Tobacco's Pack of Troubles

When doctors began to link smoking and lung cancer ten years ago, the U.S. tobacco industry deftly headed off catastrophe by switching to filter brands, which seemed to allay the public's fears. Since then U.S. cigarette consumption has puffed merrily on to new highs year after year (24 billion packs last year), and most of the major manufacturers have reaped a harvest of profit records. Suddenly last week the cancer scare rose up again, setting off a flurry of selling on the New York Stock Exchange that tumbled every major U.S. cigarette producer's stock to a new 1962 low--though by week's end all had recovered some of their losses.

Transatlantic Trouble. This time the source of the trouble lay across the Atlantic where British cigarette companies are under attack as the result of a recent Royal College of Physicians report on lung cancer, which has brought on a British government anti-tobacco educational campaign (TIME, March 23). After watching their sales fall 10%, the British companies last week, in an attempt to hold public esteem, volunteered to restrict television tobacco advertising to after 9 p.m., when children are in bed. One company even pulled its cigarettes out of street vending machines to keep under-age smokers from buying them so easily.

Adding to the impact of the British hubbub was an Italian law prohibiting tobacco advertising entirely. Though Italy's cynical citizens assumed that the law was meant to protect the cigarettes produced by the state tobacco monopoly against competition from imported cigarettes (whose sales depend much more heavily on advertising), U.S. tobaccomen began to worry lest the U.S. Government take a cue from Britain and Italy. They found scant comfort in news that the U.S. Public Health Service has just decided to set up a panel to study the relationship between smoking and cancer.

Safety in Diversity. Philip Morris Inc. (Marlboro, Parliament, Alpine) has already begun hedging against possible loss of cigarette sales by diversifying. Some 20% of its business last year was in razor blades (Pal, Gem), flexible packaging and polymer chemicals. P. Lorillard Co. (Kent, Old Gold, Newport, York) recently obtained permission from its stockholders to begin diversifying.

For the most part, however, tobacco-men profess confidence that the cigarette habit will not lose its hold on the public. The industry's largest producer, R. J. Reynolds Tobacco Co. (Camel, Winston, Salem) is test-marketing in Southern California, New England and North Carolina a new king-size nonfilter cigarette called Brandon, which ambitiously aims to displace American Tobacco Co.'s Pall Mall as the top individual seller. And Philip Morris President Joseph F. Cullman 3rd gave some hint of how the industry hopes to fight the medical issue. He told his company's stockholders last week that there is unspecified but "growing evidence that smoking has pharmacological and psychological effects that are of real value to smokers."

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