This report will give the history of the Philip Morris Company, all of the changes, leaders and acquisitions that it went through to get where it is today. Also, all the battles that it still has to fight in the 21st century.
Philip Morris, Esq., a tobacconist and importer of fine cigars founded Philip Morris in the mid-1800s, by opening a shop on Bond Street in London (picture-attachment I). Its first cigar was produced in 1854. Leopold Morris took over his brother’s business in 1873 when he passed. Leopold joined Joseph Grunebaum and created Philip Morris & Company and Grunebaum, Ltd. This partnership was separated two years later in 1887; the company now became Philip Morris & Co., Ltd.
In 1894 Philip Morris was for the most part controlled by William Curtis Thomason and his family, due to the company being taken over by creditors. Only six years after being taken over by creditors it was appointed tobacconist to King Edward VII. George Eckmeyer, imported and sold English-made cigarettes in the United States, since 1872, he was Philip Morris’ only agent in the U.S. He incorporated Philip Morris & Co., Ltd. in New York, in 1902. The ownership was split 50-50 between the British parent and the American partners. It sold the following brands: Philip Morris, Blues, Cambridge, Derby, and one named after the street its London factory was on, Marlborough2.
Philip Morris purchased a factory in Richmond, Virginia in 1929, where it first began to manufacture its own cigarettes. Whelan’s Tobacco Products Corporation crashes shortly before the market in 1929; Rube Ellis, who calls in Leonard McKitterick and appoints him president, picks up Philip Morris2. Only 3 years later Otway Hebron Chalkley was appointed president of Philip Morris and then became chairman of the company in 1945. Johnny Roventinni, was a bellhop who was discovered in 1933 in a New York Hotel and became the Philip Morris spokesperson for the next forty years.
The Axton-Fisher plant and facilities in Louisville, Kentucky was bought out by Philip Morris in 1944. An investor group headed by A.P Giannini, founder of the Bank of America, had bought the Axton-Fisher Tobacco Company in 1942. The company was unsuccessful in making their new Fleetwood cigarette a major contender to Lucky Strike, Camel, and Chesterfield, Axton-Fisher was sold to Philip Morris3. Another Philip Morris plant was opened in Louisville, Kentucky in 1952. The first major affiliate outside of the U.S. was Philip Morris Ltd. (Australia).
The first company that Philip Morris acquired that was not in the tobacco industry was Milprint and Nicolet Paper Co. of Milwaukee in 1957. Combining Milprint, Inc.; Nicolette Paper Co.; and Polymer Industries, Inc. created the Industrial Products Division of Philip Morris in 1965. Their third president was also appointed in 1957, Joseph F. Cullman, III. He became chairman and CEO of Philip Morris Inc. 10 years later.
In 1964 the report by the Surgeon General on Smoking and Health was issued. The Federal Cigarette Labeling Act took effect in 1966 in the U.S. All cigarette companies were required to put a warning label on all cigarette packs.
Philip Morris Inc.; and three operating companies: Philip Morris Domestic; Philip Morris International; and Philip Morris Industrial, were created when Philip Morris decided to reorganize its corporate structure in 1967. Within one year of Philip Morris Domestic being created, it changed its name to Philip Morris USA.
In 1969 fifty-three percent of The Miller Brewing Company (from W.R. Grace & Co.) based in Milwaukee, was acquired by Philip Morris. The other forty-seven percent of the Miller Brewing Company (from De Rance Foundation), was acquired by Philip Morris in 1970. Three years later the Miller Brewing Company moved from No.7 to No. 5 among U.S. brewers and it also broke record sales for that year.
In 1975 Miller Brewing Company created a new lower-calorie beer category and introduced it nationally, by the end of 1975 Miller Brewing was up to No. 4, its net earnings were in the top $200 million. Only seven years after Miller was acquired by Philip Morris it was No. 3, among the U.S. brewers, it had once again achieved record sales for that year and it also achieved the largest annual barrelage increase in the beer industry. The company became No. 2 in the U.S. in 1977. In 1984 Milwaukee’s best beer in the budget category is rolled out by Miller Brewing and in 1986 twenty-two states were introduced to Miller Genuine Draft.
In 1965 tobacco companies created an advertising code in which the company voluntarily and individually agrees not to advertise/promote cigarettes to young people and not to imply that cigarettes are healthy for you and that they are cool. Cigarette advertising was banned from television and radio altogether in 1971. One year later all tobacco companies are required to put health warnings on all advertising, direct mail and point-of-sale materials.
In 1978 ninety-seven percent of the Seven-Up Company was acquired by Philip Morris. Seven-Up became their sixth operating company. Pepsi Co. bought Seven-Up International from Philip Morris in 1986.
In 1978 George Weisman was appointed chairman and CEO of Philip Morris Inc. Also plans to construct a new 26-story corporate headquarters building in Midtown Manhattan, across from Grand Central Station, were announced. The company also posts record revenues ($6.6 billion) and profits ($409 million), for 25 consecutive years. In 1983 they reported record revenues ($13 billion) and earnings ($904 million), for the 30th consecutive year.
In 1984 Philip Morris Inc. got a new president and CEO, Hamish Maxwell. Philip Morris’ Inc. corporate framework was restructured in 1985 and Philip Morris Companies Inc., becomes the parent company of Philip Morris Inc. Philip Morris Cos. also went through the largest non-oil acquisition in U.S. history when they acquired General Foods Corp. for $5.6 billion. Philip Morris was the first U.S. company to line up most of the financing for acquisition from non-U.S. banks. Philip Morris’ revenues increased more than 50 percent to $25.4 billion, while net earnings reach $1.5 billion in 1986, due to the General Foods acquisition. Philip Morris once again set another record in 1988 when they acquired Kraft for $13.6 billion, a new record for the largest non-oil acquisition in U.S. history. As in their previous acquisition with General Foods, almost all of the financing was provided by non-U.S. banks.
In 1990 Kraft, Inc. and General Foods Corp. were combined to create Kraft General Foods, which was the largest Food Company in the U.S. Philip Morris Cos. revenues increased by 41 percent to nearly $45 billion; net earnings jumped 26 percent to nearly $3 billion. Fat-Free products in seven different categories were introduced by Kraft General Foods in 1990, which were more products than any other companies offered at the time. One-year later Capri Sun, Inc. was acquired by Kraft General Foods. In 1992 Jacks Frozen Pizza, Inc. was acquired by Kraft General Foods.
They also acquired two Eastern European businesses, one of them being Hungary’s leading confectionery manufacturer, Usage. The purchase by Kraft General Foods of RJR Nabisco (U.S. and Canadian ready-to-eat cold cereal) for $448 million was completed in 1993. In that same year, they also acquired the leading confectionery company in Scandinavia, for $1.3 billion and a leading manufacturer and marketer of confectionery in the U.K., for $295 million. Kraft Jacobs Suchard was formed when Kraft General Foods and Jacobs Suchard were combined. Once combined this newly created company acquired three businesses in Eastern Europe and in the former Soviet Union. Lastly, Bird’s Eye Frozen Vegetable business and Kraft General Foods U.S. ice cream business was sold.
In 1994 Philip Morris Cos. appoints its new chairman, William Murray and names Geoffrey C. Bible president and CEO. Only one year later Geoffrey C. Bible became chairman and CEO of Philip Morris Cos.
In 1995 there was a reorganization of Kraft General Foods. The reorganization created Kraft Foods Inc., which consisted of one operating company with category-based divisions. Entenmann’s baked goods were one of the three businesses that Kraft decided to sell-off. One year later the Taco Bell line of grocery products was sold to Kraft Foods. An Internet site for “good food and good food ideas”, was launched by Kraft Foods, it was called the Kraft Interactive Kitchen. The Jello-O gelatin brand 100th anniversary was celebrated by Kraft Foods in 1997.
In 1998 the tobacco industry reached an agreement with the state Attorneys General, this put an end to all of the nationwide Medicaid lawsuits that were filed against it. The companies agreed to pay about $200 billion to the 46 states over a 25 year period. They also consented to a number of marketing restrictions, one of them being taking down tobacco billboards and stopping the distribution of tobacco branded promotional items, like t-shirts and baseball caps. Part of the settlement agreement provides $1.5 billion to research and programs that are aimed at youth smoking prevention.
Philip Morris requested that each state that is receiving part of the settlement dedicate a considerable amount of the settlement to youth prevention smoking programs. Philip Morris itself has created a $100 million Youth Smoking Prevention program that includes television commercials. Philip Morris is also concentrating its efforts in other areas such as feeding the hungry, helping victims of domestic violence and disaster relief. Over the past four decades, Philip Morris has donated over $500 million to charity4.
In 1999 Philip Morris launched its corporate website (www.philipmorris.com). Philip Morris has been working hard to change the public perceptions the company created by its silence. In keeping with the same effort of changing the public perception, Philip Morris launched a $100 million national television advertising campaign in the fall of 1999, that highlights the company’s people, products, and programs.
The commercials airing profiled the company’s efforts to feed the hungry, its involvement in helping victims of domestic violence, its work in disaster relief, and its efforts to help retailers keep cigarettes out of the hands of kids4.
Philip Morris is the largest consumer packaged goods company in the world. If it wasn’t for Philip Morris’ innovative thinking and its ability to keep up with these fast times, the company wouldn’t have survived and made it to where it is now.
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