Chapter 30, Part 1

By Frank Tursi, Susan E. White, Steve McQuilkin and Ken Otterbourg
JOURNAL REPORTERS
© 1999 Winston-Salem Journal

The brand was dying, and it wasn't pretty to watch. Since its introduction in 1913, Camel had weathered the Great Depression and two world wars. It had been the first truly American cigarette, the smoke that put R.J. Reynolds Tobacco Co. on the path to wealth and power.

The glory was gone, and had been for years. In 1947, RJR had sold 100 billion Camels, just under a third of all the cigarettes in America. In 1987, it sold just 24.2 billion, about 4 percent of the total. Too many smokers thought that it was unfiltered, harsh, or worse, an old person's brand. All in all, it was no way to ring in the 75th anniversary of this industry icon.

It was Lynn Beasley's idea to celebrate Camel's birthday and perhaps give it a lift with a new advertising image. (Photo By Will and Deni McIntyre)

Lynn Beasley was the senior brand manager for Camel at the time. She was looking for a way to celebrate Camel's birthday and to create some excitement about the brand. It all came together at a focus group meeting.

''And we had a lot of ideas,'' she said. The list included a cartoon poster of a camel's face that had been used in France in the mid-1970s.

''And when that was shown to adult smokers, they just, like, loved it. They lit up. They said, `Hey, this is fun, it's entertaining, this is what you should use.' And, you know, it's one of those things that when you're in marketing; it happens, like, once every several years where everybody in the room goes `I like this, I really like it.' And it was one of those moments that just -- it's really great.

''And a light bulb went off in my head and I thought the Camel 75th birthday is coming up, people love this French Camel, why don't we try and make this French Camel a campaign to celebrate Camel's 75th birthday.''

The R.J. Reynolds Tobacco Co. was once the largest cigarette company in the United States with a powerhouse of best-selling brands: Winston, Salem and Camel. But times changed, and as the case against smoking became more pronounced in the 1960s, RJR failed to adapt to the marketplace. Its rivals would eventually rush past it, and RJR's efforts to catch up would have a profound impact on the company and the cigarette industry.

The French camel would soon get a new name: Joe Camel. His success in turning around RJR's oldest brand and making it hip to smoke Camel would lead to a turning point in the tobacco wars. Critics said that Joe Camel appealed to underage smokers and was a clear attempt by Reynolds to addict the next generation.

Matt Myers, the executive vice president of the National Center for Tobacco-Free Kids, said that Camel's success came at an extraordinary price to Reynolds and other tobacco companies. It helped shift the political debate over smoking from whether adults are responsible for their actions to the need to protect children. ''It was just too blatant, too obvious, too visible an image,'' he said. ''Joe Camel helped change a nation that wanted to believe the industry didn't market to kids to a nation that didn't doubt that the industry would market to kids.''

Reynolds says it doesn't now and has never marketed its cigarettes to underage smokers. The company would battle against Joe Camel's critics, poking holes in their research and repeating to all that adults were the only smokers it cared about.

And maybe that was true. But in an industry built on image, Reynolds lost the battle of public perception. In the end, that was what mattered.

The Fountain of Youth

On July 22, 1980, Jerry Long, the president of Reynolds Tobacco, wrote a three-paragraph memo to his boss, Ed Horrigan. The subject was the marketing development department's report on teen-age smokers.

It reads in full: ''Attached is a MDD report covering the aforementioned subject. Last January, a report was issued on this subject that indicated that Philip Morris had a total share of 59 among 14-17 year old smokers, and specifically, Marlboro had 52 share. This latest report indicates that Philip Morris' corporate share has increased by about 4 points; however Marlboro remains the same at 52.

''Importantly, the report further indicated that RJR continues to gradually decline, and between the spring and fall 1979 periods, RJR's total share declined from 21.3 to 19.9.

''Hopefully, our various planned activities that will be implemented this fall will aid in some way in reducing or correcting these trends.''

Long's memo has become one of the key pieces of evidence in the war against the tobacco industry. Critics of the cigarette companies say it clearly shows RJR's concerns that it was losing the youth market and a willingness to try to remedy the situation.

Hogwash, said Horrigan. He and Long have both been deposed before a federal grand jury because of this memo.

''And I know what he meant. What he meant was our problem is made even more difficult. In other words, and the research they were referring to, and again I've been deposed on this, it wasn't even Reynolds research, but market research obviously. . . . I think it was a government survey -- that showed the incidence of smoking down around 12- and 13-year-olds. And then it went on to articulate what their brand preferences were. All right? That was a U.S. government study. It wasn't an R.J. Reynolds Tobacco consumer study. So it gave us some more facts about the market. And what he was trying to say is these preteeners to teen-age kids are starting to smoke Marlboro already. So by the time they get to the legitimate age, they already have a brand that they're kind of comfortable with, it's going to be more difficult to get them to smoke a Camel or a Winston. That's what he meant.''

Long declined to comment on the memo. He said he had been subpoenaed before a federal grand jury and RJR's attorneys had advised him not to discuss youth smoking. But he also insists that Reynolds never targeted underage smokers. ''Every brand that RJR introduced was never, never, never marketed to the younger-adult market. They were all marketed against the upper end of the market, either economically, socially, demographically or whatever.''

Other company executives say the same: Reynolds was scrupulous in steering clear of kids and went out of its way to avoid even a hint of impropriety.

But the written record is more complicated, and it shows a company clearly wondering where its next generation of customers would come from.

By 1980, RJR had been collecting information on teen smokers for years, and -- contrary to Horrigan's statement -- its data didn't come from the government. Reynolds contracted with National Family Opinion of Toledo, Ohio, to survey customers about their smoking habits. Information on teen smokers was ''a natural byproduct of the tracking of adult smokers,'' the company said. ''No special effort is made to gather this data, and it is not to be used for marketing strategy purposes.''

That said, Reynolds spent a fair amount of time and effort analyzing a market that it professed to have no interest in. In 1980, for example, researchers noted that Marlboro was still socking it to Winston. Kool was no longer a threat to Salem. In its place was Newport, made by Lorillard. ''Newport overtook both Salem and Kool in share of the teen-age market in Fall 1979, making Newport the second most popular brand among teen-agers, after Marlboro,'' wrote Stephen Perry, the report's author.

Shortly after Long's memo was written, the company changed the language in its marketing reports. Teen smokers would eventually be grouped with 18-year-olds as ''continuing smokers, ''and the numbers 14-17 were banished from research documents. In spelling out the change, L.W. Hall Jr., an RJR marketing official, wrote: ''More to the point, it is not our business to motivate people to start smoking, particularly minors. . . . Given this policy, it is important that we do not do anything that would leave the false impression that our real intentions are otherwise.''

Lawyers hired by Reynolds in 1985 reviewed the company's arms-length relationship with teen smokers and said that RJR had nothing to be ashamed of. They wrote: ''The industry should not be defensive about surveys of teen-age smoking habits. Nothing prohibits people who work for tobacco companies from learning of the habits and preferences of consumers, including minors. The instances of surveying are not pervasive. In fact, they can be described as `isolated.' The discovery does not indicate that any specific marketing action was based on these surveys. The best response is to acknowledge whatever was done, but state no marketing action was taken. Business planning decisions such as whether new plants are needed might be based on projections of the numbers of smokers in the future.''

That same review noted RJR's ''almost obsessive interest in the `18 to 21' year-old-market. And that was really the larger message behind the youth surveys and marketing studies of the 1970s and early 1980s, regardless of the age cutoffs used. RJR's franchise was aging, a researcher wrote in 1980.

''Some of RJR's losses are due to Winston, which is losing share among 18-year-olds, and to Salem, which is experiencing decreases in its net gains due to aging. There are no indications that these trends will level off in the near future.''

As Diane Burrows, an RJR marketing specialist, noted in a Reynolds marketing report written in 1984: ''Younger adult smokers have been the critical factor in the growth and decline of every major brand and company over the last 50 years. They will be just as important to brands/companies in the future.''

Later, in her report, she wrote: ''The renewal of the market stems almost entirely from 18-year-old smokers. No more than 5 percent of smokers start after age 24.''

Equally important was RJR's knowledge that smokers were extremely loyal to their brands. It was a lot easier to keep a smoker than to switch one. For Horrigan and Long and the marketing honchos at Reynolds who followed them, the message was clear. They would need to find a brand that appealed to younger smokers.

A Star Is Born

Lynn Beasley came to Reynolds in 1982, fresh from receiving an MBA from the University of Wisconsin. She grew up as one of nine kids on a dairy farm in rural Wisconsin and worked her way through college as a postal worker. She was planning to go work for General Mills when RJR called. She had never been to the South.

''And my ongoing impression was, like: a cigarette company,'' she said. ''And -- but when I got there, the company explained to me the philosophies on how they market cigarettes and how they view them, and I felt good about it.''

Beasley started at the bottom, as a marketing assistant on Now, RJR's low-tar brand. She then moved to More, then to Camel as an assistant brand manager in 1984. Her next stop was as a brand manager for Reynolds' discount cigarettes, the fastest-growing segment of the market, and she guided the growth of Doral during its early years. In 1987, she became senior brand manager for Camel.

Joe Camel was always a "Smooth Character."

From her stint with the brand three years earlier, Beasley was familiar with Camel's weaknesses; things hadn't changed much. Despite the brand's heritage -- the beautiful pack with the pyramids and palm trees -- Camel was slowly losing market share, a little each year.

Its advertising was still the same, based around a rugged-looking guy with curly hair by the name of Bob Beck. Beasley said smokers saw it as ''a bad imitation of Marlboro, that. . . just wasn't very compelling and motivating to particularly young smokers.''

''They thought, you know it was -- here this guy was a loner and it made Camel seem old and harsh and it was not a good campaign.''

Smokers who tried Camel liked its smooth taste and blend, but most couldn't get past the stale image. An overhaul was needed to get smokers -- particularly young smokers -- to try the brand. That was vital to Camel's survival.

After that fateful brainstorming session, Beasley took her cartoon Camel to senior management for approval. They turned her down. Cigarette advertising was serious stuff they told her, and they worried that existing Camel smokers would think RJR was making fun of them. Beasley was undeterred. She went to the cigarette factories and talked to the old-timers. If anyone would have a problem with the irreverent approach, they would. But they loved it. Beasley made another presentation, and Joe Camel was launched in the first quarter of 1988.

The pitch would be ''Smooth Character,'' a bit of wordplay to emphasize Camel's taste and Joe's good-times approach to life. As RJR said in a memo two years later: ''Always the winner, on top of the situation, beating the system, and covering the scene, whatever he does he does with a style and joie de vivre all his own. The twinkle in his eye and that `cat that ate the canary' expression on his face say it all.''

RJR poured advertising dollars, as much as $40 million a year, into Joe Camel billboards, promotions and magazines, particularly such young-adult publications as Rolling Stone. He skateboarded, played the saxophone and wore dark sunglasses. In the advertising campaigns for RJR's other brands, the models had to be at least 25. Joe Camel didn't have that problem. He was a cartoon. He was ageless.

Adweek magazine named it one of the 10 best print campaigns in 1989. Most important, from Beasley's and RJR's perspective, the campaign was working. More young smokers were choosing Camel. In 1987, Camel had a 3 percent share of 18- to 24-year-old smokers. By 1994, it would jump to 10 percent. There were smaller gains among older smokers.

Suddenly, Camel was cool. Maybe too cool.

• Coming Saturday: Collateral Damage