Ashes to Ashes (78 page)

Whatever it lacked in external charm, the dark brick leviathan made up for with a gleaming interior that was indeed the last word in efficient, user-friendly production facilities. Some 15 percent of the budget had been set aside for workers’ amenities, to the point where Goldsmith, overseer of the entire
project, happily claimed, “You couldn’t tell where the executive offices ended and the factory proper began.” The latter had an airy, spacious feel to it, as far as imaginable from the dark, grimy, satanic mills of the past. The very floor of the plant, of a polished maple laid in parquet, was chosen to be easy on workers’ feet and seemed more appropriate for a living room or a gymnasium. The place was bathed in glare-free light; the soaring walls were painted in cheery blues, greens, and yellows, and each worker had his own locker, access to. comfortable, sound-muffled lounges overlooking the production facilities, and a view of floor-to-ceiling, glassed-in vaults full of trees, plants, and flowers native to Virginia. The manufacturing equipment itself had a beige or other light finish to it and was relatively quiet, and—at the workers’ explicit request—the air was not incessantly aquiver with the sound of piped-in music. When challenged to justify such heavy expenditures to create a veritable workers’ paradise, Goldsmith answered that people who labored in such surroundings would take pride in them and themselves and turn out more and better work.

It was less the grace notes of the manufacturing center, however large their contribution to worker morale, than the plant configuration itself that enlarged Goldsmith’s reputation as a superb technician with skills that fattened the corporate bottom line. Equipped with a precision of manner, certitude of opinion, and icy look behind his thin-framed glasses which made him almost a caricature of the Erich von Stroheim film German, that embodiment of iron command, Goldsmith was known around the Richmond operation as “the U-boat captain,” and even his admiring superior, Ross Millhiser, teasingly called him “Klaus”—a bittersweet irony for the refugee from Hitler who fought against the Third Reich in the U.S. Army and, when taken prisoner, had to play dumb lest his Nazi captors detect his German accent and guess his Jewish origins. Goldsmith had determined that to pay its way, the new plant design had to invite dramatic cuts in the high expenditure of time and manpower traditionally required by the movement of millions of cigarettes from one stage of production to the next across busy factory floors.

Goldsmith’s innovation was to break up the main plant floor into five giant “bays,” each an acre or more in size and containing some thirty “modules,” each one in effect a complete, miniaturized manufacturing and packaging factory, integrating makers, tippers, pasters, cutters, wrappers, boxers, and cello-phane-appliers, all funneling into cartons that were automatically loaded onto little freight cars and carried off on overhead tracks to the shipping platforms. The key to making these intricately coordinated units operate at a sufficient laborsaving speed was to gear them to a pace achievable by the fastest-rated machines available. The latest “making” models could turn out 5,000 cigarettes a minute, but no packaging machine could match that pace until an Italian company in Bologna came up with a high-precision design that Goldsmith
was willing to try. The remaining problem, though, was that the more processes that were tightly meshed for maximum output, the greater the chance for a breakdown, and a bottleneck anywhere along the line would defeat the entire scheme.

Goldsmith’s solution was the “OSCAR,” an acronym for Overhead Storage Conveyor And Reservoir. If a packer broke down, the making unit in the integrated module would keep spitting out cigarettes but piling them up in the OSCAR for the twenty or so minutes that it took to make the average packer repair; and likewise if the maker got bollixed, the packer could just turn to the surplus cigarettes stored in the OSCAR to keep operating. To minimize downtime elsewhere in the system, Goldsmith installed electronic diagnostic charts and television screens that monitored trouble spots and scanners that, at the incredible rate of eight packs per second, could detect tears in cigarette paper, uneven seams, and loose filters and kick out the flawed butts. The net effect of the company’s $50 million investment in these ultrasophisticated machines was a factory that produced 25 million packs of cigarettes per day at double the industry’s per-man-hour rate of output.

III

WITHOUT
television to bring instantaneous celebrity to a new brand, the Philip Morris marketing team was convinced that the best way to build sales was to extend its existing lines by offering them in different lengths, hard and soft packages, and menthol versions. Starting from scratch, even with a world-beater of a selling proposition, would be exceedingly costly now.

Still, few at the company’s Park Avenue headquarters were enthusiastic when Joseph Cullman came in all hot and bothered one day early in 1971 with an idea that had seized him over the weekend after he had heard New York’s mayor, John Lindsay, propose a cigarette sales surtax of four cents per package for brands high in tar, meaning above 15 milligrams. Such a measure, inspired by the reform-minded mayor’s concerns about smoking as a health risk, could, Cullman feared, have a swift negative impact on Marlboro, the top-selling brand in the nation’s biggest metropolitan market, and give milder rival Kent, also very popular with health-minded New Yorkers, a major boost. Why not bring out a weaker version of Marlboro, Cullman proposed, allowing the new entry to escape the proposed surtax? Call the line extension Marlboro Milds, the boss suggested.

Pandemonium reigned. The brand in all its existing versions accounted for 60 percent of the company’s U.S. sales. The very thought of spawning a weak-kneed, degenerate offspring of a product that had billed itself as a full-bodied taste treat for real men and the sort of women who craved them seemed misguided
to many, to say the least. “You were talking about Marlboro, the franchise itself,” James Morgan recounted. But Jack Landry, like the rest, saw that “Joe was pretty damned serious,” and so there followed a six-month intramural donnybrook over every aspect of the proposition, starting with the name of the low-tar line extension. To Landry, calling it “Milds” suggested that “the parent brand was strong and harsh, and I didn’t want us to imply that. ‘Lights’ made a better statement, I said—and Joe took it. I think he was throwing me a bone, because he knew I didn’t care for the idea.”

And so Marlboro Lights, yielding 13 milligrams of tar compared to 17 for the regulars, hit the Philip Morris drawing boards, as Cullman sought the input of everybody whose opinion mattered in order to make the risky proposition work. The basic strategy that emerged, as Morgan put it, was: “Don’t rip the legs off Red [Marlboro regulars] to launch Lights.” All that followed, then, was done to make the distinction clear. Instead of the sharp-edged box with the bold red roof, Marlboro Lights came out first only in a soft pack featuring an inset roof of gold with a black-dot screen overlay. Instead of the simulated-cork tip on regulars, Lights had a white-wrapped filter, and where the ads for Reds showed palominos in gritty, almost documentary-style, photographs, Lights had white horses in them or consisted of Remingtonesque line drawings one degree of starkness removed. The sell was soft: “For smokers who prefer the lighter taste of a low-tar cigarette;” no Vantage-like promises were made about offering smokers the best-tasting low-tar brand ever or the flavor miracle of the century. “The scenario was never ever to talk about Lights without reinforcing what the Reds were about,” said Morgan.

The new entry got off to a limping start. When Virginia Slims debuted with saturation advertising in its test market of San Francisco just three years earlier, some 78 percent of area residents polled reported familiarity with the new brand, but in the fall of 1971, after Marlboro Light was rolled out in a New England market without benefit of television, only 32 percent said they were aware of the product after a comparable time. But the company let the line extension plug along to the point in 1979 where it accounted for 15 percent of all Marlboro sales. By the end of the decade, Marlboro in all its various packages was outselling the Winston line by 25 percent, and while Winston Lights were still doing marginally better than Marlboro Lights, they had cannibalized the parent brand in the process, while Marlboro’s regular Reds had grown a bit, vindicating the investment.

But even with Marlboro Lights on retail shelves, Philip Morris had been a laggard in the low-tar field. Lorillard had established an early lead with its Kent and True brands, and then Reynolds had made its presence felt with Doral and Vantage, as more and more smokers began switching to brands with lowered yields. Never an industry leader in basic developments, largely because it had not been financially strong enough in the past to risk pioneering,
Philip Morris made its way upward by learning from the triumphs and mistakes of its competitors, and now, with the low-tar trend established, Ross Millhiser, president of the company’s domestic tobacco business, urged operations head Clifford Goldsmith to develop a new, freestanding brand in that field.

This was no easy trick, since smokers by then constituted, in James Morgan’s words, “a very skeptical marketplace.” By the mid-’seventies, an estimated 90 percent of all smokers had tried one or more low-tar brands, and only 10 percent of them had so far made the switch permanently. To overcome such resistance, Philip Morris would have to become more innovative than was its wont. Though there was little love lost between Goldsmith and his research and development director, Helmut Wakeham, the team worked closely on a plan under which the principal effort would go not into new filter technology, as Reynolds had done with Vantage, but into an intensification of the flavoring process which would neither boost tar yield nor junk up the taste by saturating the tobacco with additives.

“The worst thing you can do is overflavor the product,” explained Frank Daylor, longtime manager of flavor development in Philip Morris’s research department. Loading on sweeteners and other additives could have caused the aroma to overpower the smoker or even sicken him or her upon opening the pack, for smell is the key to taste—the tongue can distinguish only sweet, sour, salty, and bitter—but the quantity of any given flavoring substance does not necessarily govern the strength of its detectable smell. In developing what the company tagged “Enriched Flavor” for its new low-tar brand, Philip Morris scientists contributed nothing really new in terms of the additives but changed how the elements of flavor were combined for enhancement.

The detective work required identifying the best-smelling of the thousands of compounds and combinations thereof that made up tobacco smoke, a task facilitated by R&D’s purchase of newly sensitive and very expensive instrumentation. The plodding task led to the discovery of what Wakeham called “basic flavor units that deliver taste way out of proportion to tar.” These were then run through olfactometers, which measured the intensity of the smells that contributed to these flavor elements, and the most efficacious were analyzed for their chemical structure. Finally, the lab searched out or synthesized substances with a chemical structure identical to or closely corresponding with these high-flavor, low-tar components of smoke. “These chemical additives, or flavorings, were then added to the tobacco blended into Merit,” Wakeham explained to the press when the resulting brand appeared at the end of 1975. He insisted that “in this entire procedure nothing new or foreign has been added—just more of the preferred elements that already existed in tobacco smoke.” He did not say whether they had been tested to determine if “the preferred elements” promoted carcinogenesis or any pathology.

When submitted in blind tests to some 3,000 smokers, the 9-milligram Merit scored beautifully, and when Philip Morris salesmen sampled the brand, they guessed that it had twice its actual tar yield and excitedly asked the manufacturing department to get the product to market as soon as possible. “Everyone knew lower numbers were going to sell if they had taste,” Philip Morris sales executive Tom Littleton recalled. “Vantage didn’t really have it—there was a difference between night and day in the taste of the two brands.” But how to persuade a jaded smoking public that Merit was something new under the sun? Step two after the taste hurdle had been cleared was a distinctive pack for Merit, a task turned over to the San Francisco shop of industrial designer Walter Landor. The outcome was a white background for a central geometric design that conveyed movement and modernity yet hinted at the tasty reward within by the use of the traditional tobacco colors, brown, orange, and yellow.

More important still was the marketing department’s plan for how to present Merit. Perhaps its truest believer was the young marketing ace, Jimmy Morgan, who recalled, “After a year of test-marketing we had documentable, FTC-proof evidence that Merit tasted as good as brands with twice as many milligrams of tar … . We decided to position Merit as if General Motors had just developed a brand-new car … .” The plan was to play the brand’s arrival as a major news event, with a big press conference presided over by Cullman and featuring the company’s scientists to explain their prodigy of milder yet lip-smacking enticement. The print ads, sporting large, newslike headlines, much more text than traditional cigarette advertising, and no imagery besides the package itself, were highly reminiscent of the Vantage approach, but the text was less coy and the volume much heavier, especially in newspapers, to stress the newsiness of the event, with headings such as “Tar/Taste Theory Exploded … New 9 mg. MERIT with Enriched Flavor proves taste no longer depends on amount of tar” and “National Smoker Study Hails Merit.”

The immensely costly send-off for Merit, with ads appearing in newspapers as often as three times a week and running up a $40 million space outlay in the brand’s first year, dwarfed anything the tobacco industry had seen before. But as long as the Merit sales trend headed upward, the company kept spending. The new brand got a sizable if unwitting push from the health community just as the low-tar entry was reaching the market. The American Cancer Society’s Cuyler Hammond reported the results of a twelve-year study concluded in 1972 during which smokers of what were then categorized as low-tar brands—the breakpoint was put at 17.6 milligrams of tar—showed a reduced risk rate for lung cancer of 26 percent and for heart disease of 14 percent, assuming no change in the number of cigarettes consumed. Accordingly, Hammond urged government health officials to order all high-tar brands off retail shelves—a
step the FDA might have taken at any time. But Hammond’s data failed to account for one phenomenon that
Consumer Reports
and other trackers of smoking patterns had begun to observe: as tar and nicotine yields were reduced by manufacturers, many smokers compensated by taking deeper and more frequent puffs, so that actual yields could not be determined solely through tests using automatic smoking machines.