The Old Dope Peddler
3 June 2001
Imagine for a moment a drug cartel, one that distributed not one but two addictive recreational drugs to tens of millions of addicts around the globe. Imagine that this cartel earned over $14 billion in profits on sales of $80 billion last year. Imagine that this cartel gave $3.5 million in cash to American politicians so that political pressure on it would abate. Imagine that this cartel now owned two huge food conglomerates, so that its drug-marketing expertise could be used to push unhealthy foods. The cartel in question is real: Philip Morris, one of America's largest corporations.
Philip Morris is an immensely profitable corporation, with several different divisions. But the majority of its sales and profits come from the sale of recreational drugs. According to the Morningstar.com report on Philip Morris, the company had sales in 2000 of $80.4 billion and profits of $14.7 billion. Tobacco provided 61.0% of sales and 65.1% of profits. Beer provided 5.4% of sales and 4.0% of profits. Although its Kraft and Nabisco operations, taken together, dwarf all other American food companies, selling tobacco gives Philip Morris its market capitalization of over 110 billion dollars.
Philip Morris, along with other companies that sell alcohol and tobacco, used to be a contributor to the Partnership for a Drug Free America. The Partnership produces public service advertisements about the dangers of illegal drugs to American youths. Until 1997, however, it saw no reason to refuse contributions from alcohol or tobacco companies. Even after the change in its policies, the Partnership's ubiquitous advertisements do not focus on the dangers of drinking or smoking, despite the vast majority of smokers who start smoking as teenagers, despite the distressing number of teenagers who die each year in alcohol-related accidents, and despite the large number of teenagers who experiment with alcohol and tobacco before they experiment with illegal drugs. Perhaps the Partnership is still worried about biting, not simply the hands that feed it, but the hands that feed the entire advertising industry.
Philip Morris is a large enough contributor to American political campaigns that its influence there extends beyond the influnce that it might ordinarily have as a market leader. According to the Center for Responsive Politics report on tobacco industry contributions for the 2000 election cycle, Philip Morris gave $3.45 million to candidates for political office or to political parties. Most of this amount was "soft money" directly to party committees, but other donations were direct contributions from the company's political action committee or, to a lesser extent, from its employees. Eighty-two percent of the company's contributions went to the Republican party or its candidates. Philip Morris was by far the most profligate of all tobacco companies, accounting for almost 41 percent of the entire industry's contributions.
The fiscal year 2002 budget for the federal government eliminated funding for the lawyers in the Department of Justice who would work on the suits against the tobacco industry to get it to pay for medical costs associated with smoking. The directors and top executives at Philip Morris knew that their investment in the Republican Party was likely to pay dividends. The Republican Party has already shown that it offers a great return on investment. If the lawsuit dies--and it might not, because the federal government was only one party in the suit against the tobacco industry--then Philip Morris might save billions of dollars on a $3,500,000 investment.
Philip Morris has a history of buying outside businesses to insulate itself from any problems with its alcohol and tobacco divisions. In 1985, it paid $5.6 billion to buy General Foods. In 1988, it paid $13.5 billion to buy Kraft Foods. Last year, it paid another $15.2 billion to buy Nabisco Holdings. To pay down some of the debt from this last transaction, it plans to sell shares in its Kraft subsidiary. It will sell 16 percent of the shares but give up only 3 percent of the voting power. (MSNBC has a good explanation about the planned offering.) As a result of these purchases, Philip Morris has tentacles in almost every aisle of the supermarket, except the actual fruit and vegetables in the fresh produce section. It owns Post cereals, Maxwell House coffee, Kraft foods of all descriptions, Jell-O desserts, Kool-Aid drinks, and Oscar Meyer meats. It owns all of the Nabisco products in cookies, crackers, and snack foods. It even owns the Balance Bars in the health food aisle.
What Philip Morris has learned about pushing cigarettes to the masses is obvious in its marketing of its processed foodstuffs. Oreo isn't just a cookie any more. It's an ice cream, in many guises. It's a breakfast cereal. It's a cookie with extra frosting, or with chocolate frosting. Dipped in the right candy, it's a Mystic Mint cookie. In my darker moments, I expect to see Menthol Oreos, or special 120mm Oreos, or Oreos in a flip-top box. Philip Morris has learned that traditional advertising must work in conjunction with nontraditional advertising. In the 1970s, its Virginia Slims brand sponsored the women's pro tennis tour. Nowadays, its Marlboro brand sponsors top Formula One and Indycar racing teams. Over Memorial Day weekend, Michael Schumacher and Rubens Barichello finished one-two in the Grand Prix of Monaco; and Helio Castroneves and Gil de Ferran finished one-two in the Indianapolis 500. Philip Morris executives were cheering the loudest, because their red-and-white logo was on the winners' caps, cars, and uniforms. You can't buy advertising like that.
It is true that the two recreational drugs that Philip Morris sells are legal in this country. But Philip Morris has marketed its more harmful product, tobacco, in deceptive and abusive ways. In the last several years, its own documents have shown that it aimed its tobacco marketing at children and falsely claimed that tobacco was safe to both users and those around them. Its major product is addictive and lacks any redeeming social purpose. Another major product is a psychoactive drug that is frequently abused. Consumers need to take the whole corporation into account before they give that corporation their business. Adbusters has long asked North Americans why we buy their food from a tobacco company. Well, why should we?
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