sample="quota" bates="ATX05_0022017" isource="atc" decade="1960" class="ui" date="19671102" Montgomery, Scott & Co. Comment The tobacco industry is between the well-known Scylla and Charybdis. On the one side, the ITC has changed its view as to whether tar and nicotine is or is not a health claim, and it is expected that by year-end it will report its findings as to the nicotine and tar content of all brands on the market. The tobacco industry, which is conducting tests on its own, will probably report on or about the same time. Other agencies now suggest that nicotine is a hazard where in the initial Health, Education & Welfare report was rather negative on this score. On the other side, various legislators have suggested rewarding those companies who have low tar-nicotine content cigarettes through lower taxes and the requirement that such members be printed on the labels of every pack and carton. Anyone bold enough to suggest that smoking is not, or may not be, a causative agent in producing cancer, etc., is harassed. For instance, every person testifying for the cigarette companies at the recent Senate Commerce Committee hearings received a letter and questionnaire imputing that they were "paid off" to make such a testimony. This is an obvious effort to discourage competent men from giving the other side of the story - certainly improper procedures in a free society. Various government agencies have also suggested that the label "Caution: Cigarette Smoking May Be Hazardous To Your Health" is not working, i.e., people are continuing to smoke. It should be noted that this was not the purpose of the labeling act, but rather it was to allow people free choice - if, despite the label, RECEIVED NOV 2 1967 Res. & Dev. New Products Div. to smoke - that was their decision. Now like spoiled children, the zealots are stamping their feet in anger and frustration because people still wish to smoke, and they are attempting to impose their mores on an unwilling public. In fact, there is increasing evidence to counter these arguments. For instance, a report recently published by the World Health Organization on lung cancer in Israel found no statistical association between lung cancer and smoking. This again points up that so far the anti-tobacco forces have only bent statistics to their own use and have no scientific data. For, as syndicated columnist, James J. Kilpatrick, said in a recent article dated September 28, 1967, in the Newark Evening News, "With the same validity on the basis of the Public Health Service statistics, a critic can assure you that pack-a-day smokers spend fewer days in bed than persons who have never smoked; that the pack-a-day man is likely to have less hypertension, less arthritis, and better hearing than the never-smoked man. Amazingly, men who are presently smoking even have a lower incidence of upper respiratory conditions than the persons who have never smoked. And believe it if you will, from Table 21 of the PHS report: Heavy smokers over 65 - the two-pack-a-day volcanoes - spend 8.5 days sick in bed each year, while their counterparts, men over 65 who have never smoked at all, are sick in bed for nearly two weeks. What do you make of that?" In another study initiated by the U.S. Public Health Service on American Tobacco Co. employees, it was pointed out that "Over a 14 1/4-year period, mortality among American Tobacco employees from all causes, from cancer, from lung cancer, and from cardiovascular disease has been 21% to 30% lower than the general population rate. It will be noted that their respiratory cancer rate is as much below average as is mortality from other causes. Of these employees 65% were regular cigarette smokers, as compared with 37% of the U.S. adult population. These data were not based on estimate or sampling; smoking habits were determined by applying pretested measuring instruments to virtually all the individuals under study (98.1%)." The FCC has also gotten into the act through a recent ruling without prior hearings (unprecedented) in which it chose to require that television give equal time to opponents of cigarette smoking if cigarette advertising were to be carried - a new form of blackmail as prime time (which must be allotted to these opponents) probably runs about $10,000 a second. The broadcasters have instituted suit against the FCC, but in the meantime are forced to give time to anti-smoking forces. This, of course, opens the door to everyone that disagrees with any product being advertised. Thus, if this ruling is upheld, it would not be surprising to see such groups as the WCTU asking for time to offset beer commercials, or Mr. Nadar rebutting General Motors' Monza ads. As a recent Barron's article suggests, "Smoking may be a minor issue, but contempt for due process of law looms large. Cigarette advertising, however disagreeable, constitutes an exercise in freedom of speech. Big Brother doesn't take over all at once, he closes in step by step. Here's a chance to draw the line." HEAR! HEAR! In our statistics we have estimated consumption to be up some 2%. Our withdrawal estimate is 532 billion, up 1.8% from the 522.5 billion of last year. However, one discrepancy should be noted - non-taxable sales of the armed forces. In the September issue of the U.S.D.A. Tobacco Situation, it is pointed out that unit volume in this area which had stabilized around 14 billion units for about a decade rose to 17.2 billion in 1965, 18.7 billion in 1966, and an estimated 22 billion in 1967. This, we believe, relates to the Viet Nam builid-up and we feel that several billion units which would otherwise be counted as domestic sales are going to our increased military establishment abroad. If this were to be factored in, we believe the total increase in withdrawals would have been close to the 2% area in 1967. Filters have continued their growth, increasing 8% this year versus 8.8% the prior year, and are now running at a rate of over 75% of unit volume. Philip Morris is the obvious gainer in this market, growing 8 times faster than the market and twice as fast as any of its competitors. Both Marlboro brands and Benson & Hedges brands turned in one of the best gains in the industry. At current rates, it looks as if Philip Morris could overtake Brown & Williamson in the not too distant future, unless Brown & Williamson were to return to its former growth rate. In fact, if one were to include overseas sales (licensing, export and manufactured), Philip Morris' total units would probably exceed 100 billion, indicating that they were just behind American Tobacco in total volume. The British American Tobacco group which owns Brown & Williamson is the largest international company. The proliferation of brands continues with 70 brands covered in our current report, versus 53 last year. Of even more import has been the 100 millimeter brands (99MM - 101MM) which are probably running at a rate in a range of 12-15% currently, although they only accounted for 10% for the year. In this grouping, Reynold's Winston, American's Pall Mall and Philip Morris' Benson & Hedges appear to be successful, though in most cases it is too soon to tell. In another category Lorillard's True has leveled off at about a 2% share and increased unit volume more than any other cigarette having a meaningful volume in 1966, certainly an excellent performance for a cigarette now just a year old. RECEIVED NOV 2 1967 Res. & Dev. New Products Div.