ALL-NATURAL KILLERS RJR'S CONTROVERSIAL ADDITIVE-FREE CIGARETTES
(FORTUNE Magazine) – You've seen the ads: "I get enough bull at work. I don't need to smoke it," says one. "Fire up a real one," urges another.
The product they're pitching is Winston, the brand that ruled the U.S. cigarette market until the Marlboro man trampled it in the late 1970s. Now it has been reinvented by maker R.J. Reynolds as an all-natural smoke. And guess what? Sales are up.
The new Winstons contain none of the additives tobacco companies usually mix in to enhance flavor and make cigarettes burn longer. Additive-free cigarettes had until recently been the province of niche brands sold at specialty smoke shops and advertised in natural-food magazines. But the remarkable success of the top all-natural brand, Santa Fe Natural Tobacco Co.'s American Spirit (its sales have been growing more than 60% a year), made tobacco industry No. 2 R.J. Reynolds take notice.
Before Winston switched to additive-free in July, it held a 5.4% share of the U.S. cigarette market (down from 15.6% in 1970). By September it was at 5.8% and rising. That's great news for the bottom line of R.J. Reynolds' parent, RJR Nabisco Holdings: One point in market share equals $80 million in pretax profits, says Sanford C. Bernstein tobacco analyst Gary Black.
Winston's apparent success has irked antismoking groups. The American Cancer Society, American Heart Association, and American Lung Association jointly filed a petition with the Federal Trade Commission claiming that Winston ads mislead smokers into thinking additive-free smokes are healthier.
RJR denies that it is making any health claims. So what exactly are those ads saying? Ned Leary, vice president of marketing for the Winston brand, explains it like this: "We needed an idea that embodied a very relevant attitude and image that was also combined with a product that supported that image."
Got that? Another explanation is that RJR--which tried and failed to interest smokers in an all-natural cigarette (Real) in the late 1970s--is capitalizing on fears about additives sown by antitobacco activists. In 1994, National Public Radio made public for the first time a list of 599 additives used in cigarette manufacturing, among them such noxious substances as freon and ammonia. Health groups reacted with outrage, and the ensuing publicity sparked consumer interest in all-natural smokes.
To be sure, there's no evidence that additives increase the health risks of smoking. Even additives critic Greg Connolly, head of Massachusetts' tobacco-control program, admits, "It's the natural stuff that kills you, stupid."
For now, though, it's the natural stuff that sells. If Winston's renaissance continues, look for others, like industry leader Philip Morris, to join the additive-free parade.
--Rajiv M. Rao