On the Call: Altria Group CEO Marty Barrington
Altria Group Inc., the owner of the biggest U.S. cigarette maker, Philip Morris USA, continues to focus its efforts on building its premium Marlboro brand which has been under pressure from competitors and lower-priced cigarette brands as consumers face economic challenges and unemployment remains high.
The brand sold for an average of $5.79 per pack during the third quarter, compared with an average of $4.24 per pack for the cheapest brand.
Those challenges are in addition to the tax hikes, smoking bans, health concerns and social stigma that have made the cigarette business tougher.
After experiencing one of the biggest U.S. market-share declines in at least four years in the year-ago quarter, the top-selling Marlboro brand gained 1 percentage point of market share in the third quarter to end up with 42.7 percent of the U.S. market. Marlboro's shipment volume increased 1 percent to 28.9 billion cigarettes.
The Richmond, Va., company 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, who also have fought cigarette sales declines with promotional prices.
Altria recently introduced Marlboro NXT _ a cigarette that can be switched to menthol by crushing a capsule in the filter. At the end of the quarter, Altria said it expanded the brand extension into 27 states. And it says it has a pipeline of innovative products to supplement the Marlboro brand moving forward.
In a conference call with analysts Thursday regarding third-quarter earnings for Altria, CEO Marty Barrington discussed Marlboro's brand architecture.
QUESTION: How does the Marlboro brand architecture play into the ability to maintain and gain market share?
RESPONSE: "The Marlboro architecture is the next evolution really in how that brand, which has grown over time, can continue to grow into the future. ... It actually provides some room for the brand to operate. ... We want to give Marlboro the license, if you will, to reach out to all the smokers who want to be in the franchise. It's a terrific brand, with great equity and great premium pricing, and we believe that the architecture is the next logical step on how to grow that brand over time."