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And the No. 1 New Cigarette Is …

For the second consecutive year, the same cigarette brand has been named best new product by convenience store and tobacco shop operators.

Marlboro special blend
Marlboro Special Blend

Philip Morris USA‘s Marlboro Special Blend scored top honors, based on the 2nd annual NATO-CSP Tobacco Survey, which asked voters what was their most significant new cigarette product of the past 12 months (calendar year 2011).

With more than 100 respondents, Marlboro Special Blend finished with more than 19% of the vote, equally popular in both tobacco outlets and c-stores. The cigarette finished first last year, scoring even higher with nearly 28% of the total vote. [the surveys may feature different respondents.]

Lorillard‘s investment into the non-menthol arena continues to pay off. The company’s Newport Non-Menthol finished second in the overall tally, scoring nearly 16% in the c-stores channel. In t-shops, Newport Non-Menthol was less popular, landing fourth with nearly 9% voting share. The performance in tobacco stores, however, is markedly better than last year when it finished with a 2% score, possibly because of its arrival, which occurred in late 2010.

UBS tobacco analyst Nik Modi is not surprised by the continued strong performance by Marlboro Special Blend and Newport Non-Menthol.

“Both Marlboro Special Blends and Newport Non Menthol are line extensions of well know premium brands at a good price point–given introductory pricing on Newport Non Menthol and buy downs on Special Blends,” Modi told Tobacco E-News . “This speaks to the consumers’ desire for premium brands at a good value.”

PM USA, the cigarette arm of Altria, touted the success of its Special Blend family of products. “In 2010,” said spokesperson Ken Garcia, “Marlboro gained 0.8 share points behind an attractive introductory offer on Marlboro Special Blend, achieving a record 42.6% retail share for Marlboro for the year.”

 
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Posted by on March 9, 2012 in Tobacco News

 

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And the No. 1 New Cigarette Is …

For the second consecutive year, the same cigarette brand has been named best new product by convenience store and tobacco shop operators.

Marlboro special blend
Marlboro Special Blend

Philip Morris USA‘s Marlboro Special Blend scored top honors, based on the 2nd annual NATO-CSP Tobacco Survey, which asked voters what was their most significant new cigarette product of the past 12 months (calendar year 2011).

With more than 100 respondents, Marlboro Special Blend finished with more than 19% of the vote, equally popular in both tobacco outlets and c-stores. The cigarette finished first last year, scoring even higher with nearly 28% of the total vote. [the surveys may feature different respondents.]

Lorillard‘s investment into the non-menthol arena continues to pay off. The company’s Newport Non-Menthol finished second in the overall tally, scoring nearly 16% in the c-stores channel. In t-shops, Newport Non-Menthol was less popular, landing fourth with nearly 9% voting share. The performance in tobacco stores, however, is markedly better than last year when it finished with a 2% score, possibly because of its arrival, which occurred in late 2010.

UBS tobacco analyst Nik Modi is not surprised by the continued strong performance by Marlboro Special Blend and Newport Non-Menthol.

“Both Marlboro Special Blends and Newport Non Menthol are line extensions of well know premium brands at a good price point–given introductory pricing on Newport Non Menthol and buy downs on Special Blends,” Modi told Tobacco E-News . “This speaks to the consumers’ desire for premium brands at a good value.”

PM USA, the cigarette arm of Altria, touted the success of its Special Blend family of products. “In 2010,” said spokesperson Ken Garcia, “Marlboro gained 0.8 share points behind an attractive introductory offer on Marlboro Special Blend, achieving a record 42.6% retail share for Marlboro for the year.”

 
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Posted by on March 9, 2012 in Tobacco News

 

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Altria seeks to tap wide-ranging tobacco users

Today’s smokers are more open to trying different types of tobacco than smokers of previous generations, and Altria Group Inc is working on new products to entice consumers who want a change from cigarettes, the company said.

Marlboro Black Nonmenthol
Marlboro Black cigarettes

The company, best-known for its Marlboro cigarettes, also stood by the profit forecast it gave in late January.

Altria, whose other products include Skoal and Copenhagen smokeless tobacco and Black & Mild cigars, has seen a shift in tobacco usage in the United States. While the number of smokers of both cigarettes and cigars has remained relatively flat, usage of smokeless tobacco has risen. Still, Marlboro – with 42 percent retail market share in the cigarette industry – remains the dominant brand in Altria’s portfolio.

Some smokers have been trying alternative products, such as smokeless tobacco, amid concerns about the health risks of smoking.

Altria is encouraged by the early sales of its new Marlboro Black brand, Vice Chairman Dave Beran told analysts and investors at the annual Consumer Analyst Group of New York, or CAGNY, conference held in Boca Raton, Florida.

Marlboro Black, which Altria’s Philip Morris USA unit began shipping in December, had over 1 percent retail market share earlier this month, said Beran, who is set to become Altria’s president and chief operating officer in May.

Marlboro Black Menthol
Marlboro Black Menthol cigarettes

The new product is what the company calls a bold, modern spin on the traditional brand, and is packaged in a black box for menthol and nonmenthol varieties.

The Marlboro brand had a 42 percent share of the market in 2011, down from 42.6 percent in 2010. Marlboro is the best-selling cigarette in all U.S. states, but like other cigarettes faces a continued decline in the number of American smokers.

Altria said it has not seen much of a change in the mix of premium and discount brands.

There has been some volatility among price-sensitive shoppers who seek out promotions and shift between different discount brands, but consumers who buy the company’s premium products tend to be loyal, Chairman and Chief Executive Mike Szymanczyk told reporters at the conference.

About 90 percent of Marlboro smokers buy only that brand, according to the company’s research.

Altria also expects adjusted earnings to grow by 6 to 9 percent in 2012, to a range of $2.17 to $2.23 per share, executives said on Wednesday.

Analysts, on average, expect Altria to earn $2.20 per share, according to Thomson Reuters I/B/E/S.

Over time, Altria still aims to post average annual adjusted diluted earnings per share growth of 7 to 9 percent and issue a dividend that grows in line with its adjusted earnings per share growth.

Szymanczyk said last month that he plans to retire in May, and will be succeeded as chairman and CEO by Marty Barrington.

Shares of Altria were up 0.3 percent at $29.71 on Wednesday afternoon on the New York Stock Exchange.

 
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Posted by on February 23, 2012 in Tobacco News

 

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Altria reports cigarette sales down but smokeless up

Philip Morris USA’s reported domestic cigarette shipment volume for the whole of 2011, at 135.1 billion, was down by four per cent on that of 2010, primarily due to retail share losses and one less shipping day, partially offset by changes in trade inventories.

Marlboro’s volume, at 117.2 billion, was down by 3.8 per cent, while the volume of the company’s other premium brands fell by 9.1 per cent to 9.4 billion and its discount brands volume fell by 0.9 per cent to 8.5 billion.

Philip Morris
Philip Morris USA, a property of Altria Group.

PM USA’s fourth quarter volume, at 33.7 billion, was up by 0.2 per cent on that of the last quarter of 2010, primarily due to trade inventory dynamics, partially offset by retail share losses and one less shipping day.

Marlboro’s volume during the fourth quarter of 2011 was down by 0.6 per cent to 29.0 billion and the volume of the company’s other premium brands was down by 7.2 per cent to 2.3 billion, but its discount brands volume was increased by 19.7 per cent to 2.4 billion.

After adjusting for changes in trade inventories and one less shipping day, PM USA’s 2011 fourth-quarter and full-year volumes were estimated to be down about three per cent and four per cent respectively.

Total cigarette market volume for the fourth quarter and full year of 2011 was estimated to be down about 3 per cent and 3.5 per cent respectively, when adjusted primarily for changes in trade inventories and one less shipping day.

PM USA’s retail share of the cigarette market during 2011 was down by 0.8 of a percentage point to 49.0 per cent.

Marlboro’s share was down by 0.6 of a percentage point to 42.0 per cent, while the share of its other premium brands was down by 0.2 of a percentage point to 3.7 per cent and its discount brands’ share was unchanged at 3.3 per cent.

Altria reported its fourth quarter and full-year results on Friday. The tobacco company’s 2011 reported diluted earnings per share (EPS) were down by 6.8 per cent to $0.41 for the fourth quarter and down by 12.3 per cent to $1.64 for the full year, primarily due to the impact of special items, including a 2011 second-quarter charge related to certain leveraged lease transactions, 2011 fourth-quarter restructuring charges related to a cost reduction program announced in October 2011, and charges related to tobacco and health judgments.

Marlboro Filter Plus
Marlboro Filter Plus cigarettes

Altria’s 2011 adjusted diluted EPS, which excludes the impact of special items, including charges related to tobacco and health judgments, were up by 13.6 per cent to $0.50 for the fourth quarter and up by 7.9 per cent to $2.05 for the full year.

Meanwhile, smokeless tobacco volume during the full year 2011, at 734.6 million (cans and packs), was up by 1.4 per cent on that of the full year 2010.

Copenhagen’s volume rose by 8.2 per cent to 354.2 million and Skoal’s volume was up by 4.5 per cent to 286.8 million, but the volume of other brands taken together was down by 23.6 per cent to 93.6 million.

During the fourth quarter of 2011, total smokeless product volume was up by 9.7 per cent to 189.3 million.

Copenhagen’s volume was increased by 15.9 per cent to 95.7 million, Skoal’s volume was up by 9.4 per cent to 71.9 million, but the volume of other products was down by 10.4 per cent to 21.7 million.

During the full year 2011, the company’s share of the smokeless market fell by 0.1 of a percentage point to 55.1 per cent.

Copenhagen’s share was up by 1.5 percentage points to 26.2 per cent, while Skoal’s share was down by 0.5 of a percentage point to 22.8 per cent and the share of the company’s other smokeless products fell by 1.1 percentage points to 6.1 per cent.

Cigar volume during the full year 2011 was unchanged at 1,246 million, though the volume of Black & Mild cigars, at 1,226 million, was up by 0.3 per cent.

The fourth quarter saw cigar volume down by 5.6 per cent to 286 million, with Black & Mild’s volume down 5.5 per cent to 281 million.

The company’s cigar share during the full year was up by 0.4 of a percentage point to 29.8 per cent, with Black & Mild’s share up by 0.5of a percentage point to 29.5 per cent.

“Altria delivered strong returns for its shareholders in 2011 in a challenging business environment while taking steps to continue creating shareholder value into the future,” said Michael E. Szymanczyk, chairman and CEO of Altria. “Altria grew its redefined adjusted diluted EPS by 7.9 per cent behind the strength of our tobacco and wine businesses.

“Altria outperformed the S&P 500 Index for the twelfth consecutive year and delivered total shareholder return of 26.9 per cent. In 2011, Altria created shareholder value by increasing its dividend by 7.9 per cent, repurchasing $1.3 billion of its shares, completing a $1.5 billion 2007 to 2011 cost reduction program and announcing a new cost reduction program for its tobacco and services companies in October.”

Szymanczyk then turned to lower risk products. “Altria continues to focus on developing lower risk products that appeal to adult tobacco consumers,” he said. “To support this goal, I am pleased to announce that Altria Client Services has entered into an agreement with Okono A/S, an affiliate of Fertin Pharma A/S, to develop innovative, non-combustible nicotine-containing products for adult tobacco consumers. This new product initiative combines the expertise of the Altria family of companies with Okono and its affiliates’ product development and manufacturing capabilities.”

Szymanczyk is to retire after 23 years with the company, including four years as chairman and CEO of Altria.

The board has elected Martin J. Barrington to serve as chairman and CEO, effective upon Szymanczyk’s retirement following the annual meeting of shareholders on May 17. The board has elected Barrington to Altria’s board, effective immediately.

Additionally, the board elected David R. Beran, to serve as president and COO, effective May 17, and approved a consulting agreement with Szymanczyk for an initial period ending January 31, 2014.

 
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Posted by on January 31, 2012 in Tobacco News

 

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Earnings Preview: Altria Group Inc.

Altria Group Inc., parent of the biggest U.S. cigarette maker, Philip Morris USA, is expected to report higher fourth-quarter profit and revenue when it releases its results before the stock market opens Friday.

Altria
Tobacco company Altria Group Inc.

As Americans buy fewer cigarettes amid increasing health concerns and rising tobacco taxes, Altria’s volumes have fallen markedly, but the company has managed to maintain its profit by raising its prices.

WHAT TO WATCH FOR: Whether Marlboro, the top-selling U.S. cigarette brand, can retain its command of the market. Richmond-based Altria said its top-selling Marlboro brand lost almost 1 percentage point of market share in the third quarter to end up with 41.7 percent of the U.S. market. Its Virginia Slims, Parliament and Basic brands also lost retail market share.

Volume declines for Marlboro drove down the total number of cigarettes Altria sold by 9 percent to 33.3 billion cigarettes for the quarter compared with a year earlier, even though volume for its discount cigarette brands increased 9.5 percent.

Altria has introduced several new products with the Marlboro brand, often with lower promotional pricing. They include special blends of both menthol and non-menthol cigarettes to try to keep the brand growing and steal smokers from its competitors.

But the company still faces pressure in the current economy from less-expensive brands like Pall Mall from Reynolds American Inc. and Maverick from Lorillard Inc. Even so, Altria has raised prices on some brands and maintained its profit per pack. Marlboro sold for an average of $5.74 per pack during the third quarter, compared with an average of $4.22 per pack for the cheapest brand, Altria said.

Marlboro Gold Touch
Marlboro Gold Touch and Marlboro Gold Fine Touch cigarettes

Altria and other tobacco companies also are looking to cigarette alternatives — such as cigars, snuff and chewing tobacco — for growth. So analysts will want to see how Altria’s Black & Mild cigars and Copenhagen and Skoal smokeless tobacco products, as well as Marlboro Snus, perform. It also owns a wine business, which saw gains in the quarter, holds a voting stake in brewer SABMiller, and has a financial services division.

Smokeless tobacco volumes were essentially flat in the third quarter and had 55.2 percent of the market, which is tiny compared with cigarettes. Volume for cigars grew about 4 percent during the period.

Altria, the first of the nation’s largest tobacco companies to report its fourth-quarter and full-year earnings, continues to work on cutting general and manufacturing costs. Last quarter the company announced plans for an additional $400 million in cost savings by the end of 2013 in advance of anticipated cigarette volume declines industrywide. It said the restructuring charges will total 11 cents per share in the fourth quarter.

WHY IT MATTERS: Increased spending on premium brands like Marlboro could signal consumers are adjusting to paying more for cigarettes following federal and state tax increases. Consumer spending continues to be critical to a strong rebound from the worst economic downturn since the Great Depression.

WHAT’S EXPECTED: Analysts expect Altria to earn 49 cents per share on sales of $4.23 billion, according to FactSet.

LAST YEAR’S QUARTER: Altria reported net income of 44 cents per share on revenue of $4.14 billion. Figures for both periods exclude excise taxes the company passes through to the government.

 
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Posted by on January 26, 2012 in Tobacco Facts

 

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Behind Cigarettes’ Brands

Newport Non-Menthol continues to hang in, Marlboro’s promotions will keep building share and Pall Mall’s performance is increasing, according to retailers in the latest UBS-CSP Tobacco Survey.

Marlboro Cigarettes
Packs of Marlboro cigarettes

As revealed in last week’s CSP/Tobacco E-News, retailers in the survey, representing 50 chains and nearly 8,000 stores, expect Philip Morris USA‘s Marlboro to take the lead in gaining market share in the upcoming year.

When asked, however, if they thought the company’s Marlboro Leadership Price (MLP) promotion helped the brand’s share trends in 2011, there was a pretty even mix of yes (48%) and no (51%) answers. (The program, implemented last year, in essence, asks operators to forgo part of their typical markup in exchange for incentives).

Retailer responses included:

“I’m in a fair trade state and was already selling at state minimum. Made zero impact on my numbers.”

“The price strategy of closing the gap of the premium to discount encourages trade-up by consumers.”

Nik Modi, UBS analyst, pointed out that not everyone signed on to the program, estimating about 60% to 70% participation. So, he said, the 48% means “that almost anyone who has signed it is seeing some kind of market share progress.”

For Lorillard Inc.’s Newport Non-Menthol, retailers were also evenly split, with 50% on each side of whether the brand has shown year-over-year growth. “What’s interesting to me,” Modi said, “is the price increase and reductions in the buydown, and the brand is still kind of hanging in there. … It looks like it has more staying power than maybe some people predicted.”

Responses included:

“Newport N/M is being retailed as a fourth-tier product with a premium tier name badge. As we all know in this business, price sells.”

“It was growing steadily since launch. When they took pricing it dropped down two straight months. Since then it has gradually been increasing, but has not again reached its highest pre-increase level.”

Camel Cigarettes
Camel cigarettes packs

For R.J. Reynolds Tobacco Co., 25% of the retailers expect Camel to gain more market share than Marlboro or Newport. Meanwhile, the majority of the retailers (55%) said the company’s Pall Mall brand has shown an increase.

Modi said the Pall Mall responses were better than he expected, but added that he sensed the brand is “still under pressure,” as it makes most of its volume gains in lower-income regions, where PM USA has stepped up promotion of its L&M brands. To his point, one retailer said “L&M discounts have eaten into Pall Mall sales in the last quarter.” Meanwhile, another said RJRT is increasing share because “they are deep discounting Pall Mall and this brand has more awareness than L&M.”

Another retailer pointed out an additional reason for growth in the brand. “Due to the large decline in jobs in this area, there has been a large increase in lower price tobacco product sales. I expect this will continue until the economy improves.”

 
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Posted by on January 26, 2012 in Tobacco Facts

 

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