To the Package Store

Fearing that the smoking-and-cancer scare may be hazardous to their fiscal health, cigarette makers have long been hedging their futures by tracking down merger opportunities. Lately, the trail has led to the package store. Liggett & Myers last year took over the U.S. importer of J & B Scotch whisky. American Tobacco bought nearly all of Chicago's James B. Beam Distilling Co. last fall, and will soon purchase control of the Buckingham Corp., importer of Cutty Sark Scotch. When its turn came, P. Lorillard Co. decided to try a little tippling too.

Useful Shot. In Manhattan last week, Lorillard announced plans to acquire Schenley Industries for some $350 million in new Lorillard securities. The deal will create a liquor-and-tobacco conglomerate with combined sales, including excise taxes, of nearly $1 billion from more than 50 brands, including Lorillard's cigarettes, cigars, chewing tobacco, candy and cat food, and Schenley's bourbons, Scotches, wines and other potables.

Both companies could use a shot of some sort. The fifth-ranked U.S. to bacco company, Lorillard last year earned $29 million on sales of $510 million, but its profits have barely budged since the late 1950s, when its filter, Kent, stole the low-tar-and-nico-tine march on the industry. Chairman Manuel Yellen, 54, last year offered a new filter brand, True, both plain and mentholated; though True is highly successful so far, sales have just begun to make up for its heavy introductory costs in a market now choked with competition.

Schenley's profits ($20.5 million last year) should look good on Lorillard's books. And with its marketing-minded young management, Lorillard should soon be able to return the favor for Schenley, whose 1966 sales of $478 million were only 2% greater than in 1957. Once the leading U.S. distiller, Schenley was overtaken by aggressive Distillers Corp.-Seagrams after the war. None of its leading brands (among them: Schenley Reserve blended whisky, Dewar's Scotch, I. W. Harper bourbon) are now the top sellers in their fields.

Reign's End. Detractors lay much of the blame to an aging but not notably mellow Schenley spirit: Chairman Lewis Solon Rosenstiel, 75. Rosenstiel founded the company shortly before repeal in 1933, and remains its dominant shareholder, controlling stock worth some $55 million. Ever contentious, he has for decades feuded with the industry over various marketing practices; more recently, he has spent much of his time in and out of court waging private wars with, among others, his estranged fourth wife, his daughter, one of his own lawyers, and his Greenwich, Conn., neighbors.

Still robust and ever stabbing the air with his long cigars, Rosenstiel only last August gave up the presidency to Scots-born John Mackie, 55. Schenley-Lorillard merger terms and management details still have to be approved by directors and stockholders, but Rosenstiel at last seems ready to end his rambunctious reign. "He screams at you one minute," recalls one former Schenley staffer, "and then loves you the next." Schenley survivors may respond readily to some steady Yellen.

This file is automatically generated by a robot program, so reader's discretion is required.