“The secret of all effective advertising is not the creation of new and tricky words and pictures, but one of putting familiar words and pictures into new relationships.” - Leo Burnett
Driven. To be bold. To produce greatness. To redefine the industry.
We ended Part One in 1954, with Philip Morris having just finalized its purchase of Benson & Hedges. The acquisition armed the company with a leading premium filtered cigarette, Parliament. Despite Parliament’s success, it would not prove to be the driving force that allowed Philip Morris to take on its much larger competitors, American Tobacco and R. J. Reynolds. That ability came from the people gained through the acquisition, including Joseph F. Cullman III.
When Joseph F. Cullman III arrived at Philip Morris, it was not all that he expected. The company was far larger than the environment he was used to at B&H, but its advertising had grown stale, and recent product launches failed to propel it forward. It had never quite adjusted properly to its previous growth spurts, leaving it poorly structured and less efficient. The acquisition of B&H was just the first of many actions in which the company took on new risks for the prospect of outsized rewards.
One of Philip Morris’ brands, Marlboro, had stalled. First launched in 1924, positioned as a premium cigarette for women, it aimed to attract those who took up smoking during WWI. Alas, most smokers were men, and the company needed a solution to a new problem that had been uncovered.
Filtered cigarettes were fast-growing, and Parliament was in a solid position. However, research showed that more than half of smokers who trialed filtered cigarettes went back to unfiltered variants. Two conclusions were reached. Overall, the market lacked a filtered cigarette with full flavor, and many men saw filters as emasculating. To tackle these issues, the company would design a new cigarette with broad appeal, with flavor as bold as the imagery supporting the brand. This would be the new Marlboro. Appointed as a vice president following his exceptional work at B&H, Joseph F. Cullman III was tasked with assisting in its development.
Using the Marlboro name was rationalized in the simplest terms. It was already familiar, and while growth had stalled, it had a loyal consumer base. Initial advertising for the new Marlboro wouldn’t be quite as steep as launching an entirely new line. Four considerations, blend, base, box, and brand, would prove critical to success.
The original Marlboro used Virginia bright leaf tobacco, which has a high sugar content and is mild and sweet. The new blend would be designed by Wirt Hatcher, the company’s Vice President in Charge of Leaf Tobacco and a master blender, using a blend of Virginia and flavored burley tobaccos, along with small amounts of Turkish and Oriental tobaccos. Producing the blend was not cheap, but there was no objection from those overseeing the project. The company was obsessed with quality and knew it had to design something that could best RJR’s Winston. Winston was released in the spring of 1954 and sold 7.5 billion units that year. The next year, the brand would go on to sell 23 billion units, rising from #13 to #5 in the country. During testing, Philip Morris found that Marlboro outranked Winston in flavor, with users also reporting that Marlboro was smoother.
The design of the base of the new Marlboro, the filter, was an equally puzzling piece. Copying Parliament’s cotton filter was too primitive. Marlboro needed to stand out. Fortunately, while the company’s brand portfolio had stalled due to inefficient R&D, multiple years had been spent optimizing new filter technology. Competitors had released cellulose-based filters. Philip Morris had designed “Selectrate”, made of cellulose acetate. This would be purposed into a flush, cork-styled filter for Marlboro.
The next question to answer would be on the design of the box. Soft packs rose to prominence in the 1930s and continued to gain adoption through the 1940s. Again, Marlboro needed to be different. Inspired by a new design gaining popularity in England, the group settled on using a flip-top box. This would prove to be one of the most consequential decisions in the equation.
The new packaging, made of cardboard, was crushproof. When held, it felt more substantial; more important. Without a single extra word, it immediately conveyed a sense of superiority.
Just as important as the design of the new packaging was who was responsible for producing it. The boxes were made by Molins’ high-throughput machines. Molins had started in 1874 as a cigar and cigarette producer before focusing on manufacturing machines in the early 1900s, patenting its first cigarette maker, the Mark1, in 1926. Molins also held a patent on the flip-top box design. Philip Morris decided to take a risk. The company committed to a significant minimum order size. In doing so, Molins provided Philip Morris with exclusive use of the box design for a two-year period.
Philip Morris had a masterful tobacco blend, a perfect filter at the cigarette’s base, and the exclusive box. But how would it market the brand? Rebranding Marlboro was a difficult task, as the goal was to make it feel familiar yet entirely new. To solve this conundrum, Philip Morris felt that the go-to agencies regularly used by the industry simply wouldn’t do. Instead, in late 1954, they looked to Chicago and the smaller firm Leo Burnett. This relationship would prove to be as consequential as the one Philip Morris had with Molins.
Burnett’s outfit was small, but on the rise, having created legendary campaigns around the Jolly Green Giant, the Pillsbury Doughboy, and the Keebler elves. He had an adept ability to create ads that not only gained attention but also stayed in your head. For Marlboro, it certainly helped that he was an avid smoker himself (not that such a quality was rare at the time). However, during early discussions, Burnett made Philip Morris aware of a problem they didn’t even know they had.
Leo Burnett found Marlboro’s quality exceptional and was intrigued by its flip-top box. What he was not fond of was the design applied to the box, which was done by a separate firm earlier commissioned by Philip Morris. The “M” in “Marlboro” was lowercase, and the box had red-and-white pinstripes on the top, which he found unappealing and unsophisticated. He and his team redesigned the package in a single night, landing on the chevron design Philip Morris adopted, which would ultimately become one of the most recognizable products of all time. The iconic lettering features a capital “M” and elongated “L” and “B” letters. While the elongated letters are thought to help center the viewer’s eyes and balance the design, I cannot help but think of Leo Burnett’s initials when I see them.
The right box design was essential to Leo Burnett, not just because it would support his success and that of Philip Morris, but because he intended for the box to be prominently featured in the ads he would create for the brand.
Burnett explained it to us: “Here is what we are going to say— ‘New from Philip Morris,’ because we want people to know that Marlboro is made by a credible, recognized manufacturer. The newness makes it exciting, and we go on to describe it: ‘You get a lot to like—filter, flavor, flip-top box.’” He concluded that the cowboy was the right image, not only for men, but also for women. —I’m a Lucky Guy, p.93
Freedom. Toughness. Independence. The Cowboy spoke to everyone. It took practically no deliberations amongst the Philip Morris team to agree that this would be the route. They had better not be wrong. The processes involved in developing Marlboro took longer than initially expected, and time was not a luxury that could be afforded. Sales and profits had become challenged. In January of 1955, the reimagined Marlboro was launched.
In 1954, the final pre-rebrand year, the old Marlboro had sold 300 million units. Hardly a market-shaking number, but respectable for a premium niche. For the year, Philip Morris reported net earnings of $11.2 million on net sales of $294.9 million. Joseph F. Cullman III’s father would not see what his son, Marlboro, and Philip Morris would go on to achieve. He died on March 18, 1955, less than a year after Benson & Hedges was acquired and just two months after the release of the new Marlboro.
In 1955, the first year that the Cowboy was puffing, Marlboro sold 6.7 billion units. More would have been sold if not for the fact that production capacity was maxed out. The company’s 1955 Annual Report stated:
The year 1955 witnessed the national introduction of Marlboro, our Company's entry in the popular priced filter field. The success of the Marlboro filter cigarette in the hard flip-top box resulted in an encouraging increase in overall sales in the last six months of the year over the same period of 1954. Realization of the full sales and profit potential of Marlboro was not possible in 1955 due to unavoidable delays in the delivery schedules of imported packaging machinery. It was not until April that Marlboros were available in most of the major cities in the United States.
For the year, Philip Morris saw net sales remain roughly flat, while earnings increased only modestly. But this was only the beginning. In 1956, net sales increased to $326.8 million, with net profits rising to $12.7 million.
During the fall of 1957, the company’s president and CEO, Parker McComas, was diagnosed with cancer. In November of that year, he underwent surgery, but experienced a fatal heart attack shortly after. The company was in dire need of a leader who could leverage Marlboro’s momentum. Joseph F. Cullman III had been with the company for only a few years. However, considering his importance to Parliament at B&H and his critical role in developing Marlboro, the board ultimately decided he was the man for the job. The board did not choose poorly, and by 1960, net sales had grown magnificently, breaking the half-billion mark, and net earnings had grown to $21 million, nearly double 1954’s earnings. The 1960 Annual report glowed of Marlboro:
Marlboro cigarette volume was well ahead of sales for 1959. Advertising for this brand continued to call attention to its full favor and exclusive Selectrate Filter, and it was obvious from the years’ results that Marlboro delivered what the advertising promised.
Marlboro’s growth continued, supported by increased advertising across radio, TV, and print. Profits followed. Leo Burnett once again delivered, and the renowned Marlboro Country campaign began in 1963.
The United States had become Marlboro Country, and Philip Morris was in an enviable position. But not all was well. The company’s ambitions to expand internationally rose alongside Marlboro. Likewise, concern over domestic regulatory risk led to entirely new endeavors. Each had their own painful mistakes, but none too severe to thwart the ascent. With Marlboro, and Joseph F. Cullman III at the helm, Philip Morris was about to experience something radical.
In Part Three, we will begin exploring beyond the borders of the United States.
If you enjoyed this piece, hit “♡ like” on the site and give it a share.
Questions or thoughts to add? Comment on the site or message me on Twitter.
Ownership Disclaimer
I own positions in Altria and other tobacco companies such as Philip Morris International, British American Tobacco, Scandinavian Tobacco Group, and Imperial Brands. I also own positions in Haypp Group, a major online retailer of reduced-risk nicotine products.
Disclaimer
This publication’s content is for entertainment and educational purposes only. I am not a licensed investment professional. Nothing produced under the Invariant brand should be thought of as investment advice. Do your own research. All content is subject to interpretation.
Additional resources:
Cullman, Joseph F. III. I’m A Lucky Guy. 1998.
O.P.M’COMAS DIES; TOBACCO MAN, 62; President of Philip Morris Had Been Bankers Trust Executive--Civic Leader. The New York Times, 1957. Source
Philip Morris Annual Report, 1954. Source
Philip Morris Annual Report, 1955. Source
Philip Morris Annual Report, 1956. Source
Philip Morris Annual Report, 1960. Source
Philip Morris Annual Report, 1963. Source
enjoyed reading this!
Hi Devon - Thank you for this part 2 segment & I particularly liked the tattoo on the hand of the cowboy in the Marlboro ad, ‘You get a lot to like’, designed by Leo Burnett, 1956. Also appreciated the interesting detail on the design & manufacturing of the card board / flip top box.
Looking forward to reading part 3. -Al