If you've ever driven down I-95 through Richmond, Virginia, then you've certainly passed the Philip Morris headquarters. You can't miss it - the company has erected a massive 30 foot tall pillar next to the interstate, emblazoned with the logos of all 18 brands of cigarettes distributed by Philip Morris in the USA. Every time I see it, I feel a compulsive urge to scream, "the monolith!" and rejoice in the music of the spheres whilst reverently bowing my head and smoking as many cigarettes as I can possibly cram between my lips. Such is the power that Philip Morris and their products hold over my addiction-addled brain.
If you live in America (or even if you don't), chances are that Philip Morris holds some kind of power over you, too, regardless of whether or not you smoke. The Little Jack Horner of multinational corporations, Philip Morris has a thumb in every pie. In addition to tobacco, there's Kraft, General Foods, Miller Brewing - whew, that's a lot of thumbs. When you think of Philip Morris, just think of a multi-armed Hindu god. Now imagine that god sucking down a butt, binging on mac and cheese, and chasing it down with a brew, all the while growing fat on multiple billions of dollars willingly handed over by consumers. There, now you've got the idea.
For many people, Philip Morris has come to represent all that is wrong with greedy, bloated corporate America, where human life is expendable and it's all about the bottom line. Although the company has gained a foothold (and sometimes a stranglehold) in nearly all of the industrialized countries on the planet, there is something about Philip Morris' public image that seems quintessentially American. Surprisingly, it didn't start out as an American company at all.
From Humble Beginnings
By the middle of the nineteenth century, the cigarette had become all the rage in Europe. Up to this point, people mostly smoked pipes or used snuff. In 1832, some Egyptian soldiers, inspired by the paper tubes they used to insert gunpowder in their cannons, came up with the brilliant idea of rolling their tobacco in paper. The cigarette's popularity soared amongst the military, where the convenience and portability of one's smokables was of the utmost importance. By 1850, the idea had crossed the class boundary to become the ultimate fashion statement for the wealthy, based on the now time-honored principle that smoking cigarettes makes you look cool. The cigarette appealed especially to the ladies, who could at last indulge in their tobacco habit without resorting to unwieldy masculine pipes, the decidedly unfeminine practice of snorting snuff, or the cigarette's stinky big brother, the cigar.
Philip Morris was a member of the British gentry who had high ambitions but limited funding. Anxious to make his fortune, Morris wanted to use his small inheritance to launch his career as a merchant. He took note of the recent cigarette fad, and, accurately gauging humanity's inherent laziness, figured that people would much rather buy packages of pre-rolled cigarettes instead of rolling their own (or having their servants roll the cigarettes for them). Morris opened a tobacco shop on Bond Street in London, and in 1854, he began selling his first brand of pre-rolled cigarettes.
Alas, Morris would not live to see the realization of his dreams. When he died in 1873, his career as a tobacconist was a modest success at best. After Morris' death, ownership of the company passed into the hands of his wife Margaret and brother Leopold. In 1880, Leopold convinced Margaret Morris to sell him her share of the company. At first, the decision seemed to be a wise one, as Leopold incorporated the company and quickly filled its coffers with money from investors. Alas, Leopold was much better at parting potential stockholders from their money then he was at actually running a business, and in the late 1880s, his investors began to flee. His creditors seized the company for unpaid debt in 1894.
No longer a simple family business, Philip Morris had been selling cigarettes for four decades and had earned a certain degree of brand name recognition in Great Britain. When coupled with the business sense of the new owners, this allowed the company's fame (and profits) to rise, culminating in the 1901 royal warrant declaring Philip Morris as the royal tobacconist for King Edward VII.
Philip Morris Hits the States
The year after Philip Morris became the royal tobacconist, management decided it was high time that the company stepped up to an international scale. In 1902, Philip Morris was incorporated in Manhattan, New York, with half of the stock belonging to the British company and the other half going to American investors. Although the new corporation was headquartered in the US, they retained their original cigarette factory in London and simply imported their cigarettes into the States.
The cigarette market in the US was already nearing the saturation point: R.J. Reynolds captured almost half of cigarette sales, with smaller tobacco companies accounting for the rest. Philip Morris' imported cigarettes (including "Marlborough," named after the Marlborough Street location of the London factory, and advertised as a red-tipped ladies' cigarette that camouflaged lipstick marks) did not do especially well against such competition. In 1919, the ailing company was acquired by an American firm and incorporated in Virginia. The new company adopted the now familiar logo of lions flanking a coronet and the boastful motto "Veni, Vidi, Vici" that is found on all packs of Philip Morris cigarettes today.
Infused with new money and a new manufacturing facility in the heart of tobacco country, it was with great hopes that Philip Morris launched their retooled Marlboro brand in 1924. Again, the advertising was aimed at women, with the slogan "Mild as May" and the assurance that Marlboro was the brand of choice amongst glamorous jetsetters and the social elite. Again, the cigarettes did poorly, holding on to less than 1% of the market.
Powermongers? Who, Us?
Philip Morris tenaciously clung to their tiny share of the market while upper management underwent several major changes. In 1954, the company hired the Leo Burnett advertising agency, which decided to completely change the target demographic of Marlboro cigarettes from women to men. The agency launched a series of print ads for Marlboro promising that it "delivers the goods on flavor" and featuring "Marlboro Men." The Marlboro Men included everyone from muscular athletes to toughened sailors, in an effort to show that real men only smoke Marlboros. Sales improved immediately.
As a small but now established player in the tobacco industry, Philip Morris tooled along until 1963, when they fine-tuned their Marlboro advertising campaign. The Marlboro Men were condensed into the concept of the Marlboro Man, a rugged cowboy, and in 1964, the Marlboro Man began inviting consumers to "Come to where the flavor is. Come to Marlboro Country." Despite the fact that the 1960s saw a glut of scientific evidence linking smoking to lung cancer and the Surgeon General ordered all cigarette packs to display warning labels, Marlboro sales skyrocketed, improving roughly 10% a year. In 1972, Marlboro became the best selling brand of cigarettes worldwide.
After the Marlboro brand took off in popularity, Philip Morris used the opportunity to greatly expand their offerings to cigarette-smoking consumers. In addition to Marlboro, Philip Morris cigarette brands now include Virginia Slims, Benson & Hedges, Merit, Parliament, Alpine, Basic, Chesterfield, and a whole slew of smaller, lesser known brand names.
Philip Morris used the profits from the explosion in cigarette sales to diversify their holdings. By 1970, the company acquired nearly 100% of the stock in the Miller Brewing Company. They bought several small paper and polymer companies and combined them to create Philip Morris Industrial. In 1978, Philip Morris bought Seven-Up (later sold to PepsiCo for a handsome profit). In 1985, the corporation sold their industrial division and acquired General Foods Corp., temporarily setting the record for the largest non-oil acquisition in history. In 1988, they bought Kraft, Inc., breaking their previous record for the largest non-oil acquisition in history. The 1990s saw a similar period of success.
Today, Philip Morris Companies Inc., the umbrella organization for the Philip Morris empire, proudly proclaims itself to be the "largest consumer packaged goods company on earth." The company reported $80 billion in net revenue in 2001. Overall, Philip Morris manufactures and distributes roughly 300 different products on the world market, but cigarettes are still their most profitable venture, responsible for more than 60% of the company's revenue. They are the biggest tobacco company both internationally and domestically, with 92 varieties of cigarettes sold in 180 markets across the globe. Marlboro continues to be the best selling brand of cigarettes ever.
Implausible Deniability
Did you ever hear the one about the Marlboro Man dying of lung cancer?
Well, it's not exactly true. In fact, lung cancer struck two men who played the Marlboro Man over the years. Wayne McLaren, who was a real live rodeo cowboy before becoming an actor in spaghetti Westerns in the 1960s, portrayed the Marlboro Man in a series of print ads in 1976. He smoked a pack and a half a day, and was diagnosed with lung cancer in 1990 at the age of 49. He died in 1992. Shortly before his death, McLaren implored Philip Morris executives to limit their advertising, realizing that he, as the Marlboro Man, had helped bring the same horrible fate to other smokers. His pleas went unheeded.
David McLean was an actor who also got his start in Western B-movies and television series. He played the Marlboro Man in both print and television ads in the 1960s (before the ban on cigarette advertisements on TV). McLean had been a heavy smoker since he was 12, was diagnosed with emphysema in 1985, and finally died of lung cancer in 1995. After his death, his wife and son filed a wrongful death lawsuit against Philip Morris, alleging that the company contributed to McLean's disease by forcing him to smoke as many as five packs of cigarettes per take during the advertising shoots. Philip Morris also continued to send McLean complimentary cartons of Marlboros for the rest of his life.
The smoking-related deaths of the Marlboro Men are just an extremely ironic example of a large problem that was quickly turning the late 1990s into Philip Morris' own corporate version of hell. A whole generation of smokers had grown up hearing advertisements hailing cigarette smoking as the classy, fashionable, manly, womanly, or even healthy thing to do. In the 1990s, emphysema, lung cancer, and other maladies related to the long-term effects of cigarette smoking suddenly cropped up in this segment of the population. The financial burden of these patients on federal and state healthcare was enormous. Someone had to pay, and Philip Morris was the largest tobacco company on the planet.
Philip Morris and the other members of Big Tobacco were faced with quite a conundrum. The addictive properties and detrimental effects of smoking had long been publicized by the Surgeon General and other outside sources. However, the tobacco companies themselves, Philip Morris included, had never made any public mention of these side effects. Philip Morris could defend themselves in a class action lawsuit by claiming that all of these lung cancer patients made the personal choice to start smoking and keep smoking even after they heard about the mounting evidence linking cigarettes to lung cancer. After all, it was common knowledge. However, in doing so, the company would be admitting that they had known about the dangers of smoking all along. If Philip Morris knew they were manufacturing and marketing a dangerous product and did not directly inform consumers of such dangers, then they could be held liable in court, regardless of the number of sources outside the tobacco industry who had been warning the public since the 1960s.
Instead, Philip Morris took a course of action that borders on the ludicrous: denial. Complete, total, overarching, unwavering denial, on all issues. No, we are not aware that cigarettes are addictive. No, we have never seen any evidence linking cigarettes to lung cancer. No, we did not introduce chemical additives that increase the addictive or carcinogenic properties of cigarettes - we did not know these properties existed. These are the kinds of statements uttered by Philip Morris executives when questioned by the press, U.S. Congress, and eventually, the U.S. Department of Justice.
Just on the face of it, Philip Morris' denials were hard to believe. Philip Morris executives would have had to literally sequester themselves in the Marlboro-Cave (TM), severing all contact with the outside world, in order to avoid hearing about the dangers of smoking. When viewed in detail, their denials become even more implausible. There is a wealth of evidence, from internal memoranda to audio tapes of secret meetings among executives, that proves that Philip Morris was most definitely aware of the problem. They did, in fact, knowingly introduce additional carcinogens to improve the flavor of their cigarettes, and used chemical additives that enhanced the addictive properties of nicotine in order to hook potential lifetime customers more quickly. In the late 1980s, Philip Morris briefly (and quite secretly) debated making a "safer" cigarette that maintained nicotine levels but reduced carcinogens by 60-70%. However, they quickly scrapped the idea, as doing so would be an implicit admission that cigarettes were unsafe in the first place.
Slap My Wrist Harder! Harder! Oh Yeah, Baby
In 1994, a Florida jury set a record when they ordered the tobacco industry to pay $200 billion in damages in a class action lawsuit filed by smokers living in that state. Between 1995 and 1998, Philip Morris and the other companies that form Big Tobacco were named as the defendants in civil lawsuits filed on the behalf of all 50 state governments, looking to recoup their losses for the healthcare and state services provided to diseased cigarette smokers. In the overwhelming majority of the cases, the tobacco industry's offer of an out-of-court settlement was accepted. This led to the 1998 Master Settlement Agreement, in which Philip Morris and the other large tobacco companies agreed to pay out $200 billion to 46 states and 5 US territories, in addition to separate settlements with the governments of Florida, Mississippi, Texas, and Minnesota. Altogether, the tobacco industry will dole out more than $500 billion in damages over the next 25 years.
The money was not the only issue, however. Philip Morris and the other tobacco companies also had to agree to several stipulations regarding the way they conduct their cigarette business, especially advertising. The Master Settlement Agreement goes into excruciating detail as to where, how, and to whom Philip Morris may advertise their tobacco products. Most importantly, the MSA prohibits Philip Morris from advertising to children. The agreement also requires the company to fund programs that educate children about the dangers of smoking, and to produce anti-smoking public service announcements specifically targeting minors.
In order to pay these settlements while maintaining their sizable profit margin, Philip Morris raised the price of their domestic cigarettes by roughly 35 cents a pack. American smokers, however, are likely to notice a much more significant increase in the price of their smokes. Following the spate of lawsuits, many states levied higher taxes on cigarettes. The national average for state excise taxes on cigarettes is currently 53 cents per pack (more than double what it was in 1989), but an increasing number of states are hiking that figure up to more than $1 per pack. On the other hand, states that depend on the tobacco industry for their lifeblood have not only refused to raise their taxes, but have passed legislation protecting the tobacco companies from further litigation, at least at a state level.
In 1999, the Feds stepped in, as President Clinton urged the U.S. Department of Justice to investigate the matter and initiate a civil lawsuit if necessary. In September 1999, the DoJ did just that, filing a lawsuit against Philip Morris and 10 other defendants to recover billions of dollars spent by the federal Medicare and Medicaid programs to care for patients with smoking-related illnesses. If a decision is ever reached in the case, it will set a historic precedent. However, the lawsuit has dragged on for three years now, and will likely continue to stagnate for some time to come. The major hinderance to the progression of the suit is a lack of funding for the government's side. The tobacco companies have made significant campaign contributions to more than half of the Congressional representatives. Philip Morris alone is one of the top 10 contributors to the GOP, and the company also donated large sums directly to George W. Bush's presidential campaign. The end result is that the federal government, while loath to dismiss the case entirely in the interest of public relations, is also reluctant to fund the federal prosecution of the lawsuit.
So how badly has Philip Morris been hit by this trend of anti-cigarette hysteria? Despite the incessant whining by the company's executives, Philip Morris continues to thrive in the business world, reporting increasing profits every year. Philip Morris is no more likely to declare bankruptcy due to this matter than the average human being is likely to die from blood loss after a mosquito bite. The diversity of the corporation's holdings helps to stabilize their financial situation, as well as the fact that more than half of Philip Morris' cigarette revenue comes from foreign sales and not from the US. Finally, although the increasing cost of cigarettes has certainly prompted some Americans to quit, most addicted smokers are willing, albeit begrudgingly, to support their habit at any price (I know because I'm one of them).
Philip Morris is currently busily engaged in a massive public relations campaign to repair the damage to their public image. They have run a series of television advertisements designed to convince the American public that "the people of Philip Morris" are a bunch of inveterate dogoodniks who simply cannot restrain themselves from feeding the hungry, visiting the lonely, counseling children in after-school programs, and generally making the world a better place to live. The company proudly advertises the fact that their money goes to organizations like the American Legacy Foundation, which produces The Truth campaign (a website and series of public service announcements that depict youths literally infecting each other with a particularly virulent strain of anti-smoking paranoia, accompanied by the motto, "The Truth: It's Contagious"). Of course, in discussing their altruistic activities, Philip Morris purposefully blurs the line between "charitable donation" and "legal injunction."
As yet another way of trying to deflect the bad press and disassociate themselves from the tobacco scandals of the 1990s, in 2002, stockholders in Philip Morris Companies, Inc. decided by an overwhelming majority to change the name of the corporation to the Altria Group. The name change has not taken place yet; it remains to be seen whether this move will fool American consumers.
P.S. Kids, smoking is stupid. Do as I say, not as I do, in all of my hypocritical glory.
Sources:
http://www.philipmorris.com
http://www.uchsc.edu/sm/cihl/history_of_cigarette_smoke.htm
http://www.snopes.com/radiotv/tv/marlboro.htm
http://www.library.ucsf.edu/tobacco/litigation/summary.html
http://www.americanlegacy.org