Saturday, December 8, 2018

The marketing genius of Marlboro cigarettes






You would probably be surprised at the fact that Marlboro was originally introduced (in 1926) as a woman’s cigarette. The advertising theme for the cigarette was the less than inspiring “mild as May”campaign, and the brand faltered repeatedly for the next 30 years.

What saved the brand, ironically enough, was lung cancer.

During the early 1950’s, the first studies linking cigarette smoking to lung cancer were released. As a result, smokers started to switch from the favored brands of Camels, Lucky Strikes, and Chesterfields to the “safer” filtered cigarettes, like Marlboro.

Logic would tell you that an advertising agency would focus on these new-found health concerns, but the Leo Burnett agency took an entirely different approach, focusing instead on the
Masculine Image of the New Marlboro.




When the campaign started in 1954, Marlboro sales were $5 billion a year. Two years later, Marlboro sales were an astonishing $20 billion a year, an increase of 300%. As a result, the Marlboro Man advertising campaign is considered to be one of the most brilliant advertising campaigns of all time. Marlboro ads were used in America until 1999, but were used up until recently in both Germany and the Czech Republic.

Three of the men who portrayed the Marlboro Man (Wayne McLaren, David McLean, and Dick Hammer) all died from lung cancer. Strangely enough, their passing hasn’t put much of a dent in the popularity of smoking overseas.  China consumes about 40% of the world's cigarettes, predominantly by men. Overall, 54% of the adults in China smoke cigarettes, but the percentage in rural areas is even higher, at 64%.


Most of the cigarettes smoked in China are produced in the country. The People’s Republic of China (China) is the largest tobacco producer in the world. In 1999, production of leaf tobacco was about 2.4 million tons, or nearly one-third of world output. Most tobacco was processed into cigarettes for domestic consumption. In 1998, total output of cigarettes reached about 83 billion packs (20 pieces/pack), representing more than 30 percent of world cigarette production. It was estimated that over 320 million Chinese were smoking and nearly 500 million Chinese were second-hand or passive smokers, which made China the world largest cigarette consuming country and hence most vulnerable to smoking health hazards.


Cigarette smoking among U.S. adults has been reduced by more than half since 1964, yet remains the leading preventable cause of disease and death in the United States. Overall, cigarette smoking among U.S. adults (aged ≥18 years) declined from 20.9 percent in 2005 to 15.5 percent in 2016. Yet, nearly 38 million American adults smoked cigarettes (“every day” or “some days”) in 2016, according to data released today by the Centers for Disease Control and Prevention (CDC).


Since cigarette smoking is down in America, logic would tell you that the company would be hurt financially, but that is not the case at all. Marlboro has been the world's No. 1 cigarette brand since 1972. Altria holds the rights to the Marlboro brand in the U.S., while Philip Morris International handles the brand overseas. Marlboro commanded 43.3% of the U.S. cigarette market in 2017, bigger than the next 10 brands combined. Marlboro volume was down 5% in the U.S. in 2017 with an increased excise tax in California  impacting sales, but higher pricing pushed profits up. Volume was off 4% outside the U.S.

According to Forbes, Marlboro is one of the most valuable brands in America, with an estimated brand value of $26.6 billion – and it is about to get a lot bigger.


Earlier this year, recreational marijuana use was legalized in Canada As a result, the familiar maple leaf flag may need to be redesigned to look like this:





If didn’t take Marlboro long to capitalize on a new source of revenue. After Constellation Brands (the manufacturer of Corona and other beverages) spent $4 billion in August to acquire shares of Canopy Growth Corp, a Canadian pot producer, Altria (Marlboro’s domestic parent company) took a 45% share in Cronos Group, another Canadian medical and recreational marijuana producer. After the purchase, U.S. traded shares of Cronos jumped 22%.




Consumers are expected to spend $57 billion per year worldwide on legal cannabis by 2027, according to Arcview Market Research, a cannabis-focused investment firm. In North America, that spending is expected to grow from $9.2 billion in 2017 to $47.3 billion in 2027.

By now, most people have figured out that the “war on drugs” has been a disaster, since our prison population has exploded since the early 1980’s. The vast majority of the people in prison (46%) are there due to drug offenses. The next largest category (weapons) makes up 18% of those incarcerated.


As Michelle Alexander points out in her book, “The New Jim Crow: Mass Incarceration in the Age of Colorblindness”, African-Americans make up a disproportionate percentage of all inmates. Although this group comprises 12% of regular drug users, they make up almost 40% of drug arrests. The vast majority of those arrested with a drug offense are not charged with serious offenses. In 2005, 4 out of 5 drug arrests were for possession, not sales.  

As of March, 2018, there were 2.3 million people in state prisons, local jails, federal prisons, and youth detention centers. Roughly 400,000 of this total is for a variety of drug offenses, but 320,000 of the total is for simple possession of drugs (primarily marijuana).


In 2010, the annual cost to house an inmate in prison was $28, 284. If you do the math, our country is spending a touch over $9 billion a year on incarceration for drugs, which brings up an interesting idea.

In 2017, medical and recreational sales of marijuana in Colorado totaled $1.51 billion.


Tax revenue from marijuana for that year for the state was $247 million. If recreational and medicinal revenue was legalized nationwide, total tax revenue would be roughly $12,350,000,000.


If all of the people incarcerated for drug offenses were all released on January 1, 2019, and marijuana of all types were legalized at the same time, our country would be better off financially by more than $20 billion a year, which would be used for infrastructure repair or increases in funding for education or medical expenses.

So ..

The next time somebody buys a Marlboro product, the world could be a lot more mellower. 








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