Benson & Hedges cigarettes are sold across the world. A former subsidiary introduced the highly successful Parliament cigarette brand to the United States.
Establishment and early growth
William Hedges (1836 – 1913) and Richard Matthias Benson (1817 – 1882) established themselves as tobacconists on 13 Old Bond Street, London from 1873. Benson & Hedges targeted the aristocratic market from one of the most exclusive retail streets in the world. Imported Cuban cigars were an important early component of the business.
William Hedges was born in Marylebone, the son of a coal merchant. A refined and pious man, he was a clerk by trade and a keen Wesleyan Methodist who frankly considered the tobacco business to be on the verge of immorality.
Richard Benson was a Bristol tobacconist who had followed his father into the trade. He was a coarse man, and in many ways the opposite of Hedges. He spent much of his time at his tobacconist’s in Bristol, but when in London he would stand outside the Benson & Hedges shop, dressed drably, smoking a cigar and brazenly spitting onto the street.
Benson & Hedges received a Royal Warrant from the Prince of Wales in 1878.
Benson smoked fourteen to fifteen cigars a day, and died, allegedly from excessive smoking, in 1882. It was estimated that he smoked 20,000 of the firm’s stock during his lifetime.
A P Hedges enters the firm
Alfred Paget Hedges (1867 – 1929), the son of William Hedges, joined the firm as an assistant to his father following the death of Richard Benson. He was considered a thoroughly decent man, who also possessed a fierce ambition.
Benson & Hedges was converted into a private limited company in 1896.
Establishment of American subsidiaries
The London business attracted a number of high-spending Americans. Encouraged by their custom, William Hedges established a United States subsidiary at 288 Fifth Avenue, New York, from 1897. Arthur Quinton Walsh (born 1861), a long-term bookkeeper for Benson & Hedges, was sent to manage the subsidiary. A relatively small business, it sold high quality cigars. At the behest of A P Hedges, Benson & Hedges also began to manufacture high-quality cigarettes in the United States in order to avoid import duties.
Sales were slow to develop at Fifth Avenue. The store was located on the first floor, and was thus unable to entice window shoppers. Walsh instead found success when he established a branch outlet in affluent Newport, Rhode Island.
Walsh eventually defied the orders of William Hedges and relocated the New York shop to a ground-level address at 314 Fifth Avenue from 1900. He removed the business to 17 West 31st Street from around 1905, but this was to prove unsuccessful due to its more obscure location. He relocated the business to 435 Fifth Avenue from 1907.
A Canadian subsidiary was established on Cote Street, Montreal from 1906. Both North American branches were to prove successful.
A P Hedges became the managing director following the retirement of his father in around 1901. A P Hedges was a man guided by his Wesleyan Methodist faith, and served as a lay preacher. He was elected as a Liberal Member of Parliament for Tunbridge in Kent from 1906 -1910.
Benson & Hedges received a Royal Warrant from Edward VII in 1906.
Benson & Hedges was converted into a public company with a share capital of £120,000 in 1910 in order to fund the expansion of the London and Montreal businesses.
William Paget Hedges (born 1894) joined his father at Benson & Hedges following service in the First World War.
Benson & Hedges was one of the largest retailers of high-quality cigars in the world by 1917.
Company capital was almost doubled to £220,000 in 1920 in order to establish a new cigarette factory at 104, New King’s Road, Fulham, and to provide further capital for the North American subsidiaries.
The American subsidiary was highly successful on the back of a strong national economy, and the British company continued to prosper. A Florida branch was opened in affluent Palm Beach from 1923.
Meanwhile the hitherto successful Canadian subsidiary entered into modest losses in 1925 and 1926, triggered by an economic depression which hit the luxury trade particularly badly. This was compounded by high taxation. Management believed that the subsidiary would have required a very high level of advertising expenditure if it was to remain viable, and lacked sufficient capital to provide it. As a result of this, the Canadian subsidiary was sold to Adhemar Gaston Munich (1882 – 1970), a French-born Quebec investor, and a regular customer, in 1926.
The United States subsidiary was sold to two New York banking houses in 1928. With a modest sales force of no more than 20 people, the company grew rapidly. It introduced Parliament, a premium-priced filtered cigarette made with Virginia, burley and Turkish tobaccos, and flavoured with liquorice, apple and brown sugar, from 1931.
Joseph F Cullman Jr (1882 – 1955) acquired 55 percent of Benson & Hedges (USA) for $1 million in 1941. His son later described the 435 Fifth Avenue shop at this time:
you might be forgiven for thinking you had entered into a time warp and had been transported to Victorian London. The manager wore a morning coat, the staff knew most of the customers by name, and the interior looked more like an ornate, exclusive jewellery store than a tobacco shop…the place was absolutely English.
A P Hedges died from heart failure in his London office in 1929. Major Arthur Pearson Davison (1866 – 1955) became managing director of Benson & Hedges.
Benson & Hedges held a Royal Warrant to supply King George VI by 1946.
Benson & Hedges (USA) was the seventh-largest cigarette manufacturer in America by 1952, and sales were dominated by Parliaments. However, the company lacked sufficient scale to provide its growing brand with the research and marketing support that it needed.
Benson & Hedges (USA) was sold to Philip Morris in 1953. Philip Morris was the fourth largest cigarette manufacturer in the country, but lacked a successful filtered cigarette brand of its own. Sales of Parliaments tripled between 1953 and 1961, due to improved distribution and a growing market for filtered cigarettes.
Sale to Gallaher
Benson & Hedges of Old Bond Street enjoyed consistently moderate success due to its specialisation in the luxury trade. The business was subject to a friendly takeover by Gallaher, a large British tobacco company which was attracted to the prestige value of the brand, in 1955.
Benson & Hedges held a Royal Warrant to supply the household of Queen Elizabeth II by 1956.
Gallaher sold the overseas rights to the Benson & Hedges brand outside North America to British American Tobacco in 1956.
Benson & Hedges of Canada was acquired by Philip Morris for around US$500,000 in 1958. The business was primarily focused on cigars.
Benson & Hedges introduced the Mayfair and Sterling brands to the British market from 1965.
Benson & Hedges was the leading king-size filtered cigarette brand in Britain by 1965. However, king-size cigarettes held just four percent of the total market.
Sales of Silk Cut low-tar cigarettes quadrupled between September 1971 and January 1972.
Estimates suggested that Benson & Hedges was the eighth highest-selling cigarette brand in the United States in 1973.
Benson & Hedges of Canada was merged with Rothmans in 1986 to form Rothmans, Benson & Hedges Inc, in which Rothmans held a 60 percent stake, and Philip Morris held a 40 percent stake.
The Benson & Hedges premises at 13 Old Bond Street were retained until at least 1998.
The Queen Elizabeth II Royal Warrant was withdrawn in 1999.
Japan Tobacco acquired Gallaher for £9.7 billion in 2007.
Philip Morris International acquired full control of Rothmans, Benson & Hedges Inc for about C$2 billion in 2008.
Benson & Hedges remains a leading brand of Japan Tobacco, Philip Morris USA, Philip Morris International and British American Tobacco.. Parliament is the twelfth highest-selling cigarette brand in the world. Benson & Hedges Blue is the highest-selling cigarette in Britain.