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LEVEL 1 - 4 OF 4 STORIES Copyright 1998 The Baltimore Sun Company The Sun (Baltimore) January ii, 1998, Sunday, FINAL EDITION SECTION: TELEGRAPH (NEWS), Pg. IA LENGTH: 4679 words SERIES: SERIES -- THE CIGAR CAPER. First in a series HEADLINE: The shaping of an illusion; Resurrection: Bow the cigar industry manipulated the media, infiltrated Hollywood and escaped the government's watchful eye despite the product's health hazards. BYLINE: ALEC KLEIN, SUN STAFF BODY: Nick Reed is well-versed in cigars, an able judge of hue, texture and aroma. In the back yard of his home in an affluent New York suburb, he displays a mastery of technique: Cut off the tip, ignite the end, pause between puffs. The Sun (Baltimore), January ii, 1998 Effortlessly, Reed tilts back his head and emits a swirl of smoke shaped like a doughnut - the billowy end product of one of the 20th century's great but shadowy marketing campaigns. He is 16. Cigar makers, at about the time Reed was born, conceived a long-range plan to conquer new smokers - women, the young and the wealthy - and laid the foundation for a powerful myth that cigars are cool, sexy and as harmless as afternoon tea. In a remarkable turnaround for an industry whose customers were dying off only a generation ago, the image of cigars today has even ensnared teen-agers, taboo audience that manufacturers say they have not courted. Among the ways marketers resurrected the cigar: They hijacked the credibility of the media. News reports, they understood, were more likely to sway the public than paid advertisements. "While the consumer of the '80s may harbor built-in skepticism when he reads an advertisement in a magazine or sees a commercial on TV," said an internal memo of the Cigar Association of America Inc. in 1983, "he accepts and believes the public relations message because it reaches him in the form of news and The Sun (Baltimore), January ii, 1998 information." For nearly two decades, cigar makers have manipulated the media into promoting their produot, planting news stories and letters to the editor and zeroing in on sympathetic journalists. Today, cigars are in such vogue that industry ploys may no longer be

necessary. The same media that have relentlessly scrutinized the cigarette industry have embraced cigar smoking as a glamorous trend. A database survey of recent newspaper and magazine coverage shows that articles on cigars rarely focus on their hazards. The industry has also used Hollywood to entrance the public. In a hidden form of advertising, manufacturers have paid Hollywood brokers to get stars to wield cigars on television and in the movies. Fearful of the impact on young viewers, Congress stamped out this practice nearly a decade ago when cigarette manufacturers were caught in the act. But the remedy did not cover cigars. Meanwhile, federal authorities have been so preoccupied reining in the cigarette industry that cigars have slipped by unscathed. The Sun (Baltimore), January ii, 1998 Unlike cigarettes and smokeless tobacco, the cigar carries no U.S. surgeon general warning label. Neither are its ingredients disclosed to federal health authorities. Cigars have even escaped scrutiny as the government hammers out a comprehensive settlement to tighten regulations on cigarette manufacturers. As a result, the cigar industry, a billion-dollar business catering to an estimated 12 million smokers in the United States, has obscured a simple truth: Cigars contain higher concentrations of tar and nicotine than cigarettes. And, health authorities say, cigars are just as deadly. "It's the most sophisticated campaign I've seen in a long time," said tobacco expert John Pierce, professor of cancer research at the University of California, San Diego. "It's so sophisticated that no one saw it coming." In a triumph of image making, the cigar, once a tired old prop of gangsters and grandfathers, has migrated from smoke-filled back rooms to the chambers of the well-to-do and the counters of the 7-Eleven. Everyone, it seems, is lighting up: conservative commentator Rush Limbaugh, pop singer Madonna, hockey great Wayne Gretzky, movie star Demi Moore, Hollywood heavy Arnold Schwarzenegger, super-model Claudia Schiffer. Even President Clinton dabbles. The Sun (Baltimore), January ii, 1998 The mood in the industry is as giddy as in a speakeasy during Prohibition: In the past five years, U.S. sales of cigars rose 26 percent to 4.49 billion, led by expensive premium cigars, which nearly tripled to 270 million. Cigar bars, cigar dinners and cigar clubs are popping up from coast to coast. Cigar makers put forth a widely accepted explanation for their renaissance. They say that a spontaneous movement took hold with the spread of black-tie cigar events. That the launching of Cigar Aficionado magazine, the industry bible, offered a rallying cry. That there was a backlash against political correctness. "It took everyone by surprise," said Norman F. Sharp, president of the cigar association. But an in-depth examination, including thousands of internal industry documents, shows that the cigar boom was not an accident.

It was the result of an fmage so seductive that it enticed young smokers like Nick Reed, the son of a doctor and nurse. He doesn't have a habit, yet. But a youthful curiosity overcomes his better judgment. "I just wanted to figure out," he said, "why people like this so The Sun (Baltimore), January II, 1998 much. " Making of a myth Nearly two decades ago, cigar manufacturers did not concern themselves with young smokers. They had enough trouble figuring out why adults didn't like cigars. Overall sales had been dropping an average of 5 percent a year since their height in 1964. "We were very concerned about the inextricable, relentless decline in the cigar industry, and we felt we had to try something," recalled Edgar M. Cullman Jr., chief executive officer of General Cigar Holdings Inc. , a market leader in premium cigars. With their survival at stake, industry chieftains formed a public relations committee in 1980 under the umbrella of the Cigar Association of America, a conglomeration of foreign and domestic manufacturers, leaf dealers and suppliers, and convened in New York for strategy sessions at the old Third Avenue headquarters of Culbro Corp., then parent company of General Cigar. Other times, they met at the Madison Avenue offices of their publicist at the time, Carl Byoir & Associates Inc. The Sun (Baltimore), January ii, 1998 Among those in attendance was Cullman, regarded as one of the group's sharpest minds, a Yale-educated executive and scion of the family who created another triumph of tobacco marketing, the Marlboro Man. Joining Cullman around the table were other industry leaders: Stanford J. Newman of J.C. Newman Cigar Co., James Brown of Consolidated Cigar Corp., Thomas Arthur of Havatampa Inc. and John C. McCormick of Swisher International Inc. The problem was all too familiar. As public relations specialist Robert T. Henkel told the assembled leaders of the industry in a private meeting in 1980, "The image of the cigar industry has to do with smoke-filled rooms - traditionally cited as the spawning areas where all sorts of nefarious schemes are hatched, where secretive conclaves, political machinations, skulduggery and other contemptible acts are devised." Henkel's solution, financed by cigar association dues and outlined in his speech, was a public relations message disguised as news and entertainment. Stories would focus on cigars as a status symbol, associating them with women and youthfulness and highlighting cigar-smoking celebrities as "role models for cigar smokers to emulate." The Sun (Baltimore), January ll, "How will we do all this?" Henkel told the group. 1998 "we will write news

stories, develop feature articles, take photographs, produce radio and television news tapes." Also, a grass-roots movement launched by the industry would create the illusion of public support for the cigar. The potential, He~kel said, could be as great as that achieved by advocates of women's rights, the disabled and both sides of the abortion debate. "By the deft use of the media," he said, those groups created a movement that shaped "the destiny for the many." The cigar industry, he said, could do the same. The plan was bold, practical and, at its core, cynical. The hand of cigar manufacturers would remain unseen. But reached 18 years later, Henkel insisted that he was not trying to manipulate the media, although he acknowledged that even presidents of the United States try to create the illusion of a groundswell of support. Of his public relations efforts, he said, "I don't believe it was cynical. I was trying to explain how these things happened~" But when told how the industry carried out his instructions after he left as a consultant in the early 1980s, Henkel added, "It sounds like they made their The Sun (Baltimore), January iI, 1998 own interpretation of what I recommended." Fruits of labor What Henkel recommended is not, at first, self-evident in a typical cigar factory in Little Havana, a Miami barrio. Cuban immigrants hunch over mahogany tables, rolling tobacco between supple hands. The air is thick with the pungent odor of leaf. But just off the factory floor, a door opens into an office where the fruits of Henkel's vision are stuck to the wall on pink and yellow notes: CHICAGO TRIBUNZ ARTICLE 60 MINUTES CNBC POWER LUNCH These are a marketing director's dream: the London Times, Wall Street Journal, public broadcasting, Oprah Winfrey, Sports Illustrated, Fortune, Newsweek. The Sun (Baltimore), January ii, 1998 "It just doesn't stop," said Gayle M. Ritt, until recently marketing director for Caribbean Cigar Co. The importance of media attention was first identified in internal industry memos. "Objective: Keep cigars 'in the news' through placement of positive stories," stated a cigar association memo early in the campaign. "Target Audience: News media." Success came quiokly and in an impressive venue. A two-minute script produced by the Cigar Association was aired as part of a nationally televised news

preview of the Super Bowl at the Pontiac Silverdome in 1982. "And when it's over, the victors will gather for the traditional ritual of slapping each other on the backs and pouring champagne ~ usually on each other's heads," a reporter said on camera. "And they'll pass out the cigars that have come to be a symbol of manly success." The industry calculated its cost savings. "How can those results be translated? In dollars - to the bottom line," a cigar association memo noted the next year. "For example: A 30-second TV commercial during the Super Bowl would have cost $ 400,000. I However, we decided upon multiple exposures through TV news features which cost just $ 30,000. They reached 40 million viewers, The Sun (Baltimore), January 11, 1998 resulting in a cost-effectiveness of 75 cents per thousand viewers - or less than one-quarter the cost of advertising." Under the Richard Weiner Inc. public relations agency, a force behind the Cabbage Patch dolls phenomenon and authors of a media handbook for the cigar industry, manufacturers also targeted regional and national newspapers. With the New York Times, marketers employed deception. "As a cigar smoker, I like to linger after a meal, relaxing and enjoying a fine cigar, appreciating my smoke as I would a special glass of wine. Unfortunately, increasing numbers of cigar smokers, fearful of confrontations with nonsmokers, think twi~e before lighting up. Or they passively r~treat to relax with their cigars alone," wrote Jonathan M. Weisberg in a June 7, 1984, letter to the editor. "This is regrettable." Weisberg did not identify himself as an employee of the Richard Weiner agency. But the firm did not fail to highlight his letter in a report to its client, the Cigar Association of America. "Agency wrote and placed a 'Letter to the Editor' entitled 'A Man and His Cigar' by Jonathan M. Weisberg. Letter, extolling the virtues of a The Sun (Baltimore), January Ii, 1998 postprandial cigar. I Circulation: 963,400." Asked about the letter, Sharp of the cigar association acknowledged that Weisberg's affiliation with the industry should have been disclosed. The newspaper would not have run the letter, said Nancy Nielsen, vice president of corporate communications for the New York Times Co., if it had known of Weisberg's connections. Cigar makers, however, knew how to get their message into the news media. "Associated Press and United Press International released on their wires to the nation's major television and radio stations and newspapers a story agency wrote on 'Good Guys Smoking Cigars on TV, ' " said a cigar association memo in 1984. The industry also targeted those most potentially receptive to its cause - cigar-smoking journalists. Among several named in industry memos was one from the Fresno Bee in 1987: "Cigar smoking columnist Dennis Pollock gave some cigar smoking tips in his

October 9 column. The article announced Cigar Lovers Day and credited the CAA [Cigar Association of America] in its efforts to encourage cigar etiquette." The Sun (Baltimore), January ii, 1998 Pollock, reached for comment, was surprised to learn that he was identified in an industry document. "I have mixed emotions," he said, "when I see what I wrote used for promotional uses." The industry relied on more traditional promotions as well. In Baltimore, marketers created their own event as part of the opening of the H.L. Mencken House. From May 31 to June Ii in 1984, models hired by the cigar industry fanned out across the city, wearing sashes bearing the slogan "Relax. Enjoy a Cigar." Men dressed as the cigar-chomping journalist of the Evening Sun handed out 15,000 promotional lapel pins, rewarding those wearing them with $ 5 bills. The Sun covered the event, highlighting the cigar gimmick. Marketers' dream From such promising promotions, cigar makers have attracted what other marketers fantasize about - wealthy customers clamoring for their wares. Consider Jerry Gross, an insurance executive from Malibu, Calif., appealing to an impassive clerk in a dank Miami factory. begging you, two bundles, please, please." The Sun (Baltimore), January ii, 1998 The object of his desire is La Gloria Cubana - cigars so popular that the factory limited customer orders. Gross' solution? He travels across country three to four times a year to stock up. The industry could not have asked for more. "To make it an upper-end type of product, socioeconomically - that was kind of the primary strategy," said a former public relations specialist who worked on the industry campaign. "PR is one-sided, and we would play down any negatives and attach all the positives to it." What worked for vineyards worked for cigar makers - an unspoken yet widely understood elite appeal. "Create the 'Cigar Smoking' experience," suggested a 1983 memo, "similar to the 'Wine' experience - the tradition of the grower, the roller of cigars, the boxing, the care of cigars, the smoking of cigars." Women, too, became a target audience, one the industry believed could "help get cigars again accepted as part of elegant entertaining," according to a cigar association memo in the mid-1980s. Sharp, the industry spokesman, said manufacturers were only trying to make cigar smoking hy men acceptable to women. But as early as 1978, when cigarette maker R.J. Reynolds Tobacco International was still in the cigar business, the industry giant began to see women as a The Sun (Baltimore), January ii, 1998 potential market, concocting cigars with more palatable scents "to develop female acceptance," an internal company plan stated. Other manufacturers soon followed.

Cigar makers also considered stirring the interest of young smokers by starting a national cigar marching band of the year program to "give the cigar band a positive presence on hundreds of American campuses," a 1983 cigar association memo stated. When asked about the idea, the industry said it never acted on it. Blahs gradually turned to young, upwardly mobile professionals. "We'll especially focus on I the increase in cigar sales among baby boomers or Yuppies," the cigar association stated in a 1985 memo. With a youthful audience in mind, cigar makers established links to sports. Among the popular figures employed was Joe Torre. Long before he steered the New York Yankees to a championship, Torte was hired as a cigar industry spokesman for $ i0,000 while manager of the Atlanta Braves. Promotions were so successful that cigar makers were telling themselves public sentiment was changing by the mid-'80s: "There is I a growing perception, regardless of the reality, that cigars are back," said a 1985 cigar The Sun (Baltimore), January ii, 1998 association memo, "and that the momentum is in place for a better climate for our industry." A year later, the cigar association was bestowed with a Silver Anvil Award from the Public Relations Society of America for "shaping a positive consumer image" through such traditional promotions as a song-writing contest. Yet manufacturers maintain today that they did little to change the image of their product. The industry campaign was "an abject failure," said Sharp, president of the cigar association since 1981. He points to industry figures indicating a 37.5 percent decline from 1980 to 1988 in the consumption of large cigars - a combination of premiums and cheaper, machine-made cigars. While overall cigar sales continued to decline, however, a key segment of the industry began to show signs of life. Sales of premium cigars doubled to about I00 million from the mid-'70s to the mid-'80s - just as the industry campaign was peaking. "I wouldn't challenge the fact that they increased," Sharp said. "But I would challenge the extent to which the PR program was a contributor to that." The Sun (Baltimore), January ii, 1998 Save the dinosaur Even as recently as Nov. 19, 1993, a mood of doom prevailed when the son of a cigar merchant went to Washington to plead for mercy. "We are a dinosaur industry," Theo W. Folz, chairman of the Cigar Association of America, testified before Congress. "We are headed to extinction." But his call for exemption from a threatened tax increase would soon be moot. Not only was the proposed tax dropped, cigar smoking in A~aerica was poised for a spectacular resurrection, spurred, again, by the media. The decade ushered in black-tie cigar dinners, cigar bars and, in September

1992, a clarion call, Cigar Aficionado, a magazine that quickly gained in circulation and stature. Its publisher, Marvin R. Shanken, is perhaps the most visible figure of the cigar boom - a cherubic, at times churlish, spokesman in pinstripe suits who, like a modern-day P.T. Barnum, brashly takes much of the credit for the cigar smoking revival. But Shanken had help from the Cullmans, the tobacco family who participated in the meetings nearly two decades ago that launched the industry campaign. The Sun (Baltimore), January ii, 1998 For five generations, the Cullmans have played a central role in the health and habits of millions of smokers. "A fascinating family," said Lael Tucker Wertenbaker, author of a biography privately commissioned by the Cullmans, recalling the family from Keene, N.H., shortly before she died in March of lung cancer after years of smoking cigarettes. As Philip Morris' chief executive officer, Joe Cullman III was a larger-than-life figure who decorated his office with elephant tusks - trophies from African expeditions. Named after a friend of his father's who drowned on the Titanic, Edgar Cullman Sr. helped the family flourish by investing in the cigar trade and marrying Louise Bloomingdale, heiress to the retail fortune. And in the 1980s, his son, Edgar Jr., accepted the family mantle, overseeing General Cigar, purveyor of two of the top premium cigars in America, Macanudo and Partagas. Yet for all their work, the Cullmans remain virtually anonymous. publicity seekers," Edgar Jr. said. The Sun (Baltimore), January ii, 1998 Fewer still know of the family's connections to Shanken, publisher of Cigar Aficionado. General Cigar, the company the Cullmans control, is Shanken's landlord at his Park Avenue headquarters in New York, records show. The reception area of General Cigar is on the same floor as space leased by Shanken's publishing company, M. Shanken Conununications Inc. More than a landlord, the family has been a friend making key introductions for Shanken in the cigar business when, as publisher of The Wine Spectator, he wanted to start a cigar magazine. "Edgar Cullman told me an anecdote that Edgar relishes telling," said Aaron L. Sigmond, founding editor of Smoke magazine. "Marvin has a seed of an idea, so he goes down to Edgar Jr. and says, 'Look, I've already conquered the wine world, and I'm thinking of starting a cigar magazine. What do you think?' And Edgar says, 'We'll help you out, we'll advertise; you're a friend, you're a tenant, we know you socially. We'll be glad to help you out any way we can.' Asked about his relations with Shanken, Edgar Jr. said, "I certainly helped him, there's no question about it." But he said he has no investment in, or influence over, the publisher. "He is not my mouthpiece. The circumstances of his being in this building is pure happenstance."

The Sun (Baltimore), January Ii, 1998 Shanken was unavailable for an interview, but Gordon Mott, Cigar Aficionado's managing editor, said the magazine is not beholden to the Cullmans. "There's no connection between Marvin's presence in this building and the fact that the Cullmans ow~ ~ cigar company." There are connections, however, between industry marketing and editorial decisions in the media. That was the case when Bernard McCormick, editor and publisher of Gold Coast, a South Florida lifestyles magazine aimed at the affluent, assigned a cover story for April 1996 on the cigar boom, based on the recommendation of his advertising staff. "We knew if we did the story, we could get some ads for it," McCormick said. "We were playing to advertising, quite obviously." The strategy worked. Consolidated Cigar and local retailer Bennington Tobacconist bought the magazine's most expensive space, the back page, a slot that costs up to $ 5,590. "It's an accepted practice in all media," asserted McCormick, former senior editor of Philadelphia magazine. At Annapolis Quarterly, a regional Maryland magazine, editors also made a financial decision. A story on the health effects of cigar smoking was dropped from publication for fear of angering advertisers and subscribers, according The Sun IBaltimore)~ January Ii, 1998 to the publisher. The story was to run with a feature on cigars, "Puff Peace," in the fall issue. "It was kind of opening a whole can of worms," said Publisher Eric ~i Lund. "You're inviting the whole question of health. And we didn't want to get into it." Neither, it seems, do the rest of the media. Of 68 national magazine stories published on cigars from 1992 through May, when the government issued a report on teen-age cigar smoking, only one article, a 379-word Newsweek story on Dec. 2, 1996, focused largely on the health risks of smoking cigars, according to a Sun database search. Newspapers are no different. A database search of 26 major U.S. newspapers from 1994 to early May 1997 identified 3~994 cigar-related stories. Of those, only 37 - less than 1 percent - dealt with the health risks of smoking cigars. Most simply treated the cigar boom as a glamorous trend. "As a Prop for the 90's, the Cigar Flourishes," announced a page-one headline in the New York Times on Jan. 30, 1995. The Sun (Baltimore), January Ii, 1998 The Sun headlined the "Cigar Revival" in August 1996. And more recently, Distinction, a magazine published by the newspaper, featured on its cover a woman smoking a cigar. Sharing expertise Cigars have been so popularized in the press that even the once-mighty

cigarette makers are trying to learn from their brethren in the tobacco trade. A pamphlet from a June 1996 conference of the Tobacco International/Tobacco Merchants Association in Charlotte, N.C., outlined the topic: "What kind of advice in marketing, public affairs and manufacturing do cigar manufacturers have for cigarette companies?" "My advice was that united we stand, or divided we fall," recalled panelist Joel J. Sherman, president of Nat Sherman Inc., a prominent New York manufacturer of cigars and "all-natural" cigarettes. But cigar makers, including those who are members of the cigarette industry's main lobby, the Tobacco Institute, need no help. An almost surreal celebration of cigars has come forth - "Mr. Smoke," a 2-foot-tall stuffed cigar toy, $ 12,000 walk-in humidors to store cigars at home, a golf putter with a humidor The Sun (Baltimore), January II, 1998 built into the shaft, cigar cruises, cigar vending mazhines, cigar radio shows, apparel, conventions, Web pages and cigar-shaped Godiva chocolates. Asked about the cigar's return, former U.S. Surgeon General C. Everett Keep warned, "The camel's got his nose in the tent again." The industry may never again achieve its antebellum heights, when more money was spent on cigars than on bread in 1849 Hew York, but the demographic shifts are startling. From 1995 to 1996, cigar usage among 18- to 24-year-olds in the United States soared by nearly 37 percent to 1.13 million. "Cigar clubs are the newest rage igniting college campuses," pronounced Smoke, a magazine designed for a youthful audience. More alarming, in 1996, about 6 million 14- to 19-year-old teen-agers nationwide - 26.7 percent - reported smoking a cigar the previous year, the Centers for Disease Control and Prevention recently announced. The first of its kind, the national survey of 16,117 teen-agers also found that 3.9 percent of boys and 1.2 percent of girls smoked cigars frequently - more than 50 in the previous year. The Sun (Baltimore), January ii, 1998 The tobacco industry "will go to just about any extremes, including keeping our young people hooked I to keep their product alive," said Thomas F. Gibson, past president of the American Lung Association. But the industry said it does not pursue a high school audience. "When it comes to tobacco, no restrictive measure is too extreme when undertaken in the name of protecting under-age kids," said Sharp of the cigar association. Young, upwardly mobile professionals are another matter. To cigar makers, this audience has become crucial to profits. Cigar advertisements - increasingly showing up in magazines such as Rolling Stone and Details - shot up by more than 70 percent to nearly $ 15 million, from 1994 to 1995. Consolidated Cigar has aimed a new line of cigars, called "Playboy by Don Diego," at the emerging young men's market. And at General Cigar, the company talked about "the campaign aimed at cigar smokers under the age of 35" and the