Evening star., 1928-06-06
COMPETITION KEEN
|NC|GARETTE TRADE
Millions of Dollars to Be. Used
as Ammunition in To-
bacCo War.
BY J. c. ROYLE.
Special Dispatch to The Star.

Special Dispatch TO Jne STAR
NEW YORK, June 6.--The smoke Of
the battle Of the cigarettes Is rining. on
a wider front today. More factors In
the tobacco industry have been pushed
into the conflict, and the four cnlet
manufacturers now are fighting for the
favor of the jobbers and retailers as
we'll as for the retail purchasers and con-
sumers. Millions of dollars are being
flung broadcast, as ammunition IN tnls
fight.
The tensenesS of the battle Is evl-
denced by the announcement today by
George j. Whelan that 100000 shares
of stock In the Union Tobacco Co.. OF
which he is president, would be dis
tributed to tobbers and wholesalers ac-
cording to the amount of goods they
purchased. 1t was declared that this
offer was made in response to the oe-
mand recently made by the national
committee of the Tobacco Retailers ana
Jobbers for a margin of proht Whlch
would enable them to live.
Margin of Profit Cut.
The 100000 shares of Union Tobacco
stock are tentatively valued at $50
share. The retailers and jobbers say
that in the last 25 years their margin
of profit has been cut one-halt ana
that there must be radical changes In
relations between manufacturer and dis
tributor
Opponents of the Union Tobacco Co.
declared today that the move was simply
one along recognized lines of sales pro-
motion. Some dealers declared 1t meant
nothing more than the distribution with
merchandise of trading stamps or tobac-
co coupons to the retail customers,
which has been customary for years
None of the other manufacturers has
as yet outlined what the response will
be to the Union company move, but the
dealers at least anticipate that some
move will follow. The answer of some
companies undoubtedly win take the
form Of intensified advertising. Already
each of the four big cigarette producers
is throwing millions into the advertis-
ing pot. One concern, with one of the
newest products on the market, spent
over $6,000,000 in advertising in 1927
and will exceed that amount this year.
The rivals are spending proportionately.
Huge sums have been distributed for
the use of big names" to advertise the
various brands. Society women, poll
ticIans, actors, authors and athletes
have added to their incomes by such
means, until thousands Of publicity
SEChGLo dAC AlblielAAE AVA CAAdiiIC W
get into the ads for nothing. The
leading interest, which recently dis
posed of several brands to the Union
Tobacco Co.. is handling about 33l3
per cent of the entire cigarette trade of
the Nation. Its net income in the last
year was over $23,259, 900 and the sale
Of Its chief brand showed gain of AZ
per cent. 1t will spend $40 100000 on
advertising this year.
Largest Relative Garner.
A third concern is regarded as the
largest relative Garner In the field and
is paying dividends of 90 per cent an
nuaily on both preferred and common
stock. It also is heavy advertiser, but
does not devote its entire advertising
appropriation to cigarettes.
The fourth large manufacturer puts
out three popular brands and splits its
advertising among them. 1t is the sec
ond largest producer of cigarettes and
is strongly entrenched financially
against competition.
In the meantime. the bright leaf to-
| hacco growers of the Southeast are
| looking forward to specially profitable
SEASON since the sales efforts are catis-
ing greater consumption Of tobacco. The
cigarette sales undoubtedly are affecting
cigar sales adversely to some extent, al
though the cheaper machine made
! grades of cigars are growing In popu-
| larity. The Cuban planters, who furnish
the leaf for the higher priced cigars.
are complaining bitterly that the buyers
are leaving them no profit above pro-
duction costs. They are asking Govern
ment aid