The Controversial Princess
Puffing cigarettes, cigars and pipes until the smoke taxed the air conditioning at Miami Beach's plush hotel Fontainebleau, the men who know tobacco best gathered this week to pay homage to the persistence of one of the world's most widespread habits. More than 11,000 strong, the delegates to the annual convention of the National Association of Tobacco Distributors--which sells 75% of all U.S. tobacco products--peered at exhibits that traced tobacco from field to lip, critically taste-tested piles of free cigarettes, jostled happily through luncheons, dinners, parties. But the greatest pleasure of all was just talking shop. Never had shoptalk been so cheery, for never had business been so good.
U.S. smokers are puffing cigarettes at a record rate. The nation now has 58 million smokers--58% of all men and 36% of all women over 15. Every second of every day, they buy some 15,000 cigarettes. Last year Americans spent $7 billion on tobacco, more than Canada's national budget, consumed a record 462.7 billion cigarettes, up 4.5% from record 1958. To supply them, the U.S. annually grows 1.8 billion lbs. of tobacco on 500,000 farms, makes it into cigars and cigarettes in 625 factories.
What these figures show is that the U.S. tobacco industry, which has undergone crisis after crisis, has not only recovered nicely from the cancer scare, but is turning the unsettling side effects of the debate to its own advantage. By flooding the market with filters that promised protection from tar and nicotine, tobaccomen turned the whole market topsy-turvy. In 1952 five brands, led by Reynolds Tobacco's Camel (and followed by American Tobacco's Lucky Strike, Liggett & Myers' Chesterfield, American's Pall Mall, and Philip Morris), held 82% of the cigarette market; today that share is held by ten brands, many of them born since then. Filters have swelled from i% of the market in 1952 to 50% today, and menthol cigarettes have gone from 3% to 10%. Nor is the race to novelty over. This week Brown & Williamson began test-marketing a new filtered cigarette called Kentucky Kings.
Kings' novel selling point: even the filter is made of tobacco.
New Wooing Trend? The U.S. tobacco industry, sensing a new shift in the public taste, is undergoing yet another upheaval.
Most tobaccomen feel that filters--which were once expected to gobble up 75% of the market--have about reached their peak. Everyone who was going to be scared by the cancer talk has already been scared, they say. Have filters about worn out their basic sales appeal? One clue is front-running, unfiltered Camels. Their sales fell steadily for six years; then last year, Camel sales turned around, rose 3%. Another clue is the decision of some manufacturers to loosen or lighten their filters to let more teste through. Last week Liggett & Myers announced that it is redesigning its new filtered Duke because "most people don't like that heavy a filter." These changes come at a time when the Federal Trade Commission has just persuaded the industry to give up voluntarily all health-protection claims for cigarettes, recently their loudest selling pitch. One reason for the industry's willingness: it was beginning to think that it had already got as much mileage as possible out of filter claims. From now on, it is going back to wooing its customers with the old-fashioned lures of flavor, aroma and satisfaction.
Pushing Pleasure. No one could be more pleased by this switch than a freckle-faced, sandy-haired North Carolinian named Bowman Gray, chairman of Winston-Salem's R. J. Reynolds Tobacco Co., the nation's No. 1 tobacco company.
Reynolds and Bowman Gray, 53, have been stressing taste all along because, says Gray, "people smoke for fun and the simple pleasure of it." Except for occasional flirtations with throat therapy, e.g., in its T-zone ads of the 19405, the company has largely steered away from the health issue. When the cancer controversy started, it was Bowman Gray, then Reynolds' advertising chief, who concluded that the wisest course was to stick with the theme of taste instead of test tubes, to push flavor before filtration.
Gray knows well that it is the tar and nicotine that add to a cigarette's flavor, and that when they are reduced, smoking pleasure is also reduced. Therefore, Reynolds' cigarettes have always ranked high in tar and nicotine--and flavor.
Pushing smoking pleasure has proved a bonanza for Reynolds. In 1958, for the first time in 18 years, it edged ahead of front-running American Tobacco, last year increased its lead to pile up record sales of $1.3 billion and profits of $90.4 million. Its regular-sized Camels are the No. 1 U.S. cigarette (since 1949). Its Winstons are the biggest-selling filter tip (since 1955) and the third most popular U.S. cigarette, its filtered Salems the top U.S. menthol. Reynolds also makes Prince Albert, the leading U.S. pipe tobacco, and Days Work, the top chewing tobacco. Its profit margin is 12.5% higher than any other in the industry, and its stock, selling last week at 62 1/4, is considered the bluest of the blue-chip tobacco stocks.
Golden Tongue. To pick its mixtures, Reynolds relies on a tasting panel of 250 employees (from top executives to stenographers) who regularly test its new products. But Gray--who began smoking when he was nine--is the man with the golden tongue, gives the final O.K.
Says he: "I do believe that if a cigarette appeals to me--I'm a pretty average fella --it might appeal to the population." This week Gray, who smokes as many as four packs of Winstons a day (with an occasional Salem), was also puffing away at cigarettes from chalky white, unmarked testing packs. Through his mouth and into his windpipe he rolled the smoke with all the sober concentration of a winetaster. In the blank packs were cigarettes being tested as possible additions to half a dozen new brands that Reynolds already has on hand to put on the market when the time is ripe.
Though the company now has 30% of the cigarette market, Gray wants more.
Reynolds is building a 14-acre $30 million plant that will increase its capacity 30% next year. Last week Reynolds announced that it is moving into Europe, buying a 51% interest in West Germany's second largest cigarette firm of Haus Neu-erburg. Does the cancer talk give Gray pause? Says he: "I just don't believe it.
People are hearing the same old story, and the record is getting scratched, the needle stuck." Pattern of Hell. Many respected medical authorities flatly disagree with Bowman Gray. But then, the war against tobacco is as old as civilized man's first puff. What has changed is that the attacks that were once emotional and moral are now scientific. Ever since Columbus found the Caribbean Indians smoking "tobago" (their name for the primitive pipe in which they smoked tobacco) and smoking was introduced into Europe, the friends and foes of tobacco have been tearing at one another's T-zones.
Sir Walter Raleigh, Sir Francis Drake and the Frenchman Jean Nicot (after whom nicotine is named) all helped to popularize smoking, considered it good for the health. In 1614 a Scottish doctor named William Barclay wrote that tobacco "prepares the stomach for the acceptance of meat, makes the voice clear and the breath sweet," pushed it as an antidote for "hypochondric melancholy" and such diseases as arthritis and epilepsy.
The delicate, wide-leafed tobacco plant (Nicotiana tabacum) became known as "the divine herb" and "the princess of plants." But the foes of tobacco spied the devil's hoofs beneath the princess' skirt. King James I of Great Britain called tobacco "the lively image and pattern of hell," slapped on a big import tax. Louis XIII of France and Czar Michael I decreed penalties for smoking, ranging from death to castration, and Pope Urban VIII threatened excommunication for anyone found smoking in church or on church premises. A signer of the Declaration of Independence, Dr. Benjamin Rush, attacked tobacco on grounds of health --one of a host of doctors who through the years have attributed to the plant 300 diseases ranging from impotence to bad eyesight. Long before cancer became a cry, cigarettes were known as "coffin nails." Henry Ford and Thomas Edison vowed that they would not knowingly hire anyone who smoked. In 1918 Evangelist Billy Sunday cried triumphantly: "Prohibition is won; now for tobacco!" In earlier days, the feeling against smoking by women was so strong that when Carmen came to Kansas before World War I, it was presented against a backdrop showing a dairy instead of a cigarette factory--and Carmen herself walked onstage carrying a milk pail. Not until after Bryn Mawr lifted its smoking ban in 1925 and Chesterfield began luring women smokers (with ads showing a gentleman lighting up, and a woman coaxing, "Blow some my way") did many women dare to smoke even in their own homes.
Back to the Breast. Just why do people smoke? Almost everyone has a theory.
Only fortnight ago Dr. J. Harold Burn of Oxford suggested that the lift usually associated with smoking may be caused by an adrenalin-related hormone called nore-pinephrine--the same hormone that raises the hair on the tail of a scared cat. But most scientists agree that smoking becomes a habit because of emotional compulsions rather than any physical need.
People smoke, they say, to convince themselves that they are mature and sophisticated, to avoid or lessen tensions, to aid social poise, or just to have something to do with their hands. Young people smoke cigarettes to appear older, older people to appear younger.
Psychiatrists stress that one of the biggest elements in smoking is oral gratification, an unconscious return to the breast.
But even cigar-smoking Sigmund Freud was not above poking a little fun at that notion; he once held up his long black cigar before a class and said: "Just remember, it is not always a symbol --sometimes it's just a cigar." Small-Town Touch. By stimulating, anticipating and satisfying the public taste, R. J. Reynolds has built itself into the biggest and, according to Wall Street, the best-managed company in the U.S. tobacco industry. But it has never lost its oldfashioned, small-town touch. It resisted the glamour of setting up offices in New York City, as most other cigarette companies did, stayed on in provincial Winston-Salem (pop. 118,000), where it employs one in every five workers, is the city's biggest booster and a major contributor to civic drives. From the company's red brick factories and its 22-story limestone office building, the tallest in North Carolina, the quick and pungent smell of tobacco drifts pleasantly over the city.
From the Negro stemmers to Chairman Gray, most of the company's 14,000 employees are local folk. Like Gray, whose father and uncle were both Reynolds chairmen, many are the second or third generation to work for Reynolds. Twelve of the 15 directors are company officers who meet weekly at an informal luncheon, can be rounded up in ten minutes at any other time if anything important comes up. Reynolds' factory workers (35% 0, them Negro) are so loyal to the firm that they have kept Reynolds the only major nonunion firm in the industry, even though it pays no higher than other companies. Reynolds paternalistically rewards its employees with generous fringe benefits, including a pension plan, notably few firings, and the fulltime service of a Methodist minister, the Rev. Clifford Peace, who listens to their troubles on company time.
Reynolds' Gray is proudest of a much-abused, often misused concept known as teamwork. He freely delegates authority ("Confidence is important"), but makes certain that everyone knows precisely what is expected of him. He runs the company through seven top committees, headed by directors responsible for every function from buying tobacco leaf to setting up drugstore displays. Unhappy about the way one department was running, Gray last year walked up to its head, said softly that something had to be done, concluded: "I'll see you in six months." Exactly six months later, Gray checked up. The matter had been straightened out.
A former salesman himself, Gray takes particular pride in the sales force, has made it the industry's biggest (reported by Reynolds at 1,200 men, but estimated by the industry at up to 2,000) and most respected. Gray's taste in salesmen runs to those with a calculatingly homey counterside manner, men known at every crossroads store from New Mexico to Alaska for their friendliness, their willingness to set up displays and help the retailer in any task, their speed in filling cigarette orders. Result: the retailer often gives them a helping hand in turn, awards them choice display space. As one who knows the value of a quick flash report from the field on a new competitive situation, Gray answers his own phone, has long had standing orders that any salesman can call him directly at any time.
"Emma, Brenda, Belle." Gray sometimes tours the retailers himself (often in one of the company's three private planes), but most of his time is spent in Winston-Salem. There, he is out of bed daily at 6 a.m. sharp in the first-floor bedroom of his modified Georgian home on his 800-acre Brookberry Farm, where he lives with his wife and family (five sons, ranging from 9 to 22). He eats breakfast alone at 7:20 because "I made a deal with my wife when we were first married.
I'm not in the best humor at breakfast, and we wanted to stay married." For years, he usually prowled the farm before breakfast. But he gave up the custom when a disorder of his leg muscles forced him to walk with a cane. Now he usually does some paperwork in the library before being chauffeured to work in his 1958 grey Oldsmobile station wagon. The watchful eyes of his father and uncle stare down at him from the walls of his 19th-floor office.
Home again by 5, Gray has a single martini before dinner, poured from a full bottle of martinis that he makes up for the week. He usually gets into bed about 9 to read or watch TV (particularly shows with tobacco sponsors) until lights out at 10:30. Gray has few cultural interests (his favorite relaxation: doing jigsaw puzzles), seldom attends church (he is a Methodist), sees perhaps one movie a year. His chief outside-work interest is the farm, where he likes to wander on weekends, carrying a notebook with the vital statistics of his 415 Guernseys and calling them by name--"Emma, Brenda, Belle, Charming." Gray is a millionaire; besides his $160,000 annual salary, he has his father's bequest of 55,000 shares of Reynolds stock (then worth about $3,000,000), now owns a total of 90,000 shares, worth $5,600,000.
Long Tradition. Bowman Gray is the product of a long and inbred family tradition at Reynolds--though his family is no direct relation to the Reynolds clan.
The company got its start in 1874, when a brash youth named Richard Joshua Reynolds, wearing a tobacco-stained mustache that belied his 21 years, took his profits from a family tobacco business, set up his own business at Winston to sell chewing tobacco among the back-country folk. He did so well that by 1888 he was worth more than a quarter million dollars.
But he, like everyone else, soon ran into the formidable ambitions of James B. ("Buck") Duke, a North Carolina tobaccoman who had set up many factories, manufactured the first successful U.S. machine-made cigarettes. Duke pressured the other major tobacco manufacturers to join him in the American Tobacco Co., which became known as "the Tobacco Trust." "I don't intend to be swallowed by Duke," said Reynolds. "If he does, he'll have a bellyache the rest of his life." But Duke did swallow Reynolds by undercutting its plug prices--and Duke soon had his bellyache.
When the Government trustbusters split American Tobacco into 16 parts in 1911, forming most of today's major tobacco companies, Reynolds was on its own again.
Crowed Dick Reynolds: "Now watch me.
See if I don't give Buck Duke hell." Doubtful Dromedary. Though cigarettes were still considered effeminate and had less than 10% of the market, Reynolds decided to bring out Camels in 1913 in a package decorated with a very sick-looking animal. Recalls former Director R. C. Haberkern: "He was atrocious. He had pointed ears, his head was bad, his feet looked like sweet potatoes." The problem was not solved until the Barnum & Bailey circus came to Winston-Salem, and the Camel people got a look at their first dromedary, Old Joe. Old Joe was promptly photographed, drawn for the package. (When Reynolds tried to change the package slightly in 1958, it got so many complaints that it had to switch back to the old one.) Camels, with their stronger blend, revolutionized the cigarette market before Dick Reynolds died in 1918. Camel sales jumped from $10 million in 1913 to $188 million in 1918, and the company took over from American as the industry's leader. During World War I, Reynolds made sure that soldiers in the trenches had plenty of Camels, reaped its reward when they came back home with a warm spot for the brand. American countered with its new Lucky Strike--and the battle lines between the two tobacco giants were drawn.
"Fun to Be Fooled." American's George Washington Hill, the brassiest to-baccoon of all time, dreamed up the slogan "It's toasted" for Lucky Strike--even though all tobacco went through the same toasting process. Reynolds struck back with "I'd walk a mile for a Camel," scoffed at Luckies' "toasted" claim with ads showing a magician sawing a girl in half and captioned, "It's fun to be fooled; it's more fun to know." George Washington Hill, the prototype of the dictatorial sponsor in The Hucksters, was not a man to be outshouted; he pushed into the industry lead once more in the early 19305 with such ads as "Reach for a Lucky instead of a Sweet," "Nature in the Raw Is Seldom Mild," and "20,679 physicians say Luckies are less irritating." The FTC finally forced him to tone down some of his health claims.
The man who waged much of the battle against American was Bowman Gray's father, a hardworking, up-from-the-ranks salesman who became Reynolds' sales manager, moved on in 1924 to president.
Young "Red" Gray worshiped his father and followed in his steps. In 1918, at the age of eleven, he went to work as a leaf trimmer for Reynolds during summer vacations. (Another Reynolds employee, though less interested in it as a career: Bowman's younger brother, Gordon Gray, onetime Assistant Defense Secretary, former president of the University of North Carolina and now national security adviser to President Eisenhower.) At Woodberry Forest School in Virginia, Bo Gray persuaded fellow students to smoke Prince Albert after he discovered that cigarettes were forbidden. After graduating from Chapel Hill ('29) he went to work as a Reynolds salesman.
Though Gray's family connections did not hurt him, he got no soft treatment, and asked for none. He lived out of a suitcase for six years while selling Reynolds products in the East and Midwest, then was assigned to sell Camels to the Navy, where Reynolds had less than 6% of the business. He stayed at it for two years, worked so hard that Reynolds had 25% to 30% of the Navy market when he left. In 1936 he met Elizabeth Palmer Christian, a Virginia banker's daughter, at a friend's wedding, quickly decided to marry her. Three years later he became Reynolds' assistant sales manager. After a hitch as a Navy lieutenant commander in the war (he was landlocked in Intelligence), Gray was moved onto Reynolds' board in 1947, became a vice president in 1949, moved up to president in 1957 and to chairman last September.
Quiet Assassination. War's end found cigarette sales stronger than ever, but the dominance of the plain old regular-size cigarette was soon to end. First came the king-size cigarette. American's Pall Mall got there first, and did well. Reynolds decided to try a king with mild tobacco, brought out Cavalier. Cavalier flopped, still accounts for less than i% of the market, may eventually be dropped. Says Gray: "We goofed." The reason: top management thought it sniffed a shift to blandness in public taste in everything from music to food, brought out CavaHer to play to this trend over the opposition of Reynolds' sensitive-tongued tasting panel.
When the cancer controversy began, the industry thought disaster was at hand.
Instead, the few filters already on the market (e.g., Brown & Williamson's Viceroy and Benson & Hedges' Parliament) began to get hot. Reynolds was ready with its own filter, developed under a team consisting of Chairman John C. Whitaker, President Ed Darr and new Sales Chief Bowman Gray. The man who had seen filters coming was Darr, who was impressed by their popularity in Switzerland during a vacation. But the man who decided when to roll was Gray. Reynolds' test panel had smoked 250 versions of the trial Winston over two years when Gray took a puff of a new blend numbered 736 one day in 1954. Cried he: "This is it! Let's go all out for it." The company did--and Winston took over leadership among the filters in 1955. Reynolds followed up its victory by introducing the mentholated Salem, timing it just right to hit the growing demand for menthol.
The company also got an unexpected puff from Winston's slogan--"Winstons taste good like a cigarette should"--which had been dreamed up in an advertising session with Gray. Questioning the use of "like," Critic Clifton Fadiman assailed the "quiet assassination of the conjunction 'as,' " and Editor Bruce Bliven cried: "I find that I sit in front of my television set shouting at the tiny figures on it: 'No, no, you dope. Like is a preposition.
The conjunction is as, as, asT " Reynolds was delighted by the furor, like any cigarette maker might be.
Adamant Denial. The recent proliferation of new brands and the flightiness of consumer loyalties have played havoc with the old-line cigarette market. Camels are 37% below 1952, Luckies are down 39%, Chesterfields 57%, Lorillard's Old Gold 58% and Philip Morris 71%. Only Pall Mall among the nonfilters has gained, is running 25% ahead of 1952.
Despite the fact that the health issue is at the heart of the matter, the industry continues to deny adamantly any direct or "causal" cancer-smoking link. It has spent $3,700,000 to set up the Tobacco Industry Research Committee, which is widely regarded as only a smokescreen for the industry. But fortnight ago two reports came out from medical groups partly financed by the committee, holding that 1) smoking taxes damaged hearts, and 2) tobacco users absorb 90% of the nicotine to which they are exposed.
Dr. Ernest Wynder of Manhattan's Sloan-Kettering Institute, who, with Dr. Evarts Graham, started the cancer controversy by inducing cancer in mice with daubings of tobacco tar, is only one of many prominent medical authorities (including the Surgeon General of the U.S. and the public health services of Britain and The Netherlands) who now believe that the link between smoking and cancer is definite. Last week the World Health Organization identified cigarettes as a major cause of lung cancer. Many smokers themselves are convinced of the link; in a worldwide poll, 33% of them said they thought smoking was one cause of cancer --though they kept right on smoking.
Their attitude was summed up by Comedian Joe E. Lewis, who said that he became so nervous from reading stories about cigarettes and health that he decided to give up reading.
Have filters helped? Dr. Wynder thinks they have, fears that the FTC's decision to end the filter race was a mistake that "may have discouraged the industry's efforts toward improving their cigarettes," set back the increased protection the smoker has received since 1952. He thinks that far safer cigarettes can be developed.
Actually, filters--with their psychological assurance to smokers--have helped the tobacco industry in other ways too.
They cost less than the tobacco they displace, sell for more, allow the use of stronger, cheaper tobacco in cigarettes.
Most companies also use reconstituted or homogenized tobacco (formerly unusable stems and leaves that are pulverized and re-pressed), which was pioneered by Reynolds and copied by the industry. The average filter cigarette now contains about 14% reconstituted tobacco. Many tobaccomen feel that filters, because they have less flavor and often burn faster, actually make people smoke more.
All the Same? Despite all the claims and counterclaims, says W. P. Hedrick, tobacco marketing specialist for the North Carolina Department of Agriculture, "all the companies buy the same tobacco.
They may have slightly different formulas, but essentially all cigarettes are the same." What makes the difference is flavor --each company has its secret recipe--and heavy advertising. The tobacco industry is the nation's fourth biggest advertiser (after food, autos, soap), spends more than $200 million a year. Reynolds has the biggest budget (more than $50 million), gets more benefit from it by concentrating only on its three top brands.
Tobaccomen have been notably successful in driving home their slogans, from "Ask Dad, He Knows" (for Sweet Caporal) and "Be Nonchalant--Light a Murad" to Old Gold's "Not a Cough in a Carload" and Chesterfield's "They Satisfy."
The current trend in advertising is to link smoking to virility. Though Camels have long been considered a he-man's smoke,* it was Philip Morris' Marlboro (whose pitch was "Mild As May" back in the '20s when it was being pushed as a woman's cigarette) that made the plug explicit with its rough, tough and tattooed Marlboro Man. Chesterfield's Men of America series hinted at the inherent daring in smoking: the man who "takes big pleasure when and where he can." Viceroy's "thinking man's filter" stresses male independence--and has spawned a host of jokes. Printable example: a man comes out of an operating room in white coat and mask, removing his surgical gloves. "What a daring operation!" sighs the nurse. "Actually," says the man, "I'm a plumber--but I think for myself." What kind of person smokes what kind of cigarette? Camels and Luckies are smoked by older people and are strongest in rural areas, where consumers are slow to change habits. Filters have made their biggest impact in the cities, are popular with the young, and are bought by two-thirds of all women smokers. Mentholated cigarettes are more popular with city dwellers and women, have made the biggest hit in the warm South. Marlboros have replaced Chesterfields as the cigarette to smoke on campus. Though both Chesterfield and Philip Morris were long the cigarettes of the Big City sophisticate, the favorite smokes of New Yorkers are now Winstons, Pall Malls and Lorillard's Rents.
No Mules. The uncertain and often whimsical nature of the cigarette market makes the industry highly competitive and secretive. Before a cigarette is introduced to the general public, it undergoes taste-testing for months, is widely market-tested by pollsters. When the secret is out that one company is test-marketing a new cigarette in one area, other companies hustle into the area to fight it with extra salesmen, increased ad budgets.
Now that tobaccomen can no longer sing, shout or advertise their superior claims to health protection, they are busy researching novelty in flavors, e.g., chocolate and peppermint. They are also using their cash reserves from high profits to diversify. Reynolds has already bought an aluminum-foil plant, Archer Aluminum, and Bowman Gray is looking for other companies to buy into, particularly in the consumer field. "We'd go into almost anything," he says, "except the mule trade." The industry looks to the future with confidence, not because it expects to be spared more crises--the next one could be definite proof that cigarettes cause cancer--but because it counts on the unchangeability of human nature. Based on the population growth and increased smoking by women, the industry expects cigarette production to rise 18% by 1965 to 570 billion cigarettes v. this year's 485 billion. If many smokers feel guilty about their bondage, they are apt to share Mark Twain's melancholy experience: "Smoking is easy to give up; I've done it hundreds of times." They are also liable to feel pretty bad-tempered. Another author became so testy when he gave up smoking that his wife finally stuck a lighted cigarette in his mouth and shouted, "Smoke, dammit, smoke!" That could well be the battle cry of the U.S. tobacco industry.
*More for their strong taste than from the ads. When former Reynolds Chairman S. Clay Williams jokingly asked his Camel-puffing friend Franklin Roosevelt for a testimonial, F.D.R. offered this one: "Only the President of the United States and Clay Williams have throats strong enough to smoke Camels."
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