Nicotine and Cigarette Sales

	Inter-Office Philip Morris CONFIDENTIAL correspondence: Observations on the Relationship of Nicotine Change and Sales Change in the Marlboro TO: Dr. R. B. Seligman FROM: W. L. Dunn May 14, 1975
	Summary of Image Page One "The phenomenal increase in Marlboro Red sales which so happily marked the late '60s and early '70s has begun to falter." "The onset of decline might be perceived as occurring as early as 1971, moving from a high of 16% for 1970 to a low of 6% for 1974." [click on image to enlarge to full size -- 15K]
	Summary of Image Page Two Shows Figure 2 -- Marlboro Annual Sales Increment in Percent plotted with Nicotine Delivery Levels "If one then plots the corresponding* nicotine delivery levels for those years, one observes a close parallel in the two curves [change in sales] throughout the period" [click on image to enlarge to full size -- 17K]
	Summary of Image Page Three "Our question here, then, is whether sales lag beginning in 1974 is a marketplace response to the gradual reductions in available nicotine in Marlboro Reds that began in 1971." "...It would appear that whatever is impinging upon Winston, perhaps with even greater vigor, striking both brands most devastatingly in the fourth quater of 1974." Since Winston maintained nicotine delivery levels of "remarkable constancy over the past decade," there must be another reason. "An obvious correlate is the economic recession." [click on image to enlarge to full size -- 18K]
	Summary of Image Page Four As the researchers look for an explanation to decreasing sales, they state, "A good case can be found without going beyond corporate bounds, the case being Benson & Hedges. The chronology of the nicotine reductions is the same for both cigarettes, but inspection of the sales figures over that period for Benson & Hedges reveals no adverse sales effect..." [click on image to enlarge to full size -- 19K]
	Summary of Image Page Five Comparison of prior research of "noticeable difference" in nicotine delivery finds, "These three studies bear out the remarkable degree of insensitivity of consumer panels to major delivery level differences [of nicotine] in cigarettes..." On the other hand, "there is a small percentage (5%) of smokers who would be able to perceive the 1970-1975 Marlboro difference..." [click on image to enlarge to full size -- 22K]
	Summary of Image Page Six "It would be ludicrous to speculate that a smoker would be able to meaningfully compare today's Marlboro with his recall of the 1970 Marlboro." "During the past five years there has been a downward drift in the delivery levels of those brands which have been increasing their market shares. That this drift has not been merely a function of the increasing determinancy of the health-scare in brand choice is to be seen in trends in acceptability ratings." [click on image to enlarge to full size -- 26K]
	Summary of Image Page Seven "Underlying all of our work in this area is the conviction that what the smoker gets in the way of smoke is independent of smoke concentration levels as delivered within the range of commercially available cigarettes. He has a variety of regulatory maneuvers at his disposal for accommodating supply to a fairly constant need." [click on image to enlarge to full size -- 12K]
	BACKGROUND NOTE: This 1975 Philip Morris CONFIDENTIAL internal memo, Observations on the Relationship of Nicotine Change and Sales Change in the Marlboro, illustrates the concern PM maintained regarding the decreasing nicotine delivery levels in their Marlboro Red product. As sales begin to falter in the early 1970s, PM looks for an explanation. Their initial examination shows a perceived relationship between nicotine content and gross sales. Through deeper analysis, there appear to be a number of other possible explanations, including the economic recession. Quotes The phenomenal increase in Marlboro Red sales which so happily marked the late '60s and early '70s has begun to falter. The onset of decline might be perceived as occurring as early as 1971, moving from a high of 16% for 1970 to a low of 6% for 1974 If one then plots the corresponding* nicotine delivery levels for those years, one observes a close parallel in the two curves [change in sales] throughout the period Our question here, then, is whether sales lag beginning in 1974 is a marketplace response to the gradual reductions in available nicotine in Marlboro Reds that began in 1971. This is the Winston, whose [nicotine] delivery levels have maintained remarkable constancy over the past decade. It would follow that if Marlboro Reds' sales decline is a function of decline in nicotine delivery, then no such sales decline should have been suffered by the Winston. It would appear that whatever is impinging upon Winston, perhaps with even greater vigor, striking both brands most devastatingly in the fourth quater of 1974. An obvious correlate is the economic recession. Anne Landman American Lung Association of Colorado, West Region Office Grand Junction Title: Observations on the Relationship of Nicotine Change and Sales Change in the Marlboro Date: May 14, 1975 From: W. L. Dunn To: Dr. R. B. Seligman Site: Philip Morris http://www.pmdocs.com No. of Pages: 7 URL: http://www.pmdocs.com/getallimg.asp?DOCID=1000024914/4920

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Inter-Office Philip Morris CONFIDENTIAL correspondence: Observations on the Relationship of Nicotine Change and Sales Change in the Marlboro