Ashes to Ashes (75 page)

But it wasted little time in exorcising the menace. Rather than appealing Gasch’s ruling and risking a more conclusive defeat, the cigarette makers went to their newest champion on Capitol Hill—freshman Democratic Senator Wendell Ford of Kentucky. Not the usually diffident fledgling lawmaker, Ford had been a highly popular governor of his tobacco-rich state and an outgoing, statesmanlike figure. On reaching Washington, he asked for a seat on the powerful Senate Commerce Committee, which was already two members over its allotment of fifteen slots, thanks to senatorial rule-bending. When approached by semi-retired tobacco lobbyist (and by now longtime friendly adversary) Earle Clements to make room for Ford, who he said had been a strong consumer advocate while governor, Commerce Committee chief of staff Michael Pertschuk said he was sure the new Kentucky senator was an upright soul but there was simply no way to wedge him aboard.

When the Senate organized, however, Ford was assigned a place on the now grossly distended Commerce Committee—testament to tobacco’s might within the Capitol’s marbled halls. Among the items the committee was addressing early in the term was a revision of the Consumer Product Safety Act to exclude guns, ammunition, and pesticides from the safety commission’s purview. There had been no mention during the committee deliberations of the tobacco loophole that Moss’s lawsuit had found—until Judge Gasch’s ruling was handed down. Within weeks, and under Ford’s lash, the loophole was sealed; by a vote of 76 to 8, the Senate in July 1975 approved an amendment to the 1960 Hazardous Substances Act to exclude tobacco products, thereby definitively eliminating them from the Consumer Product Safety Commission’s jurisdiction.

In the closing years of the decade, the enduring power of the tobacco forces
in Washington was still further evidenced. When John Banzhaf’s dogged ASH petitioned the FDA once again to rule that cigarettes were drugs and ought to be so regulated, the agency steadfastly held that unless health claims were made by the tobacco companies—-who by now were all studiously avoiding any such explicit avowal—cigarettes could not be classified as drugs. And when Congress reconvened in 1979, Senator Frank Moss was gone and in his place as chairman of the Senate Commerce Committee’s subcommittee on consumer affairs, with its oversight of tobacco products, was Wendell Ford.

VIII

DESPITE
steadily growing pressure against it from the health community, if not the public at large, the tobacco industry proved remarkably resilient and spectacularly profitable during the early 1970s. For the first three years after the loss of broadcast advertising, per capita cigarette sales to Americans over eighteen rose, leading to the suspicion that the antismoking commercials of the late 1960s, when cigarette sales dropped fractionally, were a more effective damper than the TV ban. Others in the health camp argued that it would take a decade, if not a generation, for the ban to eradicate the effects of the industry’s deeply etched images of smoking as socially desirable.

The cigarette money that had flowed into TV was now heavily diverted to print and outdoor media; “placement allowances” for preferential treatment on retail shelves; merchandising that ranged from standard items like free cigarette lighters to new gimmicks like cut-rate dictionaries; and especially promotions such as the sponsorship of sports events, in which Reynolds, with its backing of rodeos, auto racing, and bowling tourneys, and Philip Morris, underwriting the women’s professional tennis tour and big-stakes horse racing, led the way. Profit margins bounded ahead thanks to the supreme irony that evolved from the campaign against smoking: lower-yielding brands cost less to make and spurred heavier per capita use among some smokers who switched to them. Ever greater use was being made of reconstituted tobacco leaf, composed of scraps, and less costly grades lower in nicotine content, as smokers were coming to tolerate less tasty smoke than from the higher-yielding “full flavor” brands. Chemically expanded or “puffed” tobacco, with twice the filling power and reduced yields, was a further economy measure. And the widespread use of microscopic holes in cigarette paper and around the filters to allow more oxygen to enter the fuel mix, quickened the burn rate, as did the looser packing of the tobacco by some manufacturers. The result was that about one-third of smokers turning to the “low-tar” brands actually increased the number of cigarettes they consumed each day to sustain their usual intake of nicotine.

For industry leader R. J. Reynolds, the net effect of these changes could be seen in the profit margin it was achieving on its flagship brand, Winston. Of the fifty-three cents a consumer paid for a pack of Winston sold in New York City in 1970, twenty-seven cents went to meet federal, state, and local excise and corporate income taxes; fifteen cents was the combined bite taken by the wholesaler and retailer; and of the remaining eleven cents accruing to the manufacturer, seven went for production and shipping, two for marketing and advertising, and two cents represented profit–or a return on net sales of 18 percent, an extraordinary margin for almost any product. With daily sales at nearly 23 million packs for all RJR brands and higher margins in the post-TV era, Reynolds had more cash than it knew what to do with, and a sense that it had become an impregnable fortress took hold. “The comfort level here was too high,” recalled David Fishel, then a young RJR publicist and later senior vice president for public relations. “Reynolds was very, very arrogant about its position in the market,” concurred Ronald Sosnick, whose family-owned business was the largest wholesaler of tobacco products in central California. “The company’s route men and rackers were dynamite—very well trained, like an army—but they didn’t give you a warm, fuzzy feeling.”

The company’s easygoing helmsman was now Alexander H. Galloway, Jr., another courtly figure and a cousin of the Grays, who had run the company for nearly half a century. Galloway’s tenure, while relatively brief, gave the company dynastic continuity but not much more. In the words of one longtime RJR executive on the financial side, “Alec seemed to walk around in a daze much of the time.” But Galloway had enough knowledgeable crewmen whom he kept at their posts to ensure his craft’s continued smooth sailing. As Philip Morris charged into the runner-up spot in cigarette sales in 1971, just ahead of American Tobacco, its market share reached 18 percent. Still far in the lead, RJR held 32 percent of the market and, if not oblivious to the gains being achieved by the inventive tobacco purveyors on New York’s Park Avenue, the Winston-Salem pacesetters were satisfied that Philip Morris was advancing at the expense of the rest of the industry and not its own. The waters around them, though, were in fact growing choppier.

The end of television advertising had been thought likely to freeze brand shares of the market—a welcome benefit to front-running Reynolds. But things did not work out that way, especially for top-selling Winston. Without its peppy little jingle (“ … tastes good / like a cigarette should”) filling the airwaves, Winston had trouble adapting itself to print media. The brand had neither personality nor image, just a good, strong taste in a boring red pack that nicely suited unfinicky older smokers, especially in the nation’s Southern region. The company tried a lot of advertising ideas—the best it came up with was a paean to the brand’s “Down Home Taste,” suited to its Dixie bastion
but not much farther afield—and kept changing them when none seemed to catch on.

Worse still, Reynolds was cheapening its products and, in the case of Winston, failing to keep up with changing tastes. Smokers may at first have craved the “bite” of Winston, but by the later ’Sixties and into the ’Seventies, a preference was growing for a smoother taste, of the sort achieved by its onrushing chief competitor, Marlboro. A detectably greater use of reconstituted tobacco sheet (RTS), of which RJR had been a pioneer developer and user, along with what its rivals heard was increased importation of cheaper Brazilian and Guatemalan leaf, was also perceptibly affecting the quality of the brand. “There was a feeling here that Winston and Camel had been loaded with G-7,” the company name for the reconstituted leaf, one top Reynolds executive conceded. Other cost-cutting measures by a profit-hungry management also hurt. Among these were starvation-level budgets for the maintenance of plants, which were thirty years old in some cases and beginning to run down, so that faulty temperature-control equipment, for example, permitted frequently dried-out leaf and a harsher-smoking product. Blending, too, was less fastidiously carried out in that period, and economies like limiting intensive quality control to only one of the three daily manufacturing shifts caused too many packages to reach the public with cigarettes that had battered, wrinkled, or torn ends. The condition would not have developed if the cutters on the “makers” had been kept constantly sharpened. Even the RJR foil and cellophane packs seemed to have a certain mushy feel to them.

To compound Winston’s deepening woes, RJR was reluctant to risk its reputation as a full-flavored smoke by extending the line into the low-tar field. Thus, it was not until late 1974, or two and a half years after Philip Morris took the step with Marlboro, that Winston Lights were marketed—with the stupefyingly bland slogan “A new cigarette that’s lighter in taste, low in tar.” During the 1970s, the Winston brand line, in all its variants (soft pack, boxed, 100 mm., menthol, and low tar), registered no increase in the number of units sold. Marlboro gained 134 percent over the same span and had taken from Winston its title as America’s top-selling brand.

Whatever its failures with regard to Winston, Reynolds was by no means asleep at the switchover to low-tar brands, as yields for the industry dropped an average of 40 percent between 1967, when the FTC sanctioned their renewed listing in ads and on packs, and 1981. Only Lorillard, staking its survival on the low-tar segment, was well out in front when RJR recognized that the more moderate-yielding brands were more profitable to sell and would be the key to both holding on to health-conscious smokers and enticing the next generation of consumers, aware of the medical charges against the product.

In the belief that brand introductions would become much more difficult
after television advertising ended, Reynolds rushed out a pair of lowered-tar entries. The first, in 1969, was Doral, with 15 milligrams of tar, the industry’s arbitrary dividing line between “low tar” and “full flavor” brands. Initially it was presented like a brand left over from the old “tar derby” days, with its filter pictured in a cutaway diagram showing baffles and air channels that seemed to imply a space-age technology behind it. The brand’s later advertising was a bit more inspired. Typical was a text quoting the ideal new Doral buyer: “I’m not too big in the willpower department. But I lost 700 milligrams of ‘tar’ the first week on what I call ‘The Doral Diet.’ Now I can still enjoy smoking, and cut down on ‘tar’ and nicotine, too.” The brand managed to gain a 1 percent market share within a few years but as a full-priced brand would climb no higher.

More subtle and successful was the 1970 debut of Vantage just a few months before the TV blackout took effect. The white package featured a big bull’s-eye with navy and sky-blue rings surrounding a coral-colored center; it was not very attractive but scored high in “shelf awareness” tests among consumers. Vantage’s chief claim was an 11-milligram tar yield made possible by an innovative, densely packed filter, with six times the absorbent area of leading competitors. The Vantage filter was also twice as long as the one on True, the leading low-tar brand at the time, allowing Reynolds to announce a technological “breakthrough” with the new brand and pitch its introductory advertising “to every cigarette smoker who enjoys good taste but who’s concerned about ‘tar.’”

Vantage got off to a respectable start, but Reynolds sales chief Billy Smith, in a notable departure, brought in the small, imaginative New York ad agency of Lieber-Katz Partners, which handled Seagram’s liquor and such luxury products as Lenox china and Baccarat crystal. The agency came up with a cerebral approach that forsook all imagery other than a picture of the bull’s-eye pack and instead seemed to dare consumers with provocative headlines like “Smoking. What are you going to do about it?” and ‘To smoke or not to smoke,” and a text that, at least relatively speaking, broke new ground for candor by cigarette makers. For example:

Many people are against smoking cigarettes. You’ve heard their arguments.

And even though we’re in the business of selling cigarettes, we’re not going to advance arguments in favor of smoking.

We simply want to discuss one irrefutable fact.

A lot of people are still smoking cigarettes. …

Now if you’re one of these cigarette smokers, what are you going to do about it? … If “tar” and nicotine has become a concern to you, you may consider changing to a cigarette like Vantage … .

Suddenly, Vantage began to score in urban markets among better-educated and obviously health-oriented smokers, previously
terra incognita
for RJR brands. By 1975, with the help of steady, heavy advertising disproportionate to its sales, the brand climbed to a 3 percent market share and had soared past True to take the lead in the low-tar category. And yet when Philip Morris brought out Merit the following year, using much the same sell—rich flavor and lowered numbers, thanks to a technological breakthrough, and showcased in largely text ads similar to those by Lieber-Katz, Reynolds failed to defend its low-tar turf, as the New York entry heavily outspent it and, despite Vantage’s seven-year lead, Merit surpassed it in sales by 1979.

Two other mid-’seventies brand launches by Reynolds reflected a half-heartedness born at least as much of marketing ineptness as of a front runner’s understandable reluctance to risk making a major mistake. American Tobacco’s Carlton had been the only major entry in the ultra-low field, dating from its 1964 rollout, until RJR brought out its Now brand in 1975. With nothing to recommend it but minuscule yield numbers, Carlton had gone nowhere in the marketplace, never attaining even one-half of 1 percent of the market. If ever there was a vulnerable target, Carlton was it. But Reynolds, as if incapable of rousing itself for a product it could not claim was bursting with flavor, merely repeated American’s mistake with Carlton, selling Now strictly by the numbers and entirely avoiding the unspoken—and unspeakable—reason for smokers to switch to the brand: as a health measure.