PM History/2 - Legacy Tobacco Documents Library

PM history/29
--AMERICA'S MOST ADMIRED CORPORATIONSt~ 1-30-89 Fortunes Merck & Rubbermaid
remain #1 & 2 . 3M up from #6 to 9f3, P1y[ is #4, up from #7• . .noting
Rubbermaid prospers on strong plan that weathers good times & bad, that
3M is remarkably innovative . . . M rated thre for LONG-TERM
JINVES'1'AfENT VALUE, FINANCIAL SOUNDNESS & ABILITY ATTRACT, DEVELOP &
KEEP TALENT -- BUT ONLY 42ND FOR "WISE USE OF CORP . ASSETS," crit. over
Miller & GF acquisitions . . .but its admirers cite & applau co .s use of
its tob . earnings "to diversify into potentially synergistic businesses
, & expand overseas" . . .in tot~l return to investors over most recent t_Ovr
eriod annual fig was 23 r 22 5 or ere for Rubber-
I I mI ~_I% T'nr 'I - n-< -r~r Rnc~na_ 'Jn_Q fnr r~rnn
--PHILIP MORRIS'S BIG BITE, NYTimes Sun Mag 4-9-89s Maxwell Hans Storr
1 & their investment bankers Wasserstein, Perella (RKs why they?5 had very
carefully studied Kra£t . . .PM w'delY acknowledg_ed to be one of US's bestrun
ma'o c .-- "le cock some woul s~a arro~dfSt~~e immense y
'Qrof tabla. It is a patron o the ar s& a sponsor o wor -class sporting
eventsi it gives generously to worthy causes & prides itself on its
advanced social conscience, although there are those who say it is pride
mingled in equal parts w/cynicism . . .its execs smoke & the bldg is one of
few modern offices equipped w/ceiling fans . . .its 5 .0_00 so ft sculpture
garden "has the dubious honor of providing the city's most luxus shelter
for the homeless" (RKs enclosed, heated, chairs, food bar) . . .4~~co~
w1a small co attitude that never takes success for aranted . . .~cosmo olitan~
£~'la,~vo~,= CEO a Scot, COO an up-from-the-streets NYer o£ Irish extraction,
ief fin . officer a German by birth, .int•Z PM headed by Australian & PM-
USA by an Israeli . . .co . works to exhibit its social consciousness= from
the Urban League to the local rescue squad in Va/"THIS BUSINESS OF .-6NSTANT-
L`L.BEING_IINDRte AmTACK IS A MARVELOUS THING IN A EERTAIN WAY." savs GW.-" T
MAKES OUR PEOPLE FEEL COHESIVE & PUT-UPON"// oass-roots cam a
vs . Svnar in Oklaa getting little kids to write & say cer a n cultural
events would be canceiled if his law went thru & tob . couldn't sponsor
thems '•THEY RE NOT V PEOPLE AT P ABSOLUTELY N RE-
SPECT FOR THE HEALTH OF AMERICA", . .Earlier diversifications went into
lark's Gum because i was thought people would turn to gum upon giving up
cigs*****but in earlv •6Os PM made extraordinary discoverv= "There was a
'~remendous amount of mone to be made in tob .," even rising £ed, & stae
taxes did-' t hurt demand so "e£oun tH-a-C-T7E COULD CHARGE A REALISTIC
PRICE'•****~******(RK= and what is that?) . . ."Of course their customers kept
buying cigs ; their customers are addicted," says Kenneth Heebner of Loomis,
Sayles brokerage house, E~ tob . expert . . .thus, rofits sho e ed back into
technolo~icaZlv efficient plants + TV ban of • gave establishe rands
Sike Marlboro "a virtual lock on their territory•'*******nearls impossible
for a new roduct to challen e//story of how Peter Grace called umn
re z].ler beer, col 3 p O ee sold "in uch he s wa as ¢i s BOTH
~ LARGELY IMMUNE TO ECO . FLUCTUATIONS +•'it might be possible to score impressive
gains in mkt share w/aggressive nat'l adv on the Marlboro model"=
MILLER TIME"//yet critics of their Miller perf .s "The reall had it in
~F their hands, and they threw it awa ," says Emanuel man, e ot
arro~ an ev i n count on euser's mktg clout" . . .Miller ho ding at
aiou 20 of the mkt 7"._Uer clever a.av campaian in The Uncola but
PM "did not understand the co,'s comp-l. .ex re ationship w/its bottlers and,
once again, it underestimated the STRENGTH OF ITS COMPETITION"/GW notes how
o e& Pepsi were making their money out of syrup & vending machines while
7-Up was making it on store shelves & "That was where Coke & Pepsi began
cutting their prices," citing a Calif chain where w/double coupons you
could pick up a two-liter pack for nine cents . . ."ZUp was El Disaster,"
says Goldman//PM breaks up 7-Up & sells off -pie4es in 04 moves inTo
the food biz in h~~ wavTv,r,a s,s'fi"red on1V sli ht dent in cash flow &
a contusio ide, .,by '85 has GF & ecs no~~o
in ervene or a
w i e vs . 7-Up & errs anew b OVERESTIMATING MKTG SKILLS OF ITS N
qUSSI heir k " ust g • says ohn McMillin of
udential-Bache,' sty or ng en orserso products///by '88 PM again
_ generating annual cash surplus o£ $1 .7 billion ($190,000 an hr), which
made PM itself a likely takeover candidate so "There was only one thing ~
to do w/money like that . PM had to get rid of it" . . .Hamish Maxwell well ~
known for his abhorrence of waste . . .PM execs believe F Ross Tohnson "had_~
~ taken leave of his senses" & a similar leveraged buyout of PM would leave ..,
it where a been, trapped in tob biz KRAFT A BEAUTIFUL MESH W/GF, ~
tierv little overlap in food lines, i .e ., only in salad dressing -- and po
Kra£'Ers came in Cottle wFile Lill's was powdered + Kraft's ood commercial N
food business as supplier of restaurants & cafeterias . . .w~Kraft PM ready
-to challenge Nestle as world's largest food mfr & Unilever as largest consumer
products co . -- and KRAFT WAS A CO . "VIRTUALLY SET UP FOR A RAID"= hivh & stable earninss . vension nlan overfunded . iIttle Te1D_r. ts ~
-
er ous un erv ue ' a t o n ic man we aware of the vulnerabil-
2g ty bac buy its n stock as fast as it could, trying to drive up the
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