Features - Firm Guidance

JUNE 5, 2000

Marlboro

BY JOE SAWARD

Philip Morris opened a tobacco shop in London in 1847 and seven years later he began to manufacture his own cigarettes.


Philip Morris opened a tobacco shop in London in 1847 and seven years later he began to manufacture his own cigarettes. The business was a success and the company expanded to sell different brands which included Cambridge, Oxford Blues, Marlboro and Players. In 1873 Morris died and the business was inherited by his brother and his widow who continued to run it successfully for over 25 years before deciding that it would be better to sell the company to William Thomson. He took the company into the US market in 1902 and this eventually led to a buyout of the company by American investors in 1919. Production began in the United States in the late 1920s and the company prospered in the 1930s by selling cheap cigarettes which were promoted by an intensive advertising campaign.

In 1954 the company bought the rights to Benson & Hedges in the United States and as part of the deal JosephÊCullman joined Philip Morris. He was given control of the Marlboro brand and hired advertising man LeoÊBurnett to design new packaging. He produced the now famous red and white chevrons. Sales boomed thanks to a heavy promotion both in the United States and around the world. The increasing success of the company led to expansion into brewing, with the purchase of the Miller Brewing Company in 1970.

As part of its international expansion program Marlboro decided to sponsor Grand Prix racing in 1972 with the BRM team. The deal lasted for three years but without much success and in the final year of the contract Marlboro was also involved with Frank Williams's Iso team. In 1974 Marlboro agreed a new sponsorship deal with McLaren which continued until 1996. The Marlboro brand has been involved with a variety of other teams in F1, including Ferrari (which began in the late 1970s and gradually increased in size on the cars), Alfa Romeo and others.

By the mid 1980s business was such that Philip Morris was able to buy the huge General Foods and later Kraft and become one of the world's largest food companies in addition to the biggest player in the tobacco business.