How Cigarettes Disrupted the Tobacco Industry

One person “almost single-handedly invented the modern cigarette”.

Hello 👋

Martin here. Welcome to another edition of Founders’ Hustle!

I write newsletters about entrepreneurship and building startups through the lense of my own experiences launching and growing companies.

Today, I’m sharing some notes from a fascinating book I’ve been reading.

With any mass-consumed good or service, I’ve always been curious as to the underlying factors and circumstances that enabled it to succeed.

It’s easy to take omnipresent companies like McDonald’s and product categories like t-shirts for granted. But—why did they succeed so well, specifically?

I find digging into the circumstantial foundation necessary to enable them helps develop critical thinking.

My recent curiosity led me to read about the astonishing rise of cigarettes in the 20th century.

Note: this is not an endorsement of cigarettes (I don’t smoke) or the tobacco industry.

Here we go.

With the inescapable presence of cigarettes amongst society throughout the entirety of living memory, it’s natural to assume they’ve always played a major role within the tobacco market since the dawn of the industrial revolution.

But, you’d be wrong.

I’ve been reading a book authored by Allan M. Brandt, Professor of the History of Science at Harvard University, that details the extraordinary rise of cigarettes in the 20th century from obscurity to ubiquity.

It’s titled The Cigarette Century: The Rise, Fall, and Deadly Persistence of the Product That Defined America and is a totally fascinating read.

Of particular interest to me were the underlying set of changes and mechanics of society and industry that combined together to create the perfect set of conditions for cigarettes to explode in popularity.

Lets put this into context.

By the 1950s cigarettes generated more than 90% of all tobacco industry revenues in the United States. But, just fifty years earlier, it was just 2%.

This alone grants cigarettes disruptor status.

When you also consider the fact they grew the overall tobacco market, which was already huge, by a factor of five, it's truly remarkable. Tobacco consumption increased from 250 million pounds to 1.5 billion pounds annually— cigarettes were almost exclusively responsible for this rise.

For centuries prior, cigarettes co-existed alongside very popular tobacco consumption products such as plug (chewing tobacco), cigars, and pipes.

However, it was the little-used outlier by comparison. That is not because the tobacco market was small or niche beforehand. It was already big business.

By the nineteenth-century tobacco products were a core component of American society — deeply embedded in culture, leisure, and commerce.

Tobacco plugs and pipes were the popular choices amongst the masses and cigars were a potent symbol for wealth and power amongst the well-to-do.

During this time cigarettes were widely considered a novelty, curiosity, idiosyncrasy, or indulgence of the young urban working poor who could not afford the more desirable alternatives.

To overturn all of this stigma, ritual, and habitual inertia and come out on top with such a dominant position within the tobacco market required a series of sweeping societal, technological, and industrial changes.

The movement of the cigarette from the periphery of cultural practice to its center encompassed critical innovations in production technologies, advertising, design, and social behaviour.

— Allan M. Brandt


The innovations necessary to enable the cigarette to explode in popularity during the 20th century can be traced back hundreds of years.

The foundations started to form as soon as Europeans first encountered Native Americans consuming tobacco in various forms. They quickly shifted from passive observation to actively growing and selling it — mostly to Europe in vast quantities.

By the late 17th century half of the English male adult population consumed tobacco daily (mostly through clay pipes).

Cigarettes existed up to and around this time. The earliest examples were likely wrapped in cornhusk. The format was incredibly basic, unrefined, and far from a level of appeal that would be sufficient to drive broad adoption.

An early key innovation — which made toking cigarettes practical — occurred in 17th century Spain when smokers replaced the husk with fine paper. This burned evenly when rolled around crushed tobacco and made cigarettes significantly more user friendly.

This was followed by two further foundational developments critical to the manifestation of the modern cigarette — one was botanical and the other technological.

As tobacco cultivation spread outside of Virginia and into other parts of the United States, driven by growth in population and demand, the character and flavor of the harvest changed.

Perhaps counterintuitively — inferior soil quality across newly cultivated lands in Ohio, Kentucky and Indiana, and North Carolina proved to be a favorable result for tobacco consumption, and particularly so for cigarette smoking.

The leaves from these regions had a distinct yellow hue and were light in flavor, a preferable taste profile for mass consumption.

One type of plant, white burley, introduced mid-19th century, was robust and particularly economical to harvest for use in mass-produced goods.

The other foundational development was a technological innovation in the curing of tobacco (the process of drying leaves out so they can be ignited and smoked).

Prior to the Civil War tobacco was cured over the open flames of wood and charcoal. The smoke would impart attractive flavors onto the tobacco leaves but the fires were hard to control consistently and the end result varied widely. Sometimes the leaves would completely dry out to the point of disintegration or burn.

In light of this growers and manufacturers began experimenting with flue-curing — using furnaces with hot iron piping to cure the leaves — instead of open flames.

Tobacco cured in this manner was praised for its “lemon yellow” color and mild flavor. The end result was a lot more consistent and wastage reduced, but, the real benefit of utilizing this process was unforeseen.

Flue-curing changed the fundamental chemistry of the leaf from slightly alkaline to acidic. This, in combination with the light flavor, encouraged inhalation into the lungs.

Unlike cigar smoking, in which smoke was primarily held in the mouth, ingesting cigarette smoke deep into the lungs transported nicotine rapidly into the bloodstream and onto the brain within seconds.

Nicotine addiction was born in the serendipitous marriage of bright tobacco and flue-curing.

— Allan M. Brandt


Cigarettes were not manufactured to any notable significance within the United States until the Civil War. When production began, due to an absence of domestically sourceable labor educated in the techniques of cigarette hand rolling, quality assurance was a significant issue.

‘Civil War cigarettes’ were only really consumed amongst isolated and small clusters of the working poor. The situation picked up after 1869 when F.S. Kinney, a tobacco company, brought over experienced workers from Europe to train their employees.

But, demand inevitably hit a slow-rising ceiling shortly thereafter as the restricting factors of stigma, habit, and impracticality inhibited growth.

That is, until the 1880s when James Buchanan Duke entered the scene.

To say he was the first successful cigarette entrepreneur would be somewhat of an understatement.

James Duke almost single-handedly invented the modern cigarette.

— Allan M. Brandt

He grew a cottage industry into one of the most profitable globally, initially through the growth of his own companies, and later via the formation of a Tobacco Trust that consolidated over 90% of the market into one entity that he was in charge of.

In essence, James Duke was the ‘John Rockefeller of tobacco’ — an industry which grew to account for 1.4% of U.S. Gross National Product and 3.5% of non-durable consumer spending.

To achieve all of this, unlike his competitors that were romantically attached to increasingly outdated tobacco traditions, Duke had an uncanny knack for identifying and executing new methods and innovations of modern industry that would come to dominate 20th century mass consumer commerce — in part due to the influence of Duke.

Aggresive and untethered, he brought together the technological, business, and marketing innovations that would define the coming new age of consumption.

— Allan M. Brandt


Duke's family company — W. Duke Sons & Company — based in Durham, North Carolina had been successfully selling chewing tobacco since the Civil War. They began producing cigarettes in 1879.

Up until this point the cigarette business held little appeal to a firm like W. Duke Sons & Company. The market was relatively small, stigmatized, and the production process labor-intensive (cigarettes were rolled by hand).

But, James Duke saw long term opportunity. Over the course of a few years from 1882 until 1885 W. Duke Sons & Company invested heavily in ramping up cigarette production —taking the employee base from 10 to 700 cigarette rollers across two factories.

Throughout this time Duke was constantly searching for a machine that could increase productivity and replace his workforce, who he complained were expensive and inefficient. Staff turnover was high.

Many mechanized prototypes had been tried and tested by enthusiastic inventors, but virtually all of them failed to assemble the small, fiddly, and delicate cigarettes reliably.

That is, until a Virginian inventor by the name of James Bonsack designed and built a reliable machine in the early 1880s. It was inspired by processes in his father’s woolen mill and neatly fed loose tobacco onto a paper ribbon that was subsequently rolled into a tube and cut to the appropriate length.

Bonsack’s machine manufactured 200 cigarettes a minute — nearly the same as what a skilled laborer could assemble in an hour. It reduced the cost of rolling cigarettes by 50%.

Although James Bonsack’s name rarely appears in the history of technology next to those of his contemporaries Alexander Graham Bell, Thomas Edison, or the Wright Brothers, his machine, like theirs, formed the foundation of a major American industry.

—Allan M. Brandt

Bonsack’s machine took the supply constraints off manufacturing.

Unlike competing tobacco products such as cigars, which still needed to be hand-rolled by unionized laborers fiercly opposed to machinery, a near limitless volume of cigarettes could now be produced inexpensively — theoretically.

While James Duke eagerly adopted the Bonsack machine into his Durham factory, his competitors were either slow to act or rejected the initial prototype.

They had quality control concerns and were worried customers would be put off by machine-made cigarettes. Duke had the opposite view and actively advertised this fact on the packaging.

A year later, while his competitors were still procrastinating, Duke realised whoever had control over this patented technology going forward would ultimately control the cigarette industry.

So, using the leverage he acquired as the first and only major customer of the Bonsack machine, he savily proposed a series of “secret” contracts to James Bonsack that would give his company advantage over the Bonsack patent and technology.

The highlight of this was an agreement guaranteeing Duke’s company a 25% discount on royalties against any and all other cigarette manufacturers.

This became a critical competitive advantage in a market that came to be heavily commoditised. Wherein brand, not product, was the distinguishing feature between rivals.

And, wherein, the degree of profit margin governed a manufacturer’s ability to make their brands appealing through marketing and promotions.

Another critical piece of technology needed to facilitate mass adoption also emerged at the end of the 19th century. Cigarettes, unlike competing tobacco products such as cigars and pipes, were a “quick smoke”.

Therefore, they needed a quick, safe, and reliable form of ignition— matches.

The first matchbook was invented in the 1890s and not before long cigarette packs were combined with free matchbooks, which gave smokers everything they needed.

Filters would not emerge as a compelling selling feature until well into the 20th century, when cigarettes were already mainstream and serious health concerns relating to their usage started to surface.


By the turn of the twentieth-century cigarettes had become cheap to produce in large volume, practical and enjoyable to consume, and deadly addictive.

There was just one problem: demand.

Duke had an overcapacity problem. A vast potential for production but not enough consumers to buy them. Cigarettes were still an outlier product with a strong social stigma attached — as was so evident in their 2% market share as of 1900.

This negative image was further compounded in the spotlight by the reformer and temperance movements of the late Victorian era. To them, the cigarette embodied many of the “evils” of alcohol — gluttony, indulgence, wastefulness, a poison onto the mind.

As the movement to prohibit the manufacture and sale of alcohol drew increased attention and support in the last decade of the nineteenth century, temperence literature increasingly made reference to the rise in popularity of tobacco, especially in its new an most devious form the cigarette.

— Allan M. Brandt

The cigarette’s overweighted visibility in society made it an easy target. Unlike pipes and cigars, mostly consumed in private drawing rooms and parlors, cigarettes were often smoked in public places — everywhere.

The state of Washington made the sale of cigarettes illegal in 1893. By 1909, North Dakota, Iowa, Kansas, Minnesota, South Dakota, and Tennessee had followed suit. Many more banned sale to minors.

Drastic action was needed in order to connect society with the palatable product the cigarette had become.


Duke clearly understood he needed to aggressively solicit new smokers and that a revolution in cigarette production needed to be matched by an equally powerful revolution in demand generation.

Heavy promotion, Duke insisted, would drive sales.

And, so began a methodology of customer acquisition that would come to define mass consumption across nearly all industries in the 20th century.

To get started, he began marketing cigarettes to malleable minds without any pre-existing prejudice to cigarettes — young men and boys.

Duke essentially set up an internal marketing department — one of many moves to create a nearly completely vertically integrated enterprise — through the installation of a print shop at his Durham factory which utilized the latest color lithography techniques.

Promotions included premiums, coupons, and collecting cards. They were included ‘for free’ with each pack of cigarettes.

Common themes included sports, adventures, Civil War generals, and the exotic (partially clothed “actresses”).

Customers were encouraged to collect entire sets in a series, which could be vast in number and compelling to finish.

Many a boy under 12 years is striving for the entire collection, which necessitates the consumption of nearly 12,000 cigarettes.

— The New York Times

This began a long tradition of cigarette manufacturers appealing to children that would reverberate for over one hundred years.

Duke and his contemporaries recognized early on that converting the impressionable mind of a child to favor their brand, or begin smoking in the first place, would create millions of lifelong customers.

The distinctiveness of cigarettes in their appearance and packaging were a sharp contrast to the traditional forms of tobacco consumed by their parents and an object of generational identity.

As advertising budgets ascended cigarette ads spread out across the United States in both urban and rural environments on billboards, novelty giveaways, sponsorships, and various forms of literature. And — later, television, radio, and cinema.

This aggressive initiative had a major benefit outside of recruiting new smokers. It also erected a barrier to entry from new firms launching competing products and even other forms of tobacco.

The larger Duke’s firm became, the more he could spend on advertising, the more defensible his position became against competitors.

Other tobacco products such as pipe and cigar smoking fell into relative obscurity as cigarettes became an omnipresent force in society through media, advertising, and community visibility.

Duke increasingly parlayed huge fractions of profit back into advertising in order to acquire more customers. Up to 20% of sales revenue was driven back into marketing and promotion efforts — an unprecedented level at the time.

Such high advertising spend was supported by huge margins from progressively lower costs of manufacturing, cheap distribution (retailers took a tiny commission), a high-frequency use product, generational shifts, and long-term retention of customers —a combined set of factors that was harder to replicate with other forms of tobacco.

The core framework of ever-cheaper manufacturing and ever more aggressive and novel advertising practices, which generated demand and uniqueness in a cigarette brand “out of thin air”, remained in place and grew evermore sophisticated as cigarettes transitioned to become the dominant form of tobacco consumption by the mid-twentieth century.

Cigarette manufacturers were among the first to identify and capitalise on a major shift in consumer advertising strategy from addressing “needs” to “desires” rooted in identity.

This armed them with the mechanism needed to make their brands appeal to an increasingly diverse set of individuals from all walks of life.

By the end of the 1920s, the cigarette had accrued a remarkably elastic set of meanings. Though nearly ubiqutous and overwhenlingy sold in just three brands, it was often regarded as a marker of independence and automony.

— Allan M. Brandt


Duke was adept at recruiting young, predominantly male, customers to smoking his cigarettes. But — the rest of society, particularly older generations, was a different story.

At the start of the 20th-century cigarettes were still broadly stigmatized.

Smokers were branded delinquent or degenerate by increasingly vocal proponents of the temperance movement. This influenced popular opinion materially.

Overturning this view would take decades without a broader catalyzing event that would accelerate an otherwise already inevitable trend.

That came in 1917 when the United States entered the First World War.

As the young men that Duke and his competitors had previously convinced to smoke cigarettes went off to fight on the frontlines in Europe, attitudes on the homefront towards cigarettes began to change.

Images and stories of American soldiers smoking together on the front line became heroic and romanticized — the “commodity of morale”.

These heroes of battle could hardly be considered degenerate or delinquent — and suddenly the temperance movement’s narrative began to break down.

The “moral threat” of cigarette smoking became insignificant compared to the horrors of war.

This view was cemented in public perception by the commander of the American Expeditionary Forces on the Western Front at the time:

You ask me what we need to win this war. I answer tobacco, as much as bullets.

— General Pershing

Cigarettes were now effectively endorsed by the U.S. Army. A national effort took place to donate millions of cigarettes to soldiers, who were experiencing shortages.

This was distributed by the U.S. government, who also purchased the entire output of cigarette factories for significant periods of time to satisfy frontline demand and public perception.

As these events transpired cigar and pipe smokers with prejudice against cigarettes found those opinions breaking down.

Even the YMCA — a previously staunch protester of the cigarette — found themselves distributing cigarettes to soldiers on the frontline. Many YMCA workers became smokers themselves.

Cigarette manufacturers leapt upon this momentum with promotional efforts tightly entwined with wartime patriotism.

All of this culminated in The First World War becoming a pivotal catalyst in breaking down Victorian values, ideologies, and notions of risk and danger.

Temperance advocates would see shortlived success via the controversial passing of the 18th Amendment (Prohibition) shortly after the fighting had ceased in Europe, but the “writing was on the wall”.

Vices such as smoking and drinking were increasingly perceived by the public as insignificant indulgences against the backdrop of a war that claimed millions of lives in Europe, and a disease — Spanish Flu — that claimed even more at home in its wake.

Prohibition actually had the unintended effect of re-enforcing smoking. As alcohol consumption became less accessible, tobacco, and increasingly cigarettes, filled the void in social settings.

By 1922, sixteen states had either banned or restricted the sale or promotion of cigarettes. But all of these laws were short-lived. Passed with publicity and fanfare, they were quickly repealed after brief periods of erratic and weak enforcement.

— Allan M. Brandt

A combination of the First World War and the effective collapse of the temperance movement thereafter transitioned the cigarette from a stigma into an attractive social accessory that symbolised power and individualism.


Interestingly, despite all of his success, Duke never fully comprehended how successful and overwhelmingly dominant the cigarette would become.

He, like many others, assumed it was another fad in the long history of tobacco consumption.

In 1912, when 13 billion cigarettes were produced, he concluded the market was near its peak. Within forty years this would rise to over 350 billion — a 27X increase.

Until next time.

- Martin


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