BUSINESSWEEK ONLINE : NOVEMBER 29, 1999 ISSUE
COVER STORY

Dismantling a Bunker Mentality


The question came from a table down in the front, and it nearly drained the color from the face of the Philip Morris Cos. executive who was there to answer it.

''Having just buried my brother from lung cancer, I want to know why Philip Morris (MO) is still in the tobacco business,'' said the silver-haired Rotarian at a recent luncheon in Denver.

Steven C. Parrish, 49, senior vice-president for corporate affairs at the world's largest tobacco company, paused, as if to gather himself. Then, he found some wiggle room in a reply that focused on the likelihood that the company's foes would challenge a spin-off of any business.

For Parrish, it was all in a day's work. His Rotary appearance is but one event of many on his Denver agenda, including interviews with the Denver Post, Rocky Mountain News, and radio and TV stations, that Parrish will jam into the two-day trip. His goal: to rebuild what he calls Philip Morris' ''rightful place in society as a respected consumer-products company.''

FLEXING P.R. MUSCLE. The trip is part of a broader effort to burnish the company's image. For decades, the tobacco industry appeared unassailable. But with a trickle of lawsuits going against the companies, a recently filed federal suit, and the release of The Insider, a powerful movie that excoriates Big Tobacco, the balance of power has suddenly tipped away from the industry. Unable simply to retreat into the corporate fortress and run its business as usual, Philip Morris is flexing its public-relations muscle.

A new ad campaign, under the theme, ''Working to make a difference: The people of Philip Morris,'' appeared in October. The national TV commercials publicize the company's donations to causes such as disaster relief and domestic violence and its efforts to curb cigarette sales to minors. A new Web site makes the startling admission that cigarettes are indeed addictive, something tobacco executives denied for decades.

The ads have enraged groups concerned with youth smoking that are mistrustful of Philip Morris' motives. A newspaper ad sponsored by 26 health, religious, and education groups under the heading: ''Philip Morris Must Change'' appeared on the op-ed pages of The New York Times and the The Wall Street Journal. Among other things, the ad called for the company to drop its opposition to regulation of tobacco by the Food & Drug Administration. ''Philip Morris wants to appear to be sound and caring, only to divert attention from the harm they do,'' charges Matthew Myers of the Campaign for Tobacco-Free Kids.

SCORNED. The skepticism isn't confined to the antitobacco activists. After Parrish's Rotary Club luncheon speech in Denver, he finds himself assaulted with tough questions. A surgeon asks what he's doing to stop adult smoking. Another Rotarian asks why Philip Morris videotaped the speech. He wants to make sure the company won't use it to suggest the club endorses its campaign.

Scorned by tobacco foes as the industry's ''Minister of Propaganda,'' Parrish, a former Philip Morris litigator, believes that cigarette companies must change their stance. ''Over the years, the industry developed a bunker mentality,'' he says. ''We reacted as if every criticism was part of a strategy to drive us out of business. We became isolated.''

Back on the corporate plane, with its gold-trimmed ashtrays, for the flight home, an associate hands him a copy of a Rocky Mountain News article with the headline: ''Philip Morris exec tells how firm is trying to gain public trust.'' It is a positive story, one that presents his views without taking any cheap shots. ''Let's keep that one for the day someone calls me a nincompoop and I'll want to jump out at 35,000 feet,'' he says wearily.

By John A. Byrne in Denver

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Dismantling a Bunker Mentality

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