ANALYSIS: Client Profile - Where there’s smoke, there’s Philip Morris - If any company were ever in dire need of an image makeover, it’s. Under siege on various fronts, the tobacco giant has embarked on a huge PR push to portray a

Next time you’re complaining about how tough your job is, just imagine what it would be like to handle PR for the Philip Morris Companies.

Next time you’re complaining about how tough your job is, just imagine what it would be like to handle PR for the Philip Morris Companies.

Next time you’re complaining about how tough your job is, just

imagine what it would be like to handle PR for the Philip Morris

Companies.



Few organizations have to deal with the level of public, government and

investor rancor and outright vilification that the world’s largest

tobacco firm faces on a daily basis. If it’s not state attorneys general

coming after PM, it’s litigious individuals. If it’s not the

anti-smoking lobby, it’s Hollywood filmmakers. PM’s executives might as

well wear targets on their chests these days.



There’s no question that US public opinion has swung dramatically over

to the anti-smoking side during the past two decades. New York-based

Philip Morris and its cigarette-making brethren have had to deal with

that in the court of public opinion, in courtrooms and on Wall Street,

where tobacco stocks are as appreciated as chain smokers in a

restaurant.



With all that stacked against it, it’s easy to see why Philip Morris for

years adopted a bunker mentality when it came to PR. ’They got out of

step with public attitudes on the controversies of tobacco,’ says David

Adelman, an analyst who follows the company for Morgan Stanley Dean

Witter.



But Philip Morris’ PR mentality has changed. Spurred largely by comments

from its 137,000 employees about how they’d like to see the company

communicating, the dollars 78 billion behemoth has launched a dramatic

new PR effort to highlight the positive side of Philip Morris and its

employees’ volunteer and community efforts.





Anti-punitive PR



Cynics say the only public this new PR is directed to is a Florida jury

that’s trying to decide how large a settlement to award in a

class-action smoking case involving five cigarette makers. The jury

already has found against the cigarette makers and is in the midst of

the punitive damages phase.



’I think it’s largely litigation driven,’ says Edward L. Swede, a senior

attorney with the Tobacco Control Resource Center (TCRC), a Boston

anti-smoking group, of Philip Morris’ new PR plan. ’In the punitive

damage phase (of a trial), the jury has to consider the behavior of a

company.’ The PR campaign is an attempt to show jurors that PM is a

fundamentally good company, he contends.



But Peggy Roberts, director of corporate communications with Philip

Morris Management (the management arm of Philip Morris) denies that.

’We’re really reaching out more than ever right now,’ she says.



Philip Morris’ new PR push includes:



- Launching its first corporate Web site last October, and admitting on

the site that cigarettes can be dangerous.



- Hitting the speaking circuit. Company executives have been talking to

health, school and community groups, among others.



- Emphasizing contributions the company and its employees make to their

communities. This PR theme carries into advertising with ads such as one

showing how Miller, a PM subsidiary and the nation’s second largest

brewer, helped bring water to a town hit by natural disaster.



- Committing dollars 100 million a year to youth smoking prevention

efforts.



Critics say it’s not enough, but PM responds that it is serious about

curbing youth smoking.



- Reaching out to Wall Street.



Last June, the company held its first analysts’ meeting in five

years.



The effort may have borne fruit; a Salomon Smith Barney analyst this

April raised his earnings estimate for the company in 2000 and 2001.

Morgan Stanley’s Adelman gives the company high marks for its new

openness. Still, the company’s stock is down 29% over the past year.



’For some time now it’s become increasingly apparent to us inside Philip

Morris that we hadn’t really done a good job of reaching out,’ Roberts

admits.



That point was brought home early in 1998 by a survey of employee

attitudes.



While company officials fought their battles with government officials

and lawyers, employees had to face their family, friends and neighbors

every day. The survey found that they wanted to be able to feel good

about working for PM. They told the company it ’needed to engage the

public and the public health community’ rather than stonewall on key

issues, Roberts recalls. That prompted the company to amass data on all

the volunteer efforts of its employees. ’Believe it or not, there are a

lot of good stories to tell here,’ she says.



The company has assembled a speakers bureau of roughly 12 vice

presidents to get its new message to the public. ’It was a challenge to

see if people wanted to hear from us,’ says Roberts, but ’we found that

as we went along, people were interested.’ Steven Parrish, SVP of

corporate affairs, handles monthly speaking engagements and has been

widely quoted in the media.



Jay Poole, VP for external affairs, has given speeches in several

southern locales. Rather than provide execs with canned speeches, PM

tailors talks to the audience.



When a speaker visits a city, local media are contacted to garner

coverage.



Asking for media coverage is a bit like walking into a lion’s den for

Philip Morris. ’It’s not all roses for us,’ says Roberts, who quickly

adds, ’coverage has been fair.’ The company used Burson-Marsteller to

help it establish the speakers bureau, but the new PR strategy has been

internally driven.



The company’s Web site has become the new public face of Philip

Morris.



Unlike some companies where marketing people handle the corporate site,

at PM corporate communications oversees it, making it a part of its PR

efforts, as is its employee intranet.



Philip Morris has come a long way, PR-wise, from where it was just five

or six months ago, but it’s not out of the woods by any means. Its

chairman faces retirement in about two years and media speculation about

a successor already has started.





Boycotts and accusations



One antismoking group, INFACT, is sponsoring a boycott of the company’s

Kraft food products. ’We’ve seen many different instances of Philip

Morris hiding behind Kraft’s wholesome image,’ says Patti Lynn,

associate campaign director with INFACT. Her group and the Tobacco

Control Resource Center call PM’s efforts on teen smoking half-hearted.

’We want changes in how they market to kids around the world,’ says

Lynn. The TCRC’s Swede points to defeat of a recent shareholder proposal

to tie executive compensation to decreases in teen smoking as proof the

company is not serious about stopping child smoking. ’The fundamental

core business goes on unchanged,’ he contends.



Roberts counters that the company is serious about preventing teen

smoking, but also that it has no intention of turning its back on its

core tobacco business. ’We’re proud of our tobacco business. We say up

front we want to talk about those issues.’ About 60% of Philip Morris’

sales and an even bigger chunk of its profits come from its tobacco

operations, according to Hoover’s Online.



One place it will talk issues is Washington, where debate rages about

possible cigarette regulation by the Food and Drug Administration.

Roberts promises that Philip Morris won’t be going back to its

stonewalling days.



Even the lawyers have come on board the new PR effort: ’We’ll deal with

the health issue in the courtroom; all these other issues we want to be

proactive about. We’re in it for the long haul.’





PHILIP MORRIS COMPANIES



PR officers: Steven Parrish, SVP corporate affairs; Jay Poole, VP

external affairs; James Spector, VP corporate affairs, strategy and

development; Peggy Roberts, director of corporate communications, Philip

Morris Management Corporate holdings: Philip Morris USA



Philip Morris International Philip Morris Capital Corp.



Kraft Foods Miller Brewing Company



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