Sunday, December 2, 2012

Mind If I Smoke?

Although this article is about cigarettes, it's really about economic history, especially overproduction and the global economy:
In 1880, at the age of 24, Duke entered what was then a niche within the tobacco business - ready-rolled cigarettes. A small team in Durham, North Carolina, hand-rolled the Duke of Durham cigarettes, twisting the ends to seal them.

Two years later Duke saw an opportunity. He began working with a young mechanic called James Bonsack, who said he could mechanise cigarette manufacturing. Duke was convinced that people would want to smoke these neatly-rolled, perfectly symmetrical machine-made cigarettes.

Bonsack's machine revolutionised the cigarette industry. "It cranked out what was essentially a cigarette of infinite length, cut into the appropriate lengths by whirling shears," says Robert Proctor. The open ends meant it had to be "juiced-up with chemical additives". They added glycerine, sugar and molasses, and chemicals to prevent it from drying out.

But keeping cigarettes moist was not the only challenge that Bonsack's contraption presented to Duke. While his factory girls typically rolled about 200 cigarettes in a shift, the new machine produced 120,000 cigarettes a day, about a fifth of US consumption at the time.

"The problem was he produced more cigarettes than he could sell," says Goodman. "He had to work out how to capture this market."

The answer was to be found in advertising and marketing. Duke sponsored races, gave his cigarettes out for free at beauty contests and placed ads in the new "glossies" - the first magazines. He also recognised that the inclusion of collectable cigarette cards was as important as getting the product right. In 1889 alone, he spent $800,000 on marketing (about $25m in today's money).

The industry had a problem. You can't advertise your way into convincing women to smoke - you have to change cultural expectations. A woman smoking on a street corner was a signature of prostitution. A polite woman would never be caught smoking in public. Edward Bernays - who was actually Sigmund Freud's family member - was engaged by the American Tobacco Company to work out a public relations strategy to enable women to smoke.

So in the late 1920s, for example, they hired a bunch of young women to march down Fifth Avenue in the Easter Parade, holding their "torches of freedom" - their cigarettes. And this then became a symbol of women's emancipation.

Duke's gaze shifted overseas. In 1902 he formed British American Tobacco with his transatlantic rival, Imperial Tobacco. The packaging and marketing would be tweaked for different consumers but the cigarettes would remain largely the same. More than a decade before the creation of the Model T Ford, Duke had a universal product.

"To him every cigarette was the same," says Goodman. "All of the globalisation that we are now familiar with through McDonald's and Starbucks - all of that was preceded by Duke and the cigarette." Buck Duke is said to have marched up to a map of the world and planted a finger on China, saying: "This is where we're going to build our empire!"

At first, cigarettes were imported from the US, but manufacturing soon shifted to China. For Cox, this transfer of production technology rather than product marks a move from colonial trade towards the current age of globalisation and multinational corporations.

Thomas had his own team of salesmen from the US, but he also formed joint ventures with established Chinese firms to distribute his product. This way of doing business is the norm today for international firms hoping to tap into the Chinese market.
James Buchanan Duke: Father of the modern cigarette (BBC)

1 comment:

Note: Only a member of this blog may post a comment.