As evidence has mounted with respect to the adverse effects of the use of tobacco products on health, tobacco manufacturing companies in the US have undergone severe pressure from the medical community, federal and state governments, and the courts. Nowhere have these pressures been greater felt than at Philip Morris, the world's largest manufacturer of cigarettes and other tobacco products. According to documents on the company's web site, Philip Morris manufactures one in six of the cigarettes smoked world-wide, and is the manufacturer of the brand Marlboro, the leading cigarette brand both in the US and worldwide.
Thus, it is not surprising that Philip Morris is the focus of battles by anti-smoking health officials, consumers and government agencies such as the Food and Drug Administration and the Office of the Surgeon General. Getting Philip Morris to change a corporate policy is a major step toward getting change in the entire industry to change its policies, so Philip Morris becomes the major target of anti-smoking advocates. Philip Morris is the dominant player in an oligopolistic industry only a small number of important competitors. In US markets, R.J.Reynolds Holdings (Formerly R. J. Reynolds Tobacco) is its primary competitor. Smaller rivals, such as Brown and Williamson, look to these two companies to influence policies affecting the entire tobacco manufacturing industry worldwide. According to Philip Morris web site documents, in 1998 the company held 49.4 percent of the US cigarette market, with most of the remainder being divided among three rivals, R.J. Reynolds (24.0 %) Brown and Williamson (15.0 %) and Lorillard (9.1 %). Most of the rest of the US market is held by BAT (Formerly British-American Tobacco) headquartered in Great Britain. So with approximately half the US market, Philip Morris assumes a leadership role in determining the behavior of the tobacco manufacturing oligopoly.
Corporate Decision Making
The internal process by which corporations such as Philip Morris make major corporate decisions that ultimately affect the future of the company is not public. For a variety of reasons, although primarily to not alert competitors or the government, most corporations are very secretive about high-level decision-making. In this regard, Philip Morris is no different from any other corporate entity. This means, however, that the literature on the company is primarily obtained by the company's own documents presented to investors, and what is available through the reporting in the financial new media such as the Wall Street Journal(2). The news media report on corporate strategies after the action by corporate executives has already taken place.
Some information about corporate strategy and the executive view on future corporate direction is, of course, available to the public, particularly when a company is publically traded, as Philip Morris is. The chief executive of any publically traded corporation must be focused on increasing shareholder value, so, while providing general information as to how executives envision the future for the company, the information that is available tends to be focused on recent financial results. Executives in charge of internal corporate strategies must never lose sight of the ultimate goal of increasing shareholder value, irrespective of the strategy that might entail and the changes necessary to the company structure. Increasing shareholder value invariably means taking the steps necessary in order to maximize the amount of investor interest in the stock.
To the extent that investors are worried about the future of the company, the stock price is adversely affected, and corporate officials routinely make public statements in an effort to allay concerns among investors. (This is true for all kinds of corporations, not just tobacco companies.) Thus, this article is a discussion of probable scenarios for the company's future that are likely being considered by Philip Morris executives discussed behind closed doors. The scenarios represent a carefully reasoned set of alternatives based on the information that is available to investors and the public about the company from a variety of sources.
Corporate Strategy
The manufacture of tobacco products has traditionally been a very high-margin business, and, historically, retail cigarette prices have greatly exceeded manufacturing and advertizing costs. Philip Morris has had a very long track record of being able to consistently grow earnings, and with this earnings growth, the stock price has soared over several decades (Figure 1).(3) Like executives of other firms, tobacco companies must maintain investor interest in the stock and its future potential for earnings growth. If investors become worried about future revenues and the potential for earnings growth, investor interest in the stock wanes. To the extent that external events such as court cases or other government decisions go against the industry, investors worry and the stock price falls.
The recent settlement with the state attorneys general will lead to significantly higher cigarette prices at the retail level because of increased taxes and the need for companies to recoup some of the money being paid to the individual states under the settlement agreement. Despite a number of empirical studies estimating the elasticity of demand for cigarettes and closely related issues dating from the 1930s to the present (Baltagi and Levin; Blaine and Reed; Fujii; Lyon and Simon; Sackrin; Shoenberg ), no one knows for certain how these substantially higher cigarette prices (far outside the range of historic data) . will ultimately affect demand for cigarettes, and, as a result, corporate revenues. Investors, however, are concerned, and they reveal their concerns as the price of Philip Morris stock declines.
For many years, tobacco companies, with sufficient income to hire the best lawyers, were able to successfully fight individual lawsuits by families of smokers who died from smoking-related illnesses. Part of the strategy for winning these legal cases is to never admit that smoking had adverse health effects for consumers, not that nicotine was a drug and smoking was addictive. Chief executive officers of the major cigarette companies a few years ago including Philip Morris testified to this before a congressional committee.
Only recently, in October, 1999, on a newly developed web site position paper relating to the health effects of smoking, Philip Morris admitted that (1) smoking is a contributing factor to the development of a variety of diseases, including lung cancer, coronary and other circulatory problems, and (2) Cigarette smoking was addictive. This follows similar admissions made earlier by RJR. For decades, cigarette manufacturers refused to admit that the increasing amount of scientific evidence documenting health risks to smoking was accurate. Such admissions were thought to provide ammunition for plaintiffs in smoking-related lawsuits. Further, the admission that nicotine could be addictive opens the door for FDA regulation of tobacco products as drugs.
The changed position of Philip Morris on these issues is as much commentary on the changed legal and regulatory environment the industry faces as it is an admission of guilt or a move toward increased corporate ethics. While long winning health-related lawsuits, in recent years, the companies have lost a number of these suits as the mass of evidence supporting the adverse effects of smoking on health grew larger and documentation supporting plaintiff claims became more compelling. The size of the legal settlements clearly worries tobacco companies, for the costs of the settlements could easily exceed the capacity of the industry to produce income from tobacco sales. Thus, tobacco companies such as Philip Morris have been searching for ways to limit claims against revenues to known amounts, which was the primary reason for the settlement with the state attorneys general. To the extent that investors became less worried about the future potential for earnings growth, the stock price would rise and this is the basic reason the companies agreed to the terms despite the stream of future costs.
The problems facing tobacco manufacturers have evolved over a long period of time Beginning with the 1964 Surgeon Generals report highlighting the dangers of smoking on health, the tobacco manufacturers have been making efforts to deal with increasing government and public scrutiny.(4) Recently, in October, 1999, a Florida court ruled that class action lawsuits could still be brought against the tobacco companies for smoking-related illnesses. If legal claims by smokers had to be proven in courts on a case-by-case basis, even if a court decided in favor of the plaintiff, the award would likely only be a few million dollars, at most. Further, tobacco company lawyers could fight each case individually, and often win. The companies might be dealing with only a few dozen cases each year, at most, with judgments running no more than a few hundred million dollars at most-expensive, but certainly not enough to put a profitable company out of business.
Of all the kinds of possible legal actions, tobacco manufacturers fear the large class-action suits on behalf of families of smokers the most. These suits could easily lead to settlements against the tobacco manufacturers in the billions of dollars, if not the tens or even hundreds of billions of dollars. In short, an adverse judgment could readily be large enough bankrupt a tobacco manufacturer, even one with large financial resources. Moreover, such class- actions suits would tend to attract the brightest and most expensive lawyers, since the potential payoff to lawyers working on a successful class-action suit would be huge. The lawyers on behalf of the class-action plaintiffs would be at least the equal of the lawyers the tobacco manufacturers could afford to hire. Currently, this is the real threat for the future facing the tobacco manufacturers.
Tobacco manufacturing has historically been profitable for both the large and small companies. Thus, each year companies had large retained earnings (money not paid out to investors as dividends) that could be reinvested. By the 1970s, the outlook for future per-capita growth in cigarette consumption in the US was becoming increasingly clouded, and the companies looked elsewhere to reinvest earnings. One possibility was increasing sales in countries other than in the US, where the legal and regulatory climate toward cigarettes and tobacco use was more favorable, and companies such as Philip Morris expanded their international operations.
The other option was to invest some of this money in non-tobacco related businesses, and, in particular, the tobacco manufacturers looked to retail food manufacturing. The food manufacturing business, while not having profit margins as high as tobacco manufacturing, in many ways was very similar. For example, most food products tend to compete against a relatively small number of competitors producing nationally-known brands. Similarly, markets are driven largely by advertizing efforts and market share considerations. So tobacco executives felt comfortable acquiring food companies.
Perhaps the most famous acquisition was the purchased by R.J. Reynolds Holdings (Then Called R.J Reynolds tobacco) was Nabisco, (originally, the National Biscuit Company) a company primarily known as a manufacturer of cookies and crackers. Part of the appeal of Nabisco was that it was a dominant player in its market, cookies and crackers(5)
.
In contrast, s food company acquisitions by Philip Morris went in several directions. They have bought and sold a number of companies over the years, and the general public is not always aware of what they own at any particular point in time. According to the Philip Morris web site, their non-tobacco subsidiaries current are (1) Miller brewing(6); (2) Kraft foods (primarily known for cheese but also home to well known brand names Kool-Aid and Jell-O), and (3) Oscar Mayer, the meat processing operation. Brand names that are part of these subsidiaries include Louis Rich, Stove Top Stuffing, and Post Cereals. All of these are valuable properties in that they represent brands well known to the consumer, and many are among the leaders in their respective food and beverage categories, even though comparatively few consumers probably identify these brands with ownership by Philip Morris.
Philip Morris produces and markets 18 separate brands of
cigarettes in US markets and 74
brand names in international markets including several that are marketed both domestically and
internationally.(7)
Thus, Philip Morris is the dominant cigarette manufacturer in both
domestic and
international sales. Despite the market dominance, 1999 has been an unkind year
for Philip Morris
shareholders. After reaching a split adjusted all-time high closing price of 58.25 on November 23,
1998, the stock has since plummeted. At the close of trading on October 21th, 1999 just after
news of the Florida court ruling permitting the class action suits came out, the stock was trading
less than $24 a share, less than half its value less than a year earlier (Figure 1). The value of Philip Morris stock (and stock in the other
publicly-traded tobacco
companies) tends to rise and fall with the degree of optimism or pessimism investors have with the
legal and regulatory environment outlook, and company fundamentals are far less important.
Philip Morris is a part of the 30 stocks in the Dow Jones Industrial Average. On October 21th,
1999, it was trading at 9.3 times earnings, less than one-third of the S&P 500, which has been
trading on average at over 31 times projected earnings recently. While the food and beverage sector stocks have generally been
weak in 1999, those that
are not part of a tobacco company have fallen 10 or 15 % on average, but not 50% or more. So
the poor performance of Philip Morris stock can thus be largely blamed on the increasingly cloudy
legal and regulatory environment for the tobacco manufacturing component. Only last year, there was investor optimism that the legal
problems of the tobacco
companies, if not behind them, at least were going to be manageable in terms of corporate
finance. With known payments going to the states as a part of the settlement package, investors
could reduce their uncertainties with respect to future litigation costs, and factor these cost into
the stock price. However, state attorneys general in the settlement package were not able to
reach an agreement that would fully limit liabilities from lawsuits by those individuals who became
ill and perhaps died as a result of smoking-related illnesses. To limit such liability cases would
limit a person's ability to sue a company for alleged damages, and this limit would not hold up in
the courts. So the tobacco companies are still faced with the threat of
litigation by individuals (or
families of individuals) who have (or had) smoking related illnesses in individual as well as class
action suits. In late 1998, share prices for Philip Morris rose, on the belief that the future was
becoming less cloudy as a result of the attorneys general settlement. But the stock price fell
throughout 1999 as investors became increasingly worried about the possible financial impacts on
tobacco companies of court cases by families of smokers increased. There have been numerous instances in the US where
health-related legal claims against a
company have drawn the company into bankruptcy, and many other close calls. The Dow Corning
cases involving silicone breast implants are famous. Another illustration is Johns Manville as a
result of asbestos-related claims.(The threat of bankruptcy is very real in large tort liability cases.
See the legal discussion in Correlia and in Honigman et al.) Union Carbide was nearly faced with a
lawsuit that could have led to bankruptcy as a result a major accident claiming the lives of 2,500
individuals living around Union Carbide's chemical factory at Bhopal, Madya Pradesh, India,
during the night of December 2nd, 1984.(8) Thus, any evaluation of the current litigation facing Philip
Morris its competitors needs to
be considered given the fact that legal claims can lead to bankruptcies, and investors in Philip
Morris stock need to value the risk of this happening when pricing the stock, The possibility of
this happening must be clearly on the minds of corporate executives. The move by RJR to spin off
the Nabisco holdings into a separately-traded company was undoubtedly in part due to the
realization that if the non-tobacco components remained as a part of RJR, then litigants in the
smoking cases would be able to go after the assets of the food subsidiary in any settlement effort. Four Corporate
Strategies Faced with the legal and regulatory challenges, Philip Morris has
four major options to consider
with respect to the future of the company, as discussed here. 1. Continue to operate as a conglomerate
with tobacco, food and beverage subsidiaries. This strategy would entail continuing to deal with the legal and
regulatory environment on a day
to day basis, much as corporate executives are doing now. This strategy would be easier to
implement if the stock price had remained relatively stable, but with the late October, 1999 stock
price at less than half what it was in November of 1998, investors are likely to get increasingly
restless if corporate executives adopt what is essentially a "do nothing" policy. Harris provides
some calculations as to what a tobacco company might be able to pay in damages without going
bankrupt. Moreover, Philip Morris stock is often a big holding by
institutional investors, including
pension plans (This includes CREF as well as many state-run pension plans). These pension plan
administrators are under increasing pressure from their participants to divest their holdings of
tobacco-related stocks.(9) To the extent that pension funds and
other institutional investors do this,
there will be more downward pressure on the stock price as large blocks of the stock are sold into
the market. Thus, the outlook for this strategy is gloomy at best, especially as new storm clouds
appear to be forming on the litigation front. Further, as the stock price drops below $30 a share,
the company increasingly becomes a potential target for a unfriendly takeover that could
eventually lead to selling off or dividing of the assets, much like what happened to RJR in the
1980s. 2.Spin off the food and beverage interests
to shareholders as one or perhaps several
separately-traded companies.
This possibility also becomes interesting in light of the current stock
price. Philip Morris would be
divided into at least two or perhaps three or even more companies consisting of the food brands,
the brewing interests, and the tobacco component. Shareholders could get one new share of stock
in each of the new companies in addition to a share of the new Philip Morris containing only the
tobacco components. Shares of the food and beverage company or companies would trade
independently on the stock exchange. This approach is similar to that employed by RJR in
separating Nabisco from the parent. There are several interesting questions here. First, with the stock
of Philip Morris trading
at below $30 a share, how much a share are the non-tobacco components of the company worth?
Would shareholders be willing to pay as much or more for Philip Morris without the tobacco
holdings than with those holdings? No one knows what the answer to these questions until the
stocks of the subsidiaries start to trade as separate companies. Given the murky legal and
regulatory environment, it could be that the non-tobacco components are worth more without the
tobacco component than with. Corporate executives must constantly be aware of this possibility
as a way to increase shareholder value. The carcass of the remaining company, the original
tobacco manufacturing component, might trade for as little as $10 a share or perhaps even less
given the uncertainty about the future. The interesting legal question here is how the courts would look
at an effort by Philip
Morris to divide what was once a single company into separately traded units as a strategy of
keeping corporate assets out of litigation. In the case of RJR, if the assets of the tobacco company
have all been claimed by litigants, could litigants then also go after the assets of separately traded
Nabisco, which makes cookies and crackers? As a legal issue, this is very unclear. Undoubtedly
the courts would view that strategy less favorably if it was clear that RJR or Philip Morris spun
off the non-tobacco assets as a way of insulating them from litigation. How will shareholders
value a food or beverage company that was once part of a tobacco manufacturing company given
the possibility of this type of litigation occurring? The legal issues here are unclear, and an
uncertain legal environment is never favorable to stock prices. 3.Shut down domestic manufacture and sales
of tobacco products, and concentrate production
and sales in countries where the legal and regulatory environment is favorable
Suppose for a moment that Philip Morris has separated the company
into tobacco and non-tobacco components. At some point in time, might Philip Morris decide that domestic sales
of
cigarettes present too many possibilities for expensive litigation that could suck dry the assets of
the company? Cigarettes and other tobacco products might remain legal in the US, except that a
company would not dare sell these products because of the threat of litigation. At some point,
Philip Morris might decide to stop manufacturing and producing cigarettes in the US, and move
production to off-shore locations, selling cigarettes only in locales where there is a favorable legal
and regulatory environment. Shareholders of Philip Morris would own stock in a company that
does not manufacture or produce cigarettes for domestic consumption. Along with that the
market for US-grown tobacco for cigarette manufacturing could disappear, as other countries
increasingly produce tobacco as needed for their home markets. This option would have substantial adverse impacts for growers
in the tobacco producing
state, such as Kentucky, North Carolina, Virginia and Tennessee. A company producing tobacco
products only for non-US markets would likely increasingly purchase tobacco in foreign markets,
and rely ever more heavily on locally grown supplies. This could lead to a very rapid decline in
tobacco production in the US. Should this be the chosen strategy, it is unlikely that the other
major cigarette
manufacturers such as R.J. Reynolds would continue to sell their products in the US, because of
the threat of similar litigation. We would face the end of the domestic cigarette manufacturing
industry as we know it. Smokers might be forced to grow their own tobacco in back-yard
gardens, and roll their own cigarettes, or cigarette production might end up in the hands of small
scale entrepreneurs. Smoker-customers would be asked to sign a legal waiver absolving these
companies of liabilities in the event of a smoking-elated illness.. 4. Sell individual food and beverage brands
currently held by Philip Morris.
As indicated earlier, many of the non-tobacco brands currently
owned by Philip Morris are
household names, and have considerable value as branded products. Some of the brands are
market leaders, while others are facing lagging sales. This strategy would entail selling the
individual brands to acquiring companies one label at a time. There is a ready market for such
brands. A company called Aurora foods (NYSE symbol AOR)
specializes in purchasing well-known individual brand names that other food companies wish to sell. Currently,
Aurora owns
Duncan Hines baking mixes, Log Cabin and Mrs. Butterworth's syrup, Van De Kamp's and Mrs.
Paul's frozen seafood, Aunt Jemina frozen breakfast products, Skippy peanut butter and Celeste
frozen pizza. These brands were acquired from various companies. Their specialty is in acquiring
food brands that are well known to the public, but have recently experienced a declining market
share. For Example, they acquired Duncan Hines from Proctor and Gamble, and Aunt Jemima
from Quaker Oats. Under Quaker Oats, Aunt Jemima sales were falling. Aurora puts a strong
brand manager in charge to rejuvenate it, and Aunt Jemima sales have rebounded 1999, according
to the company. A company like Aurora would probably be interested in many
of the brands currently held
by Philip Morris, were they to come up for sale, and these properties could be valuable. The
problem that Morris faces, however is that if these brands are sold off individually rather than
spun off into a separate company, any funds from the sale will represent assets of the parent
company, and would not be protected from the litigation threat. In short, Philip Morris may
acquire the cash from these brands, but be limited in their ability to return it to the shareholders'
pockets. They paid the cash out as a one-time dividend to shareholders each time a brand name is
sold. But ultimately that will not lead to an increasing stock price. Once the brands are sold, they
are no longer generating income for the company. Concluding
comments None of these options for Philip Morris are very good. States
nationwide are now making plans to
spend revenue that was agreed upon in the tobacco settlement with the state attorneys general
over a 25 year period. This is something of a host-parasite relationship. The parasites (the
individual states making claims on the tobacco companies) will continue to collect only so long as
the tobacco companies (the hosts) continue to survive and are profitable enough to pay the
claims. Bankruptcy is always an alternative. No one knows for certain what the impacts of the
recent cigarette price increases will be on domestic consumption, or whether the future revenue
streams will be sufficient to pay both the claims by the states and cover the costs of future
litigation. These uncertainties continue to lead to a deteriorating stock price, something investors
will not put up with for an indefinite period of time. References Baltagi, B.H. and D.Levin, "Estimating Dynamic
Demand for Cigarettes Using Panel Data,-the
Effects of Bootlegging, Taxation and Advertizing Reconsidered," Rev. Econ Stat..68
(1986): pp.148-55. Blaine, Thomas W. and Michael R. Reed. "U.S.
Cigarette Smoking and Health Warnings: New
Evidence from Post World War II Data" J. Agr. Appl. Econ. 26 (1994)
pp.535-44. Burrough, Bryan and Helyar, John. Barbarians at the Gate. New York: Harper Perennial,
1991.
"Chemical Accidents-causes, influences and important factors,"OPCW, (undated) Available on
the Internet at http://www.opcw.nl/chemhaz/chemacci.htm Correlia, Edward. "Limitations on Tobacco Industry
Tort Liability " Policy Analysis No. 4,
Northeastern University School of Law. Health Science Analysis Project Papers (undated)
Available on the Internet at http://scarcnet.org/hsap/liabilit.htm Fujii, E.T. "The Demand for Cigarettes: Further
Empirical Evidence and Its Implications for
Public Policy." Appl. Econ. 12 (1980): pp. 479-89. Hammond, E.C. and D. Horn."Smoking and Death
Rates-A Report of Forty-Four Months of
Follow-Up on187,763 Men." J.A.M.A. 166 (1958): pp. 1294-1308. Harris, Jeffrey E. "American cigarette manufacturers'
ability to pay damages: overview and a
rough calculation." Tobacco Control 5 (1996): pp. 292-294.Available on the Internet
at http://www.mit.edu:8001/people/jeffrey/abilitytopay.html
Honigman, Miller, Schwartz and Cohn (law firm),
"Bankruptcy Reorganization and Commercial
Law." October 22, 1999. Available on the Internet at
http://law.honigman.com/bankrup.htm Lyon, H.L. and J.L Simon. "Price Elasticity of
Demand for Cigarettes in the United States." Am.
J. Agr. Econ. 50 (1968): pp. 888-95. Philip Morris Corporate Web Site. available on the Internet at
http://www.philipmorris.com Sackrin, S.M. "Income Elasticity of Demand for
Cigarettes: A Cross Section Analysis." Agr.
Econ. Res. 9 (1957): pp. 1-9. Shoenberg, E.H."The Demand Curve for Cigarettes." J.
Bus. 6 (1933) pp15-35. Yahoo Finance Web Site. Available on the Internet at
http://quote.yahoo.com 1. Professor of Agricultural Economics, University of Kentucky 400 Ag Eng
Bldg,
Lexington KY 40546-0276 e-mail ddeberti@ca.uky.edu
2. Until recently, corporate annual reports were often major source of information made available to investors and the public on the financial performance of publically-traded companies. Now, however, Internet Web Sites, such as the Yahoo Finance web site provide much more up-to-date information, and this information can be supplemented with financial performance data made available through the company's own web site.
3. Stock price data used to construct Figure 1 are taken from the Yahoo Finance Web Site. As is evident from Figure 1, following the 1998 settlement with the state attorneys general, Philip Morris stock rose rapidly on the belief that some of the litigation concerns no longer threatened the corporation. But the stock price fell as courts ruled that individuals still had the right to sue for damages. This culminated in the October, 1999, Florida ruling that class action suits for damages on behalf of smokers and their families were still permissible, despite the settlement. As of October 24th, 1999, Philip Morris stock has the lowest price of any of the stocks in the Dow Jones Industrial Average.
4. Literature suggests that the medical community was well aware of the adverse effects of smoking on heal long before the 1964 report of the Surgeon General. A study by Hammond and Horn studied the linkages between smoking and death rates and appeared in J.A.M.A. .in 1958. Undoubtedly it was research such as this that formed the foundation for the 1964 Surgeon General's Report.
5. The corporate history of the company that is now publicly traded as R.J. Reynolds Holdings (NYSE symbol RJR )--but was long known as R. J. Reynolds Tobacco, and then as RJR Nabisco-is fascinating. It was publically traded, but in the 1980s was taken private in a contentious battle involving a number of players each attempting to outbid the other's offer. The eventual winner was an investment banking group known as Kolberg Kravis Roberts, or KKR. The corporate strategies among the players involved in the takeover were highlighted a 1991 book (Burrough and Helyar) and in a subsequent television movie "Barbarians at the Gate" starring James Garner.
The contentious battle that eventually involved a buyout at a stock price far more than the company was worth straddled RJR-Nabisco with enormous debt. Eventually the company was sold to the public again, and it started it recently restarted public trading as RJR Tobacco Holdings (NYSE symbol RJR). Nabisco had already been spun off as a separate publicly traded company Nabisco Holdings (NYSE symbol NA) that began public trading in early 1995.
6. Amazingly, despite many deaths occurring each year due to alcohol-related illnesses and traffic accidents, the alcoholic beverage industry so far has not been the brunt of attacks similar to the war being waged by the anti-smoking advocates against tobacco. An interesting question is whether alcohol ultimately represents a greater societal problem than tobacco. If class action lawsuits on behalf of smokers and their families are successful, it is not out of the realm of the possibility that similar legal action could be brought against alcoholic beverage manufacturers based on diseases, injuries or deaths that are alcohol-related.
7. In addition to Marlboro, the market leader in domestic and international markets, cigarette brands sold by Philip Morris in the US are Virginia Slims, Benson & Hedges, Merit , Parliament, Alpine, Basic, Cambridge, Bristol, Bucks, Chesterfield, Collector's Choice, Commander, English Ovals, Lark, L&M, Saratoga and Superslims. Several of these brands are heavily promoted with advertizing dollars, while others are "near-generics" with little or no national advertizing support. Brands sold in the US and internationally include L&M, Lark, Parliament, Alpine, Chesterfield, Virginia Slims, Merit and Benson and Hedges. Brands marketed in various countries outside the US include a brand called Philip Morris, Bond Street, Diana, Apollo, Soyuz, SG, Caro, Klubowe, Multifilter, Polylot, f6, Longbeach, Peter, Jackson, Dallas, Muratti, Kazakstan, Sparta, Next, Congress, Red & White, Le Mans Helikon, Nacional, Belmont, Medeo, Astor, Rubios, Galaxy, Astra, Kosmos, Derby, Lider, Raffles, Prima, Klaipeda, Português, Suave, Eve, Brunette, Carmen, Palace, Imparciales, Luxor, Kaunas, Kastitys, Particulares, Fiesta, Diplomat, Partner, Colorado, Talisman, Kosmosas, Juwel, Zefir , Karo, Full Speed, Mercedes, Visa, Ritz, Saratoga, Premier, Good Companion, Bond,Wilton, Basic and Freeport.
8. Union Carbide was fortunate that the accident occurred outside the US and that it did not have to confront a class action lawsuit on behalf of families of the victims brought by US lawyers in the US court system. The company paid significant damages to claimants in India, but obviously not enough to send it into bankruptcy. See the discussion of the accident and its causes in Chemical Accidents.
9. Proxy proposals by CREF participants for the pension plan to sell tobacco-related stocks come before participants every year. The 1999 proxy proposal is being voted on at this writing.