Business & Finance: Old Gold Cigarets

P. Lorillard Co., manufacturers of the new cigaret “Old Gold,” stopped a moment last week to examine how their business was going. Only in April, 1926, did they begin to sell “Old Golds.” That was in New England. Soon they promoted a sales compaign in Georgia, Florida and Alabama, then successively in California, Chicago, New York, and finally over the entire country.

Promoting a new brand of cigarets in the U. S. is vastly difficult. Smoking habits must be broken, tastes changed. Established brands hold their customers fast—R. J. Reynolds’ “Camels,” Liggett & Meyers’ “Fatimas” and “Chesterfields,” American Tobacco’s “Lucky Strikes” and “Mela-chrinos” and Philip Morris’ “Marl-boroughs.” Each sells 75 million to more than 100 million a day. To join this phalanx, not especially to disrupt it, Continental Tobacco recently dressed its new cigaret “Barking Dog” with the strong armor of advertising. So far “Barking Dogs” success is indeterminable. More recently United Cigar Stores and Schulte retail stores quietly began to sell “Three Castles,” made in England of Virginia tobacco. If “Three Castles” gains U. S. favor, it may become the brand that United Cigar and Schulte have been seeking to promote as their specialty since they merged their 5,000 retail stores as the Union & United Tobacco Corp. (TIME, Aug. 1). George J. Whelan, a founder of United Cigar Stores and for some years inactive in its affairs, has returned to his desk in Manhattan. He is there every day, cooperating vigorously with his brother Charles A. Whelan and with David A. Schulte of the firm.

In this crowded march to sell cigarets Lorillard’s have been successful with “Old Gold.” The first of last July they were selling 2,000,000 a day. Last week they were selling 20,000,000 a day. But success has been costly. Lorillard’s net income in 1925 was $5,641,431. Last year it was $4,117,197. This year it will probably be less. Advertising costs, although a trivial fraction of a cent for each cigaret sold, is altogether enormous. But continued success in selling “Old Gold” will far more than pay for advertising appropriations. Meanwhile Lorillard’s profits on their other brands of cigarets (Murad, Helmar, Egyptian Dieties), cigars and tobaccos show total profits as high as 50%.