US Tobacco Companies Fight for East German Market

ON Wismar's cobbled Old Market Square, curious shoppers gather under a broad canvas canopy to get a closer look at three white-costumed cowgirls. ``Try America's most popular cigarette,'' exhorts one beaming cowgirl, her broad-rimmed hat cocked back from her forehead at a jaunty angle. Behind her, an imposing color poster showing a lean, rugged ``Marlboro man'' hangs amid stacks of red-and-white cigarette cartons. A group of ruddy Baltic Sea fishermen looks on in amused fascination.

At another stand nearby, a woman in her early 20s in a white T-shirt is handing out free samples of what she boasts is an ``American original.''

``It's the genuine taste of America,'' she says, tapping the bull's-eye emblem on the Lucky Strike package with her index finger.

Since German economic union in July, international tobacco companies have been locked in fierce competition for shares in the new and booming East German market.

Three Western cigarette companies have already carved up much of the new production market. R.J. Reynolds Tobacco Co., Philip Morris Inc., and West Germany's largest producer, Reemtsma, recently agreed to split the East German cigarette manufacturing plants among them and to guarantee the jobs of the nation's 5,500 tobacco workers. Factory equipment is being modernized and production expanded. Similar deals are being made in the Soviet Union.

In contrast to trends in the United States and Western Europe, smoking rates in Eastern Europe have not yet been significantly affected by growing health concerns about tobacco. West Europeans smoke more than Americans, and East Europeans outsmoke their Western neighbors.

In East Germany, the marketing battle for smoker loyalty to new brands has begun in earnest. Industry officials say the stakes are high.

According to early market studies, East Germans smoke more than 82 million cigarettes a day. That amounts to daily sales of more than 20 million deutsche marks. Of East Germany's 16 million people, about 40 percent smoke.

Within weeks of the currency union, umbrellas sporting cigarette brand advertisements turned up at nearly every street-side cafe and bar. American Tobacco Co., the manufacturer of the Lucky Strike brand, has been successfully luring customers by staging a ``one-to-one exchange'' campaign, a play on the rate West Germany gave East Germans for their nearly worthless currency when the economies merged. Customers get a full pack of Lucky Strikes in exchange for any other brand pack that has a least one cigarette left in it.

Billboards advertising Marlboros, Lucky Strikes, Camels, and other brands have sprouted up across the country, even on walls at the once infamous Checkpoint Charlie border crossing in East Berlin. Newspapers and magazines are crammed with colorful, full-page ads.

Salesmen have fanned out across the country to hawk their products directly to restaurant and bar owners.

``They worked through the neighborhood street by street,'' says Renate Wiese, a tavern manager in East Berlin.

Reemtsma bought the trademark of one of East Germany's most popular cigarettes, Cabinet, and relaunched it with better tobacco, and less tar. Although sales have been good, the loss of the old (harsh) taste has disappointed many stalwart Cabinet smokers.

``We've had to learn that people get used to poor quality,'' says Christoph Walther, a Reemtsma vice president. East German brands contain 50 percent more nicotine than Western brands.

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