating income. In the U.S., where Philip Morris'
market share has grown to 49%, it has become so dominant that the term "Big
Tobacco" is something of an anachronism: It's really Philip Morris and everyone
else.
Last year, the parent company finalized a name change from Philip Morris Cos.
to Altria, a lofty-sounding but made-up word. The explanation — that the
change was needed to clarify the diverse array of the company's businesses —
was widely greeted by winks and smirks.
"When you hear Altria, you don't think about cigarettes, do you?" said
Lou Colasuonno of Westhill Partners, a New York-based management consulting firm.
"Altria" banished the "instant association with cigarettes, lies,
lung cancer," he said.
The company has also undertaken more substantive changes. Its support for FDA
regulation was a radical break from the tradition of cigarette makers marching
in lock step against all manner of oversight. The bill, which passed in the Senate
in October but failed in the House, would have given the FDA the power to expand
tobacco warning labels, limit advertising, disclose ingredients and order the
removal of harmful compounds. It is likely to come up again in the next Congress.
To drum up support for the bill, Altria lobbyists brandished ads for candy-flavored
versions of R.J. Reynolds Tobacco Co.'s Camel and Brown & Williamson Tobacco's
Kool cigarettes to illustrate problems that regulation would address.
Many observers view the company's support for the bill as a shrewd business decision,
even though it would probably bring a decline in smoking rates. As the richest
of the tobacco companies, Philip Morris would be most likely to prosper under
a regulatory regime, analysts say. Compliance costs would be a heavier burden
on smaller firms, and Philip Morris would probably boost its market share.
And the company was well aware of the halo effect of supporting the legislation.
As a company consultant noted in a memo in 2001, "The simple fact that other
tobacco companies will likely come out [against FDA regulation] provides Philip
Morris a chance to distinguish itself from its competitors as a good corporate
citizen."
Whatever the motive, Rep. Henry A. Waxman (D-Los Angeles), a sponsor of the bill,
said he welcomed the company's support. "But I don't think anybody can escape
the fact that they're in the business of selling a product that kills millions
of people around the world each year," Waxman said. "Based on that fact
alone, it's impossible to call Philip Morris socially responsible."
The company has gained mileage from its FDA stand — and in doing so, struck
a raw nerve in the tobacco control movement, which is image-conscious itself.
In a speech in October at UC Berkeley's Haas School of Business, Altria Senior
Vice President David Greenberg, who once worked for Ralph Nader, boasted that
the company had "partnered with" the pillars of the anti-smoking world,
including the Campaign for Tobacco Free Kids, the American Cancer Society, the
American Lung Assn. and the American Heart Assn.
After being bombarded by e-mails from irate activists, the heads of the four groups
fired off a protest letter to Altria Chairman and Chief Executive Louis C. Camilleri.
"Philip Morris should stop trying to borrow legitimacy from our reputations
and decades of work in tobacco control and public health," their letter said.
Common ground on FDA "does not make us 'partners'…. We call on Altria/Philip
Morris to immediately cease such claims."
Parrish of Altria wrote back to apologize for "this inadvertent misstatement."
Critics say other actions by Philip Morris contradict claims that it has fundamentally
changed.
Despite investing to fight teen smoking, the company's powerhouse Marlboro brand
is even more popular among underage smokers than adults. Marlboro has a total
market share of 38% but is the favorite brand of about 49% of 12- to 17-year-olds,
according to a 2003 survey by the federal Substance Abuse and Mental Health Services
Administration.
Opponents say the industry must entice youths because few smokers take up the
habit after their teens. It's "completely disingenuous that they don't want
kids to smoke because they have to have kids smoke," said Ruth Malone, an
associate professor of nursing and health policy at UC San Francisco's medical
school.
And critics complain that Philip Morris continues to oppose tobacco tax hikes,
even though higher taxes discourage smoking, particularly by cost-sensitive teens.
In November, for example, Altria and Philip Morris spent $1.35 million in a failed
effort to defeat a tobacco-tax increase in Oklahoma, according to records filed
with the state's ethics commission.
Peggy Roberts, senior director of communications and media affairs for Philip
Morris USA, said the company fought the measure partly because excessive taxes
promote contraband and Internet sales, where age verification is absent.
"As a manufacturer of a product that has serious health effects and is addictive,
we do have a responsibility to help keep kids from smoking," Roberts said.
"We're trying to make an effort in other ways" to do that.
In league with tavern and restaurant associations, Philip Morris also has continued
to battle indoor smoking bans, including in Idaho and New York this year.
Roberts said the company from now on would sit out these fights, an internal decision
that she said was made about two months ago.
"It's a big departure from what we've done traditionally," Roberts said.
Despite advertising restrictions in their settlement with the states, promotional
spending by Philip Morris and its rivals has increased 85% since the deal was
signed — a sore point with health groups. According to the Federal Trade
Commission, the total rose from $6.7 billion in 1998, the year of the agreement,
to $12.5 billion in 2002, the most recent year for which figures are available.
Roberts would not disclose Philip Morris' share of that, saying the figure was
proprietary.
Of the rising flood of promotional dollars, relatively little goes for traditional
advertising, such as tobacco billboards that were banned by the settlement. Instead,
the companies are spending heavily on in-store ads and consumer discounts such
as coupons — in other words, critics say, trying to keep people smoking by
blunting the effect of higher taxes.
Like its major global rivals, Altria's Philip Morris International unit continues
its aggressive push to win customers abroad, including sponsoring sporting and
artistic events in countries where knowledge of the risks of smoking is more limited
than in the U.S., industry foes say.
Philip Morris has made Marlboro, the world's bestselling brand, such a popular
symbol that it now finds itself fighting to keep the logo off everything from
baby bibs and toy cars to kiddie amusement rides.
"It's inappropriate, we don't want to see it, and we suffer from it,"
said David Davies, senior vice president of corporate affairs for Philip Morris
International. Davies said company sales reps had been instructed to report such
things to the legal department.
"No one is authorized to use our [trademark] on anything — let alone
something that is of an appeal to children."
Exec Says Joe Camel Aimed
at Adults
In a racketeering trial, one of the people who launched the
cartoon ads says her firm doesn't want kids to smoke.
From Reuters | Los Angeles Times | April 1, 2005 | See
also: Judge Calls Tobacco Exec's Testimony 'Self-Serving'
A top R.J. Reynolds Tobacco executive Thursday defended the company's advertising
policies, testifying during the U.S. racketeering trial against cigarette makers
that R.J. Reynolds did not aim its popular Camel brand products at children
or teenagers.
Lynn Beasley, president and chief operating officer for the main unit of Reynolds
American Inc., helped launch Joe Camel, the cartoon figure known for his cool
persona and dark sunglasses that later drew the ire of regulators.
She said the company marketed only to adult smokers.
"The policy since I've been at the company is that we do not want youth
to smoke," testified Beasley, who joined R.J. Reynolds in 1982 as a marketing
assistant.
The Joe Camel character was used to advertise Camel cigarettes during the late
1980s and most of the 1990s.
The Federal Trade Commission charged R.J. Reynolds with unfair advertising practices
in 1997, saying Joe Camel ads targeted youth. R.J. Reynolds agreed to halt the
ads later that year.
Beasley was the latest of several tobacco executives who have taken the witness
stand to address government charges that they promoted cigarettes to underage
smokers.
The racketeering lawsuit, filed by the administration of President Clinton in
1999, accuses R.J. Reynolds and other tobacco firms of deliberately misleading
the public about the risks of smoking in a conspiracy going back to the 1950s.
Also targeted in the lawsuit are Altria and its Philip Morris USA unit; Loews
Corp.'s Lorillard Tobacco unit, which has a tracking stock, Carolina Group;
Vector Group's Liggett Group; and British American Tobacco unit British American
Tobacco Investments Ltd.
Beasley came up with the idea to revamp an older illustrated Camel brand poster.
R.J. Reynolds wanted a new image that "was contemporary to change the perception
of Camel as an old brand. Joe Camel fit that goal completely," Beasley
said in written testimony. She added that focused consumer groups to evaluate
the ads were limited to smokers older than 18.
A U.S. government survey released Thursday showed 22.3% of high school students
and 8.1% of middle school students said they smoked cigarettes in 2004.
Tobacco product use in youth has not dropped significantly since 2002, according
to the Centers for Disease Control and Prevention survey.
In U.S. District Court in Washington, Justice Department lawyer Ken Sealls displayed
full-page ads from Rolling Stone, Sports Illustrated and other magazines, used
during and after the Joe Camel campaign. Sealls tried to show that the ads had
a youthful bent.
One, from a 2005 Rolling Stone issue, showed a younger-looking woman with a
Camel cigarette. "You see that her left eyebrow is pierced?" Sealls
asked.
"I do," Beasley said.
But she said the company placed ads only in magazines with at least 85% adult
readership and that the publications Sealls showed met that test.
------------------------------------------
Copyright 2005 Los Angeles Times
Judge Calls Tobacco Exec's
Testimony 'Self-Serving'
From Reuters April 12, 2005
A federal judge Monday discounted as "self-serving" the testimony of
Philip Morris USA Chief Executive Michael Szymanczyk in the government's racketeering
case against cigarette makers.
U.S. District Judge Gladys Kessler in Washington, impatient as the cross-examination
of Szymanczyk extended into the middle of its second day, told a lawyer for the
government that she would look skeptically at what the CEO had to say.
"When I read 200 to 300 pages of self-serving testimony about 'Oh, how wonderful
we are,' don't you think I can take that into account?" Kessler asked Justice
Department lawyer Sharon Eubanks.
The judge's comment came after Eubanks spent the morning going through a series
of arguments and exhibits in a protracted effort to cast doubt on Szymanczyk's
testimony.
Szymanczyk has emphasized that Philip Morris has changed and is now a "respectable"
company that deals with the public openly about the dangers of smoking and backs
youth smoking prevention programs.
In written testimony, Szymanczyk said Philip Morris had made a series of changes
since the late 1990s, including a decision to drop a long-held stance questioning
whether smoking was addictive and whether its links to disease had been fully
proved. The company has since deferred to public health authorities on the effects
of smoking.
During cross-examination, Eubanks tried to convince Kessler that the changes made
by the company were really cosmetic moves designed to blunt public anger and help
defend it against sick-smoker lawsuits.
Questioned later by a Philip Morris lawyer, Szymanczyk maintained that the changes
in the way the company deals with the public were more than cosmetic. He was asked
repeatedly whether health advisories on television and the Philip Morris website
were a public relations "gimmick" or "gesture," and answered
"No" each time.
Szymanczyk also denied suggestions by Eubanks that Philip Morris could revert
to its less cooperative stance. "I don't think we have any desire to go backwards
on this," he said.
The government suit, launched in 1999, targets Altria Group Inc. and its Philip
Morris unit; Loews Corp.'s Lorillard Tobacco unit, which has a tracking stock,
Carolina Group; Vector Group Ltd.'s Liggett Group; Reynolds American Inc.'s R.J.
Reynolds Tobacco unit and British American Tobacco unit British American Tobacco
Investments Ltd.
------------------------------------
Copyright 2005 Los Angeles Times
Don’t Fall for Hot Pink
Camels
EDITORIAL | The New York Times | February 19, 2007
Wall Street analysts may be applauding R. J. Reynolds for introducing a feminized
version of its macho Camel cigarette brand, and company executives clearly think
they have hit on an innovative marketing strategy. But this new attempt to woo
women smokers can only be viewed as another cynical blow to public health.
The Reynolds executives apparently don’t care that lung cancer among women
is the only major form of cancer whose death toll is rising. Lung cancer kills
far more American women than does the much more feared breast cancer. And smoking
is overwhelmingly the leading cause of lung cancer, not to mention its contribution
to heart disease, emphysema and all sorts of other health problems.
So now comes R. J. Reynolds with its new female-friendly Camel No. 9 and a campaign
to promote it costing an estimated $25 million to $50 million. The name is supposed
to evoke “cloud nine” or being “dressed to the nines,” according
to Reynolds marketers, although some think it may also suggest luxury perfumes
like Chanel No. 19 and romantic songs like “Love Potion No. 9.” As described
by Stuart Elliott in last Thursday’s Times, the company is reaching out to
women with slogans like “light and luscious,” hot pink and teal packages
and ads adorned with flowers.
This would all seem laughable if it were not so pernicious. No doubt Reynolds
will fall back on a tobacco company mantra: it’s not trying to woo new smokers
to a dangerous product; it’s just trying to convert existing ones to its
brand. But we all know that the tobacco business will wither away unless it finds
new smokers to replace those who quit or die.
Bipartisan bills were introduced in both houses of Congress last week to give
the Food and Drug Administration needed authority to regulate tobacco products
and restrict marketing to young people, consistent with free-speech principles.
That may not do much to wean their elders from the habit. But it could stop young
women from being entrapped by cynical marketers.
Copyright 2007 The New York Times Company
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