Category Archives: Tobacco

Unfiltered: A History of Benson & Hedges

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 Benson & Hedges, tobacconists and cigar importers of 13 Old Bond Street, London, in 1873. Situated on one of the most exclusive streets in the world, the firm targeted the aristocratic market.

Hedges was born in St 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.

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 tobacconists 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 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 possessed a fierce ambition, but was also likeable, and considered a thoroughly decent human being.

Alfred Paget Hedges (1867- 1929)

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.  A relatively small business, it sold high quality cigars and manufactured premium-market cigarettes. Arthur Quinton Walsh (born 1861), a long-term bookkeeper for Benson & Hedges, was sent to manage the subsidiary.

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 at affluent Newport, Rhode Island.

Walsh defied the orders of William Hedges by relocating the Fifth Avenue shop to a ground-level address at 314 Fifth Avenue in 1900. He moved again in around 1905 to 17 West 31st Street, which 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.

William Hedges had retired by 1901, and A P Hedges had become the managing director.

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 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.

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.

Meanwhile the initially 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. Benson & Hedges 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 tiny sales force of no more than 20 people, the company grew rapidly. It was to find great success with Parliament, a premium-priced filtered cigarette, from 1931. Joseph F Cullman Jr (1882 – 1955) acquired control of the company in 1941.

A P Hedges died in his London office from heart failure in 1929. Major Arthur Pearson Davison (1866 – 1955) became managing director of Benson & Hedges.

Benson & Hedges held a prestigious 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 acquired by Philip Morris, which, although the fourth largest cigarette manufacturer in the country, lacked a successful filtered cigarette brand of its own, in 1953. Sales of Parliaments tripled between 1953 and 1961, due to improved distribution and a growing market for filtered cigarettes.

Sale to Gallaher
Meanwhile, Benson & Hedges of Old Bond Street 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.

The independent Benson & Hedges (Canada) Ltd was acquired by Philip Morris in 1958.

Benson & Hedges was the leading king-size cigarette brand in Britain by 1981.

Benson & Hedges (Canada) 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 as of 2019.

Parliament is the twelfth largest cigarette brand in the world.

Whiff of success: Henri Wintermans

Henri Wintermans is the highest-selling cigar brand in the world.

Sjaak and Henri Wintermans (1886 – 1975), two brothers, established a cigar manufacturing business in Duizel in the Netherlands in 1904. They traded as A Wintermans & Sons, in honour of their father.

Sjaak concentrated on sales and Henri concentrated on buying and blending tobacco.

A Wintermans & Sons captured a substantial proportion of the Dutch market but Henri amicably left the partnership to establish his own cigar manufacturing business in 1934.

Henri relocated to the neighbouring town of Eersel, and his son Adriaan entered the business. Adriaan Wintermans took over management from 1945 onwards.

Wintermans identified the post-war Dutch cigar market as over-saturated, and decided to look to export sales to drive his business forward. Before long Britain was the company’s largest market for sales.

The Cafe Creme cigarillo was launched in France in the early 1960s. Henri Wintermans was by far the most popular Dutch cigar brand in the United Kingdom by 1965.

Adriaan Wintermans had a clear vision for the European cigar market, but he lacked the financial capital to realise his ambition. He felt that the company could best realise its potential as part of a larger concern. He sold Henri Wintermans to British American Tobacco for just under £2 million in 1966. BAT was the largest manufacturer of tobacco products in the world.

Adriaan Wintermans was appointed head of BAT’s European cigar business.

Over 500 million Henri Wintermans cigars were produced in 1971.

Just two percent of Henri Wintermans sales were in the Netherlands by 1972. Over 62 percent of sales were to the United Kingdom, and Henri Wintermans had around 15 percent of the UK cigar market.

Henri Wintermans increased sales by over 500 percent between 1966 and 1972. Production capacity was increased by 75 percent in 1972 to cope with rising demand.

Henri Wintermans was the leading cigar exporter in the world by 1977. It was the highest selling imported cigar brand in Britain by 1978.

Wintermans Cafe Creme was number two in the British miniature cigar market by 1983.

Broadsheet festive “banter”. A 1986 Henri Wintermans advertisement in the Daily Telegraph

Over 600 million Henri Winterman cigars were sold in 1990.

Henri Wintermans was sold to the Scandinavian Tobacco Group for £55 million in 1996.

Henri Wintermans products are still manufactured in Eersel. The vast majority of sales are in Europe.

Close but no cigar: Cope Brothers

Cope Brothers operated the largest tobacco factory in Britain, and pioneered the employment of women in the sector.

Establishment and the Victorian era
George Cope (1823 – 1888) and Thomas Cope (1827 – 1884) began to sell cigars, snuff and tobacco from 63 Paradise Street, Liverpool in 1848. Trading as Cope Brothers, the firm was undertaking its own manufacturing from premises on Lord Nelson Street by 1853.

George Cope managed the manufacturing arm of the firm, while Thomas Cope was responsible for the business as a whole.

Cope Brothers was one of the first tobacco manufacturers in Britain to employ a female workforce. Cope Brothers began to employ women following a factory strike in 1858. Female workers proved capable, so the policy was continued until the factory employed around 700 women and girls by 1871, out of a total of 774 employees.

Cope’s Christmas entertainment at St George’s Hall in 1864. Taken from the Illustrated London News.

Cope Brothers operated the largest tobacco factory in Britain by 1870. The factory was spacious and well-ventilated. Charles Dickens and Emily Faithfull were given tours and reported favourably. Shifts were of six to eight hours in duration. The girls were generally the daughters of shopkeepers, warehousemen and clerks. Cope Brothers employed 1,400 women and girls by 1879.

Cope Brothers operated the largest tobacco factory in the world in 1884. The buildings occupied almost the entirety of one side of Lord Nelson Street. Cope Brothers was the largest manufacturer of cigarettes in England, with a production rate of 250,000 to 300,000 a week.

Thomas Cope died in 1884, and left an estate valued at £199,000.

Cope Brothers was converted into a private limited liability company with a capital of £350,000 in 1885. John A Willox (1842 – 1905) was appointed as a director.

George Cope died in 1888. He was succeeded as managing director by his nephew, Thomas Henry Cope (1867 – 1913).

Cope’s Tobacco Works in 1889

By 1892 the regular workforce at the Liverpool factory totalled 1,500 people, many of them women and girls. With four percent of the British tobacco market, Cope Brothers was second only to Wills of Bristol.

Increased competition
The American Tobacco Company (ATC) acquired Ogdens, a Liverpool tobacco manufacturer, in 1901. ATC operated Ogdens at a massive loss in order to undercut its rivals and increase its market share. Although the acquisition was to impact the entire British tobacco industry, Cope Brothers suffered more that most, perhaps due to its proximity to its rival, as well as its decision not to join Imperial Tobacco, formed as a defensive merger of major British tobacco companies.

John A Willox, chairman of Cope Brothers, decried “the deliberate and organised effort on the part of American capitalists to destroy a British industry and create a selfish monopoly for themselves”. On the other hand, the Daily Mail criticised Cope Brothers as “slow, easy-going [and] old-fashioned”, with “out-of-date methods”.

In a defensive move, Cope Brothers acquired Richard Lloyd, a London tobacco manufacturer best known for the Old Holborn brand, in 1902.

Robinson & Barnsdale Ltd, tobacco manufacturers of Nottingham, was acquired in 1905.

Escudo Navy De Luxe pipe tobacco was introduced by Cope Brothers in 1912.

H C Lloyd & Son Ltd of Exeter was acquired in 1924.

Strike issues and acquisition
Around 460 Cope Brothers employees went on strike in 1950 in protest against the hiring of non-unionised labour. The strike lasted for nearly three months, and resulted in the dismissal of nearly 200 striking workers.

Cope Brothers was acquired by Gallaher in 1952, in an exchange of shares which valued the company at around £1 million.

At the time, purchase of American tobacco was rationed with quotas issued by the British Government, and Gallaher acquired Cope Brothers to increase its quota allowance. Gallaher was also attracted by the strength of the Old Holborn brand.

The Lord Nelson Street factory was closed down in 1952, and the site was sold to the Automatic Telephone and Electric Company.

All Cope Brothers branded products had been discontinued by 1965, with the exception of Escudo Navy De Luxe pipe tobacco. Various Richard Lloyd branded products were still produced, such as Old Holborn.

Escudo Navy De Luxe pipe tobacco and Old Holborn are still sold as of 2017.

John Hodge Tobacco Co

The John Hodge Tobacco Company was the largest exporter of dark leaf tobacco from the United States.

John Henderson Hodge (1852 – 1935) was born in Glasgow in 1852 to James Hodge and Catherine (nee Henderson). His father was a partner in J&T Hodge, which operated a tobacco factory employing four men and 18 boys in 1861.

John H Hodge emigrated to the United States in 1876 and established the John Hodge Tobacco Company at Madisonville, Kentucky. He was joined by his brother, Thomas Hodge (born 1859) in 1880.

Hodge married a Kentuckian, Kitty G Hodge (born 1856). His sons included James (born 1881), William R (born 1886) and John H (born 1889).

The Hodge tobacco factory at Henderson, Kentucky was struck by fire in 1895.

James Hodge retired from J & T Hodge, tobacco and cigarette manufacturers of St Ninian Street, Glasgow, in 1902, leaving William Hodge as the sole partner. James R Hodge was a witness to the transaction.

The John Hodge Tobacco Co acquired three million pounds of tobacco for about $175,000 in a single transaction in 1913.

The Hodge Tobacco Co, wholesaler and exporter of Henderson and Hopkins counties, Kentucky, employed 554 people in 1926.

John Henderson Hodge died in 1935.

James Hodge died in 1944.

Hodge Tobacco Co employed 200 workers during peak season in 1965, and had annual sales of over $1.5 million.

The business was operated by Thomas Hodge (1925 – 2011), the son of William Hodge, until its dissolution in 1972.

Up in smoke: a history of Gallaher

Gallaher was one of the largest tobacco companies in the world.

Establishment
Thomas Gallaher (1840 – 1927) was the son of a prosperous Protestant miller who owned the Templemoyle Grain Mills in Eglinton, Londonderry, Northern Ireland.

Gallaher served an apprenticeship with Robert Bond, a general merchant on Shipquay Street, Londonderry, in the early 1850s.

Gallaher borrowed £200 from his parents and opened a tobacconist business at 7 Sackville Street, Londonderry, in 1857. He manufactured and sold Irish roll pipe tobacco. The expanding business was relocated to Belfast from 1863.

A five-storey factory employing 600 people was built at York Road, Belfast in 1881.

A factory was opened at 60 Holborn Viaduct in London in 1888, followed by a Clerkenwell factory a year later.

The firm was converted into a limited liability company with a capital of £1 million in 1896.

A new £100,000 factory across seven acres was opened in Belfast in 1897. It was probably the largest tobacco manufacturing plant in the world.

Park Drive, a machine-made cigarette brand, was introduced from 1902.

Thomas Gallaher declined to join the great tobacco combines of the age, Imperial Tobacco and the American Tobacco Company, and consequently he controlled the largest independent tobacco company in the world by 1903.

Gallaher bought his raw materials directly, and by cutting out the middleman he was able to keep his costs low. He was the largest independent purchaser of American tobacco in the world by 1906, and bought only the highest grade of crop.

The atmosphere at the Belfast factory was described as familial. Midday meals were served at cost-price. Gallaher was the first man in Belfast to reduce working hours from 57 to 47 a week. The company employed 3,000 people by 1907.

Gallaher acquired the six acre Great Brunswick Street premises of the Dublin City Distillery for £20,000 in 1908. There, he built a large tobacco factory.

At York Street, Belfast, Gallaher established what was, by 1914, one of the largest tobacco factories in the world. The company also owned extensive plantations in Virginia.

gallaheryorkroad
The York Road, Belfast site

Gallaher continued to work at his desk every day until a few months before he died in 1927. He was remembered as a courteous, kindly man, a generous employer, and an extremely talented businessman. His plain ways endeared him to people. He left an estate valued at £503,954.

The company was principally inherited by his nephew, John Gallaher Michaels (1880 – 1948). Michaels had worked for his uncle for many years, and had been manger of the American operations.

Public offering
The Constructive Finance & Investment Co, led by Edward de Stein (1887 – 1965), acquired the entire share capital of Gallaher for several million pounds in 1929, and offered shares to the public.

Why Michaels divested his stake in Gallaher remains unclear, but he, his uncle and his brother all lacked heirs, so perhaps he simply wished to retire and pass on management of the company to others.

A new factory was established at East Wall, Dublin for £250,000 in 1929. The East Wall factory was closed with the loss of 400 jobs, following the introduction of a tariff on businesses not majority-owned by Irish residents, in 1932.

Imperial Tobacco acquired 51 percent of Gallaher for £1.25 million in 1932. Gallaher retained its managerial independence, and the Imperial Tobacco move was executed with the intention of blocking a potential bid for Gallaher from the American Tobacco Company.

Acquisition trail and subsequent growth
Gallaher was the fourth largest cigarette manufacturer in Britain by 1932.

Gallaher acquired Peter Jackson in 1934. The firm manufactured Du Maurier cigarettes, which was the first popular filter-tip brand in Britain.

E Robinson & Son, manufacturers of Senior Service cigarettes, was acquired in 1937. Senior Service had been highly successful within the Manchester area, but Robinson’s had lacked the capital to take the brand nationwide.

J Freeman & Son, cigar manufacturers of Cardiff, was acquired in 1947.

Gallaher acquired Cope Brothers of Liverpool, owners of the Old Holborn brand, in 1952.

Benson & Hedges was acquired, mainly for the prestigious brand name, in 1955.

Gallaher sales grew rapidly in the 1950s. Senior Service and Park Drive became respectively the third and fourth highest selling cigarettes in Britain in 1959, by which time Gallaher held 30 percent of the British tobacco market.

Gallaher acquired J Wix & Sons Ltd, the fast-growing manufacturer of Kensitas cigarettes, from the American Tobacco Company in 1961.

The Imperial Tobacco stake in Gallaher had been diluted to 37 percent by 1961.

Gallaher claimed 37 percent of the British cigarette market by 1962.

A large factory was established at Airton Road, Dublin in 1963.

Silk Cut was launched as a low-tar brand in 1964.

Company president Sir Edward de Stein died in 1965.

Gallaher employed 15,000 people in 1965, and had an authorised capital of £45 million in 1968. The company held 27 percent of the British tobacco market in 1968.

Benson & Hedges was the leading king-size cigarette brand in Britain by 1981.

Declining market and sale
The Belfast factory was closed in 1988. 700 jobs were lost, and production was relocated to Ballymena in County Antrim.

A cigar factory in Port Talbot, Wales was closed with the loss of 370 jobs in 1994.

The Manchester cigarette factory was closed in 2000-1. Nearly 1,000 jobs were lost. Production was transferred to Ballymena, where 300 extra jobs were created.

Japan Tobacco acquired Gallaher, by then the fifth largest tobacco company in the world, for £7.5 billion in cash in 2007.

Ballymena, the last remaining tobacco factory in the UK, was closed in 2017, with production relocated to Eastern Europe. 860 jobs were lost.

Japan Tobacco holds 40 percent of the British tobacco market as of 2018.

A brief history of Imperial Tobacco

Imperial Tobacco dominated the British tobacco trade throughout the twentieth century.

Wills of Bristol employed about 1,000 workers by 1889. The business was best known for the Woodbine brand. Informed by their Congregationalist principles, the Wills family had, by 1895, introduced financing for a staff canteen, a convalescent home, a sanatorium, a resident nurse and doctor, paid holidays and a number of recreational clubs.

Imperial Tobacco was formed in 1901 by the combination of thirteen leading British tobacco companies. Wills controlled the combine with just over half of the equity, followed by Lambert & Butler of London, Mitchell of Glasgow and John Player of Nottingham.

It was a defensive merger following the acquisition of Ogden of Liverpool, one of Britain’s leading cigarette manufacturers, by the highly capitalised American Tobacco Company.

Salmon & Gluckstein, a retail tobacconist with 184 branches, was acquired in 1902, largely to prevent its acquisition by American Tobacco.

American Tobacco sold Ogden to Imperial in 1902, and both companies agreed to avoid its rivals’ domestic market. The global market was to be catered for by a new company called British American Tobacco, with a two third stake held by American Tobacco and one third held by Imperial.

Imperial Tobacco estimated it had “rather over 50 percent” of the British tobacco market by 1904.

The Wills Embassy brand was launched in 1914.

By 1920 Imperial Tobacco had 72.5 percent of the British tobacco market, including 91 percent of all cigarette sales.

The firms in the combine retained their own brands and salesmen, but pricing and accounting were organised centrally.

By the late 1920s Imperial Tobacco had seen its virtual monopoly on cigarettes corroded by the re-emergence of competitors such as Carreras, Gallaher and Godfrey Phillips.

Imperial Tobacco employed 40,000 people across 27 factories by 1933.

John Player overtook Wills to become the largest single Imperial Tobacco subsidiary in the 1940s.

Imperial Tobacco held 78.8 percent of the British tobacco market in 1955.

Will’s Embassy was the highest-selling filtered cigarette in Britain by 1963.

Imperial held 66 percent of the British tobacco market in 1968, followed by Gallaher (Benson & Hedges) with 29 percent. Carreras (Rothmans, Dunhill) was third in the market with a seven percent share.