TOBACCO: The Long & Short of It

Chesterfield had the rest of the tobacco industry chain-smoking nervously. Chesterfield’s maker, Liggett & Myers, had brought out the first king-size version of its top brand, identical except for size, in name, tobacco and package. What made the trade nervous was the fact that the big Chestie, without making any visible dent in the sales of its shorter brother, quickly ran up king-size sales in the test markets. Despite the 1¢-a-pack higher price, dealers could scarcely keep up with demand.

Chesterfield’s makers, who only a month before had solemnly denied any intention of bringing out a new cigarette, played a couple of shrewd tricks with the new cigarette. Unlike American Tobacco, whose Pall Mall is king of the kings, it does not have to have separate newspaper, radio and TV ads, can make the same ad serve double duty. A still bigger advantage is that, where OPS has refused to allow price boosts for existing standard or king-size brands, Chesterfield was able to get 1¢ more for its king by proving it costs more to make. As a result, in spite of the higher cost, the extra penny gives Liggett & Myers an estimated additional profit margin (before taxes) of ¼¢ per package. This was a cogent reason why other makers, despite denials, might follow Chesterfield’s lead in “kinging” their top brands. And what the move emphasized most was the growing popularity of long cigarettes, whose share of the total market has zoomed from 9% in 1950 to about 16% this year, while sales of standard-size cigarettes have slipped.