To the Package Store
Fearing that the smoking-and-cancer scare may be hazardous to theirfiscal health, cigarette makers have long been hedging their futures bytracking down merger opportunities. Lately, the trail has led to thepackage store. Liggett & Myers last year took over the U.S. importer ofJ & B Scotch whisky. American Tobacco bought nearly all of Chicago'sJames B. Beam Distilling Co. last fall, and will soon purchase controlof the Buckingham Corp., importer of Cutty Sark Scotch. When its turncame, P. Lorillard Co. decided to try a little tippling too.
Useful Shot. In Manhattan last week, Lorillard announced plans toacquire Schenley Industries for some $350 million in new Lorillardsecurities. The deal will create a liquor-and-tobacco conglomerate withcombined sales, including excise taxes, of nearly $1 billion from morethan 50 brands, including Lorillard's cigarettes, cigars, chewingtobacco, candy and cat food, and Schenley's bourbons, Scotches, winesand other potables.
Both companies could use a shot of some sort. The fifth-ranked U.S. tobacco company, Lorillard last year earned $29 million on sales of $510million, but its profits have barely budged since the late 1950s, whenits filter, Kent, stole the low-tar-and-nico-tine march on theindustry. Chairman Manuel Yellen, 54, last year offered a new filterbrand, True, both plain and mentholated; though True is highlysuccessful so far, sales have just begun to make up for its heavyintroductory costs in a market now choked with competition.
Schenley's profits should look good onLorillard's books. And with its marketing-minded young management,Lorillard should soon be able to return the favor for Schenley, whose1966 sales of $478 million were only 2% greater than in 1957. Once theleading U.S. distiller, Schenley was overtaken by aggressive DistillersCorp.-Seagrams after the war. None of its leading brands are now the top sellers in their fields.
Reign's End. Detractors lay much of the blame to an aging but notnotably mellow Schenley spirit: Chairman Lewis Solon Rosenstiel, 75.Rosenstiel founded the company shortly before repeal in 1933, andremains its dominant shareholder, controlling stock worth some $55million. Ever contentious, he has for decades feuded with the industryover various marketing practices; more recently, he has spent much ofhis time in and out of court waging private wars with, among others,his estranged fourth wife, his daughter, one of his own lawyers, andhis Greenwich, Conn., neighbors.
Still robust and ever stabbing the air with his long cigars, Rosenstielonly last August gave up the presidency to Scots-born John Mackie, 55.Schenley-Lorillard merger terms and management details still have to beapproved by directors and stockholders, but Rosenstiel at last seemsready to end his rambunctious reign. "He screams at you one minute,"recalls one former Schenley staffer, "and then loves you the next."Schenley survivors may respond readily to some steady Yellen.
Prev:Cell Damage from LSDNext:The Fine Art of Grantsmanship
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
