Ferrari has found itself at the center of controversy once again as pundits have accused the Scuderia of subliminal advertising of tobacco products through its longstanding partnership with Philip Morris International, producer of Marlboro cigarettes.

Historically, tobacco advertising has been commonplace in motorsports, F1 in particular. Imperial Tobacco’s Gold Leaf brand started off sponsoring the 1968 Monaco Grand Prix, leading a trend that would see tobacco companies sponsoring teams and races for decades to come. British American Tobacco went so far as to field its own cars – the British American Racing team that later became Honda, then Brawn GP and now races under the Mercedes GP banner. For several years, Marlboro (like Santander today) sponsored both McLaren and Ferrari, before concentrating its efforts on the Scuderia. By the late 1990s, however, European countries in particular began outlawing tobacco advertising in sports, leading to the withdrawal (no pun intended) of most major tobacco companies from Formula One. Williams became the first major team to run without cigarette branding in 2000, and since then all the major tobacco companies have pulled out of the sport, with the notable exception of Philip Morris.

Like other teams had initially, Ferrari continues to run livery on its F1 cars that – in compliance with European regulations – doesn’t explicitly include the name of its sponsor. The brand continues, however, to be part of the team’s name (known officially as Scuderia Ferrari Marlboro in a deal reportedly worth $1 billion), and over the years the Marlboro logo has grown increasingly abstract on the livery to the point that today it’s little more than a red, white and black bar-code. Although the team had, until a couple of years ago, run with the Marlboro name on the cars in overseas races where regulations permitted tobacco advertising, since 2008 Ferrari has run only with the bar-code logo.

British pundits, however, say the abstraction is not enough, pointing to the bar-code and even the team’s use of the color red as subliminal advertising of the team’s title sponsor. Ferrari has released a statement refuting the charges, saying the bar-code logo has not been scientifically proven to be subliminal advertising, and that the red livery has been integral to the team since its inception and the dawn of motorsports. Follow the jump for Ferrari’s argument and judge for yourself.

By Noah Joseph, Autoblog

Altria Group Inc.’s (MO) first-quarter earnings rose 38% amid prior-year charges as the maker of Marlboro, Parliament and other cigarettes saw revenue increase.

Results topped analysts’ expectations, and Chairman and Chief Executive Michael Szymanczyk said, “We continue to be pleased with the performance of our tobacco companies’ brands, particularly Marlboro and Copenhagen. Marlboro achieved record retail share results in the first quarter, and Copenhagen regained its position as the largest smokeless tobacco brand, as measured by retail share.”

Shares of Altria, which affirmed its 2010 guidance, dropped 0.6% to $21.05 premarket. As of Tuesday’s close, the stock had risen 27% in the past year.

The tobacco industry has seen the number of cigarettes sold continue to slide. In late March, company officials stood before a U.S. Food and Drug Administration panel defending menthol cigarettes, which could face increased regulation. The FDA last year banned flavored cigarettes, saying they lure children to smoke.

The parent company of Philip Morris USA reported a profit of $813 million, or 39 cents a share, up from $589 million, or 28 cents a share, a year earlier. Excluding restructuring and acquisition charges, among others, earnings from continuing operations rose to 42 cents from 39 cents.

Overall revenue jumped 27% to $5.76 billion. Excluding excise taxes, sales increased 3.6% to $3.95 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of 40 cents on $3.83 billion in revenue excluding excise taxes.

Cigarette volume decreased 0.7% as wholesalers and retailers last year depleted their inventories in anticipation of an increase in federal excise tax, which happened April 1, 2009. In the second quarter of last year, retailers rebuilt their inventories.

Volume of the company’s smokeless products rose 22%.

By Dow Jones, Online.wsj

RICHMOND, Va. — Lorillard Inc., the nation’s third-largest cigarette maker, saw less of a decline in cigarettes sold in the fourth quarter than its competitors. One of its value brands posted big gains and its Newport menthol brand stood up to heightened competition.

Still, Lorillard, whose other brands include Kent, True and Maverick, said Monday that its fourth-quarter profit fell as it faced higher manufacturing costs and other expenses.

The company, based in Greensboro, N.C., saw the number of cigarettes sold fall 4 percent during the period, compared with its estimate of a total industry decline of 7.4 percent.

Lorillard saw a 6.5 percent decline in volumes for its Newport brand, but a 39.7 percent increase in its value-priced Maverick brand. Some smokers have traded down to cheaper cigarette brands during the recession in an effort to cut spending.

Newport’s share of the U.S. menthol segment grew by .06 percentage points to 34.61 percent of the market.

Despite the Food and Drug Administration’s pending study on the public health impact of menthol, the segment is stronger than regular cigarettes in a shrinking market, and Lorillard’s top competitors — No. 1 Philip Morris USA, owned by Richmond, Va.’s Altria Group Inc., and No. 2 Reynolds American Inc., based in Winston-Salem, N.C. — have ramped up efforts to grab some of the menthol market.

While Chief Executive Martin L. Orlowsky acknowledged the other companies’ interest in menthol, he said in a conference call that none of the entries into the market have been “game-changers or factors of any consequence.”

Lorillard’s earnings dropped 6 percent to $242 million, or $1.52 per share. That narrowly beat the $1.51-per-share estimate of analysts surveyed by Thomson Reuters.

It said it had fewer shares outstanding in the current quarter, which boosted its earnings per share by 9 cents.

Sales climbed 27 percent to $1.38 billion. About $270 million of the growth was due to April’s 62 cents-per-pack federal excise tax increase. Excluding excise taxes, sales rose 2.2 percent to $932 million.

Lorillard, which was spun off from Loews Corp. in June 2008, said its revenue benefited from higher average prices, but that was somewhat offset by selling fewer cigarettes and spending more on promotions.

Its shares fell 70 cents to $73.80 in afternoon trading Monday.

Full-year profit climbed 7 percent to $948 million, or $5.76 per share.

Annual net sales rose 25 percent to $5.23 billion from $4.2 billion. Removing excise taxes, sales grew 5.6 percent to $3.69 billion.

Lorillard, the oldest continuously operating U.S. tobacco company, was the last of the country’s top tobacco companies to report its fourth-quarter results.

Results from the three tobacco makers, who account for about 90 percent of the U.S. cigarette market, show steep volume declines as tax increases, smoking bans, health concerns and social stigma make the cigarette business tougher.

Marlboro maker Altria Group shipped 11.4 percent fewer cigars and cigarettes. Reynolds American, which makes Camel and Pall Mall, saw volume decline 7.6 percent.

Those declines have have caused some tobacco companies to focus on cigarette alternatives — such as snuff and chewing tobacco — for sales growth.

Lorillard said Monday that it plans to enter the moist smokeless tobacco market, but did not elaborate. It also said it will discontinue a joint venture with Swedish Match for its Triumph Snus — small pouches like tea bags that users stick between the cheek and gum.