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Cigarette Makers Face Heavy Task of Rebranding "Light" Smokes

Turning off the 'Lights'

VANESSA O'CONNELL Wall Street Journal

Marlboro Gold, anyone?

Major cigarette makers face a daunting marketing challenge in the wake of a federal court ruling last Thursday: changing the name of some of their biggest-selling brands.

Unless overturned on appeal, the court ruling will force companies to abandon the adjectives "light" and "low-tar," powerful marketing tools now used in dozens of cigarette brand names. Altria Group Inc.'s Philip Morris USA will have to rename its Marlboro Lights and Ultra Lights -- alternatives include Marlboro Gold and Marlboro Silver, both used in Europe -- while Reynolds American Inc.'s R.J. Reynolds Tobacco Co. will have to rename its Camel Lights.

The dilemma for cigarette makers: How can they reposition their brands without turning off smokers who might suspect that other aspects of their favorite smokes have changed?

"It's a herculean task," says Rita Rodriguez, chief executive of Enterprise IG US, a branding firm owned by WPP Group PLC that works on behalf of marketers such as Hewlett-Packard Co. and American Express Co.

The threat to the well-established brand names is the biggest negative facing the tobacco industry from U.S. District Judge Gladys Kessler's ruling in the Justice Department's civil racketeering lawsuit.

From Jan. 1, cigarette makers would be banned from using terms such as "light," "low tar," "mild" and "natural" and any other adjectives that might result in the public believing a particular type of smoke is less hazardous than other brands.

At stake is the future of the tobacco industry's single most important product. Cigarettes with tar ratings of 15 milligrams or less -- those generally marketed as "light" or "low-tar" -- constituted 84.9 percent of the 367.6 billion cigarettes sold in 2003, up from 60.5 percent in 1991, according to a Federal Trade Commission cigarette report for 2003, the most recent available. Cigarettes with tar ratings of 3 milligrams or less made up 1 percent of the total in 2003.

Retailers are already worrying about how smokers will receive the renamed smokes.

"Cigarettes are particularly challenging," says Jeff Lenard, director of communications for the National Association of Convenience Stores, based in Alexandria, Va. "You need to have more than 200 different products in the store, and people are extremely loyal to their brand and type. If you don't have it, they will walk into another store."

Still, Altria and other cigarette makers have faced -- and survived -- similar bans on terms such as "lights" outside the U.S. At least 33 countries recently have specifically banned "light" and "mild" descriptors for cigarettes.

In most of these countries, Philip Morris International and other cigarette makers switched to a color-coded system, selling what were Marlboro Lights as Marlboro Gold for the coloring on the packs. Ultra Lights were reborn as Marlboro Silver in many places.

As a result, the bans had little effect on either total cigarette sales or sales of individual brands in the countries where those regulations have gone into effect.

"I see little reason for the outcome to be any different in the U.S. if Judge Kessler's ruling is upheld," says Michael Schaefer, an analyst at the research firm Euromonitor International. "Marlboro packaging, for instance, is already neatly color-coded red for regular, gold for lights, silver for ultra lights, green for menthol -- and there's no shortage of other ways for cigarette manufacturers to continue to differentiate their sub-brands."

Maura Payne, a spokeswoman for Reynolds of Winston-Salem said the ban could affect many of its brands, which include Kool, Winston, Salem and Doral. But while the judge also barred the use of "natural" as an adjective, Payne said Reynolds plans to continue to sell its Natural American Spirit cigarettes, because they are technically made by Reynolds subsidiary Santa Fe Natural Tobacco Co., which wasn't specifically named in the lawsuit.

In its appeal of the ruling, Philip Morris could argue that the ban on the adjectives such as "light" violates its First Amendment free-speech rights, and it could contend that deceptive-advertising claims are the domain of federal regulatory agencies rather than the courts. The government's counterargument likely would be that truly deceptive language would justify the limitations.

"Tobacco companies got off pretty well in this case," says Robert Rabin, a professor at Stanford Law School "By simply restructuring their marketing ... cigarette makers will be able to convey the same thing but in a slightly different way." -- Suzanne Vranica contributed Up in Smoke

Tobacco companies face new restrictions after a ruling last week. The companies must:

• Not use banned adjectives, including "low tar," "light," "ultra light," "mild" and "natural."

• Admit they lied about the harmful effects of smoking cigarettes.

• Warn consumers about the health effects in advertisements and packaging.

• Issue "corrective statements" -- including full-page advertisements in weekend editions of 35 newspapers -- about the adverse health effects of cigarettes.

• Post all internal marketing documents on a public Web site through 2016.

-- Source: Court documents