Monday, Mar. 17, 1941
King Size
When tall, young (35), Latin-looking Frank Riggio quit American Tobacco Co. in 1937 to go in business for himself, cigaretmen thought he was crazy. His father, Vincent Riggio, was a vice president of American Tobacco, a favored member of its famous bonus system. And Frank had only $2,500 to back his own idea, which was to make the first popular blended King-size cigaret. By last week this had proved the best new idea in the tobacco business since the 10-c- brands. But its chief beneficiary was not Frank Riggio. It was American Tobacco Co.
The King-size cigaret (85 mm. instead of 70) was nothing new. For over 60 years, "longs" of a wholly Turkish blend had been sold, but mostly to tired old women, Booth Tarkington and Erich von Stroheim. Frank Riggio figured that by putting an American blend in the 85 mm.s he could broaden their market. The 20% extra length would give a cooler, longer smoke; the 11% extra tobacco required would hike the manufacturing cost only 35-c- a thousand (from around $5)--not enough to throw them out of price competition* with the popular brands. Young Mr. Riggio figured right. The first year (1939) his Regent brand, with outlets only in New York and New England, sold 200,000,000 cigarets. Papa Riggio smiled.
Papa Riggio's boss, American Tobacco's fabulous President George Washington Hill, smiled too. Ever since the famed Cremo anti-spit campaign had failed to turn the ebbing tide of the cigar business, his cigarmaking subsidiary, American Cigarette and Cigar Co., had been a headache. The Pall Mall cigaret, which A. C. & C. had put out in a 15-c- Americanized version in 1936, fizzled despite a costly advertising campaign. So Hill borrowed Frank Rig gio's idea. He lengthened Pall Mall to King size, kept Young & Rubicam, whom he had hired in 1938, to do the advertising.
Y. & R. first gave the new Pall Malls an upstage atmosphere, then changed its campaign to emphasize the bigger size. It incidentally capitalized on growing U. S. militarism by putting the comparison in the hands of uniformed sailors, soldiers, marines. Last week, like most advertising George Hill has anything to do with, this idea became so overpowering that The New Yorker was driven to puncture it (see cut). But unlike any advertising agency George Hill had dealt with before, Young & Rubicam had already (as of Jan. 14) resigned the Pall Mall account. Rumored reason: George Hill demanded too much service even for a $400,000 billing.
Whether Frank Riggio's idea, Y. & R.'s ads or George Hill's inspired hunch-playing was responsible, Pall Mall had struck a bonanza. It sold 4,000,000,000 cigarets in 1940, seven times its former volume. Last week Profit-Maker Hill, pleased as spiked punch, translated this into dollars for his stockholders. To American Tobacco's 1940 net of $28,311,783 (up 7% over 1939), American Cigarette and Cigar had contributed $1,458,107 (up 276% over 1939). The subsidiary's Pall Mall division had changed a $780,902 loss in 1939 into a $521,416 profit in 1940.
Meanwhile King-size cigarets multiplied like brands of beer in 1933. Hill lengthened another of his own lagging brands, Herbert Tareyton, watched its sales jump to 1,800,000,000 last year. Brown & Williamson's Wings adopted the new size, so did Spuds (Axton-Fisher), Beech-Nut (P. Lorillard), Dunhill (Philip Morris). Other makers thought up new names: Stratford (Fleming-Hall Co., Inc.), Cinclair (A. Ladis Tobacco Co.), Melowicks (Strand Tobacco Co.), etc. Out of 180,000,000,000 cigarets sold last year, the King size accounted for about 8,250,000,000.
Upstart Frank Riggio, with a new plant in Brooklyn and $175,000 in machinery, sold 800,000,000 Regents, a 300% increase over 1939 and enough (even with Regents' high-cost cardboard box) to net him a profit. But George Hill was by now far ahead. His two entries, Tareyton and Pall Mall, blanketed 70% of the new market.
*The Internal Revenue Tax (about 6-c- a package) remains the same so long as no less than 1,000 cigarets are made out of three pounds of tobacco. King size squeezes about 1,050 from the three-pound allotment, to the standard size's 1,350.
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