Defendant Philip Morris
The creator of the Marlboro Man has not been able to ride quietly into a NY sunset. The New York-based company and the #1 maker of cigarettes has recently been the defendant in several high-profile smoking liability cases. Philip Morris has also been the subject of repeated Federal Trade Commission probes into unfair marketing practices. Quite soon, the company's future could be decided by court decisions and regulatory action rather than sales rates. Still, all hope is not lost for the nicotine-devoted. Philip Morris, along with other tobacco companies, reached a tentative agreement with federal and state governments under which the tobacco companies will make hefty annual payments to the government in return for substantial protection from class-action lawsuits and regulation. The U.S. Department of Justice lawsuit is still in court, though the states have already settled for $246 billion over 25 years. Philip Morris is lobbying to have funding for the Justice Department lawsuit cut off by Congress. The first Polish anti-tobacco lawsuit began in 2000, and if successful may pave the way for thousands of similar lawsuits in Europe.
In July 2000 Philip Morris and the rest of the cigarette industry suffered a blow when a Miami jury delivered the largest punitive damages verdict in an Engle class action lawsuit that spent two years in trial. The jury ordered five tobacco companies to pay $145 billion ($74 billion of which must come from Philip Morris) in compensation to hundreds of thousands of sick smokers in Florida. Though the large sum may cripple the manufacturers, Philip Morris believed the class action would have "no practical impact."
Huffing and puffing
Philip Morris's core business remains cigarettes, and it produces 18 brands in the U.S., including Virginia Slims, Benson & Hedges, and Chesterfield. The company's main man, however, is that gun-slinging, cattle-rustling, brazen bronco. Indeed, the infamous Marlboro man has made Philip Morris as well-known as Billy the Kid. In 1995 alone, the brand generated $21 billion in revenue, rendering it the world's top-selling consumer packaged product. Marlboro Ultralights captured 3% of the market within a year of being introduced. The company is seeking to diversify the world's tenth most valuable brand, and is discussing Marlboro hotel chains, TV channels, or cell phones. This extention of the Marlboro name would take place outside the U.S., as cigarrete companies are forbidden to put their brand names on clothing or other products. In addition, Philip Morris' subsidiary Kraft Foods is the largest retail packaged food company in America and the second-largest food company in the world. Miller Brewing, yet another subsidiary, is the second-largest brewer in America and third-largest in the world.
Foods that end in "O"
It may seem strange that the same company responsible for so many cases of emphysema has also had a hand in deciding children's nutrition. Yet Philip Morris has done just that. From Capri Sun to Cheez Whiz, Jell-O to Polly-O String Cheese, the company produces dozens of food products that range in quality from nourishing to noxious. Philip Morris turned full-swing to the food industry in 1985, when it purchased General Foods for $5.6 billion. Philip Morris bought Kraft in 1988, thus commencing one of pop culture's greatest mysteries: Is it "Kraft Macaroni and Cheese or Kraft Cheese and Macaroni?" The acquisition of Nabisco's North American cold cereal operation in 1993 solidified Philip Morris' spot as a world-class food manufacturer and distributor.
In another move to diversify its offerings, in June 2000, the company bought Nabisco Holdings for $14.9 billion. Also, Geoffrey C. Bible, the chairman and chief executive of Philip Morris announced that once the deal is complete, the company will spin off 10 to 15 percent of Kraft early in 2001, a sale which is expected to net the company between $5 to $10 billion. In 2000 shareholders of Philip Morris Co. will vote on whether Kraft and Miller should be split from the tobacco business. Similar proposals were rejected in 1995 and 1996.
Geoffrey Bible must have been choking in 1995. Due to the EPA's findings on the insidious nature of secondhand smoke, Bible settled a $10 billion libel suit against Capital Cities/ABC over a news story aired on ABC. The company also spent $100 million to recall approximately seven billion cigarettes that had allegedly been contaminated with a toxin. By 1997, Philip Morris jacked up its cigarette prices by seven cents to compensate for the money lost in lawsuit settlements. In 1998, the company restructured its Kraft subsidiary, axing more than 2,500 jobs internationally and paying $630 million in debts. In still more disastrous news, a federal judge approved a $155.5 million settlement of shareholder litigation which alleged that Philip Morris misled investors about the addictiveness of nicotine.
The smoke finally clears
Despite its recent turmoil, the company won a 50% share of the U.S. cigarette market in 1998. In addition to its famously aggressive Marlboro man campaign, the company credits its more covert promoter: Retail Masters, a sales-incentive program that is quickly winning the thrifty hearts of independent retailers. The eight-year-old program rewards participating retailers with paybacks based on the sales and display of Philip Morris cigarette brands. In April of 1998, the company also reported a 5.7% increase in first-quarter net income, assisted by the burly sales of Marlboro cigarettes, beer, and food products such as Tang, Kool-Aid, Taco Bell Home Originals, Maxwell House coffee, and frozen pizzas.
Philip Morris is actively combatting its negative public image, having begun a series of feel-good commercials about the company's good deeds such as supporting meals-on-wheels. Denial having run its course, the company added a page to its web site admitting "overwhelming medical and scientific consensus" that cigarettes do indeed cause cancer and other serious diseases. The company also acquiesed to the Commonwealth of Massachusettes' plea to remove cigarette ads from magazines with 15% or greater underage readership, though Brown & Williamson, Lorillard, and R.J. Reynolds refused. Philip Morris pulled over $100 million in annual cigarette ad spending from magazines with underage readers. The company is also actively working for federal legislation that would regulate tobacco, saying it would not oppose requirements for disclosure of ingredients or for the development of cigarettes that may pose fewer risks. The Accord, a heater which burns special cigarettes at a low temperature and reduces tar intake, will be made more widely available in 2000, though it will still only be sold in Virginia. In July 2000 Philip Morris announced "PaperSelect," a new Merit cigarette featuring paper rings that cause it to burn more slowly. When resting in an ashtray or on certain fabrics, the cigarette may extinguish itself.
Philip Morris U.S.A, the American cigarette manufacturer, accepts mailed and faxed resumes at its New York headquarters. Applicants can also contact the corporate headquarters to obtain the contact addresses for Philip Morris U.S.A.'s regional recruiters. Those applying for positions with the Management Corporation should mail their resumes to Human Resources Department, 800 Westchester Avenue, Ryebrook, NY 10573, or fax it to (914) 335-9395. Subsidiaries Kraft Foods and Miller Brewing conduct their own hiring (see separate entries for both).
With American tobacco companies under regulatory attack, Philip Morris insiders fear that "pending regulations and any potential settlements could have a serious impact on the company's marketing activities." In the meantime, company employees enjoy the "solidly above-average pay," the "9 to 5 hours," and perks that include "all the company products one could ever want," including free cigarettes, although many call this both an upper and downer. While some employees term the atmosphere "relaxed," others describe "extensive fighting" and "both internal and external competitiveness." Employees also tire of "being in the spotlight constantly" and wish that the "universally known name" of Philip Morris were "a little more obscure."
Adolph Coors;Anheuser-Busch;British American Tobacco;Coca-Cola;Foster's Brewing;General Mills;Heineken;Kellogg;PepsiCo;RJR Nabisco
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