From Philip Morris to Altria

Establishing a corporate identity is always a complex business. Re-orienting one developed over more than a 100 years can be even more tricky.

More so when it involves businesses such as tobacco and foods, both the focus of considerable litigation and health-related controversy in the US in particular and the developed world in general.

These were issues the newly-named $ 82 billion Altria Group, nee Philip Morris Companies, had to consider over the 1990s. Altria is the New York-based parent company of Philip Morris USA, Philip Morris International (PMI) and Kraft Foods, with a global employee base of about166,000 people.

The first two are 100 per cent subsidiaries of the group and owners of established cigarette brands like Marlboro and Parliament. In the third, Altria has a 84.6 per cent stake.

The group also has a 36 per cent investment in brewer SABMiller, after the group sold its interest in Miller to South African Breweries in 2002.

The impulse to change a strongly established brand name came from two sources. First, by the mid- to late- 1980s, the group had started adding the foods business "" General Foods in 1985, which was later merged with Kraft, acquired in 1988 "" to its interests in tobacco and brewing (through Miller).

Despite the growing presence in foods "" the business accounts for 38 per cent of group revenues today and Kraft is among the world's three largest food companies "" the group continued to be identified closely with tobacco.

By the 1990s, this presented the company with a serious image problem, given the flood of anti-tobacco litigation and lobbying. "The reputation of tobacco was bad, it was perceived as not being honest nor addressing society's expectations," said David Sylvia, director, external services, Altria Corporate Services.

So much so, he says, that the joke in those days was that the company spokesman had just a stock answer to all queries from journalists: "No comment."

The foods business, too, started attracting public opprobrium. Together with other food companies, Kraft was criticised for selling obesity-causing and harmful, genetically-modified food to consumers.

In sum, in terms of image, PMI was attracting all the negatives and few of the positives of its diversified portfolio. The deterioration in the company's image was evident in the plunge down Fortune magazine's ranking of the US' most-admired firms. From Number 2 in 1990, Philip Morris Companies had slipped over 200 spots by 1999.

As the external environment grew increasingly hostile, it was clear Philip Morris needed to smoke out the negative connotations. To this end, the company started to conduct in-house research to gauge attitudes.

In 1998-99, the findings were distilled into a major corporate communication campaign to try and redefine the company. The broad idea was to educate the public and project Philip Morris Companies as an enterprise made up of leading consumer packaged goods companies, some of which were among the world's most popular brands.

Among the initiatives was an extensive print and TV campaign that involved an annual advertising buy of $100 million per year for almost three years.

In addition to the creation of a parent website, an "executive outreach programme" also focused on spreading the message to the American public that Philip Morris Companies was more than a tobacco company, that it gave back to the community and manufactured and marketed its goods responsibly.

The results of this campaign were gauged in an image tracking study conducted in September 1999 and August 2001 and yielded the following results:

• Favourable opinion jumped from 26 to 38 per cent
• Unfavourable opinion increased from 41 to 42 per cent
• The percentage of those who didn't know about the campaign fell from 30 to 20 per cent.

The results were both encouraging and discouraging, since they clearly indicated that unfavourable opinion hadn't changed. Also, although favourable opinion had increased appreciably, Philip Morris Companies was still unable to get over the confusion of the shared brand name and the Big Tobacco association. This was not surprising since its logo had been around since the 1860s.

In late 2001, therefore, the board decided to change the corporation's name, a decision overwhelmingly endorsed by shareholders in 2002. The platform for the future was already set with the acquisition in 2000 of Nabisco, one of the world's largest food conglomerates, which was merged with Kraft.

A four-member group was set up to oversee the transition, and image consultants Landor Associates were asked for options. The immediate choice would have been to simply provide a hybrid name, Philip Morris-Kraft. This was rejected, Sylvia explains, because it would not give the company flexibility to diversify in other areas.

The other options were to go with created names such as Incordis and Inmarcade. In the end, the corporation decided to go with Altria. This was essentially a created name that drew on the Latin word altus or altitude, the idea being to convey the idea that the corporation was "always striving to improve, to work with the community and was a great marketer".

At the same time, the logo was changed to a multi-coloured cube that was intended to represent the diversity of brands and people who worked for the corporation.

The name was formally changed on January 21, 2003, though the stock continues to trade on the New York Stock Exchange under the original initial MO, partly for lack of an available alternative (obvious abbreviations like "Alt" were already taken) and partly owing to the market's long-established familiarity with "Big Mo".

In the initial days, the objective was to highlight two points. One: that Altria's operating firms manufactured and marketed some of the world's biggest brands. Second: to make sure the name was pronounced correctly ("Arltria", not "Oltria").

The early focus was on three key audiences "" the financial community, opinion leaders like government officials, the media, chambers of commerce and so on, and the corporation's employees worldwide.

It was a laborious exercise, overseen by a group of four executives from the external communication department, which involved changing over 1,00,000 pieces of equipment (starting with such mundane items as paper napkins). Yet Altria remains, in essence, a holding company: today, only 1,600 employees carry an Altria business card.

Surveys conducted in November 2003 showed that the exercise had been partially successful. Between April and November of last year, 89 per cent of finance professionals, 31 per cent of investors and 33 per cent of opinion leaders had registered the new identity. Clearly, it is on the last two groups that efforts need to concentrate.

Significantly, it is the US that has been the focus of this exercise in acquiring a new identity. This is where the emphasis will remain through 2004 and 2005, suggesting that despite a decline in anti-tobacco litigation over the past decade-and-a-half, the image and reputation of Big Tobacco is still in need of refurbishing.

(The writer was in New York courtesy the Altria Group)