Marlboro Brand Lost 1% of Market Share

Published on February 9th, 2012 00:00

Altria, parent company of the largest U.S. cigarette producer, Philip Morris USA plans to present the 4Q profit and revenue when it releases its results before the stock market opens on Monday.

Marlboro tobacco

As Americans purchase fewer tobacco products due to growing health awareness and increasing cigarette taxes, Altria’s volumes have dropped evidently, but the company has realized to keep its revenue by raising its prices. We should see if Marlboro, the best selling cigarette brand can retain it leading position at the tobacco market. Richmond-based Altria declared that Marlboro brand lost about 1% of market share on the 3Q ending with 41.7% of the U.S. market. As about its other cigarettes brands as Virginia Slims and Parliament they also lost market share.

Volume decreases for Marlboro reduced the whole number of cigarettes Altria sold by 9% to 33.3 billion cigarettes for the given quarter in comparison to the previous year, tacking into account that company’s discount cigarette brands raised 9.5%. Altria has launched some new products with the Marlboro brand with lower promotional prices. They included unique blends of both menthol and non-menthol smokes in order to keep the brand raising and attract smokers of its rivals. However the company still faces particular pressure from such lower-priced cigarettes as Pall Mall from Reynolds American. Moreover, Altria decided to raise prices on particular cigarette brands due to which it maintained its profit per package. For instance, a pack of Marlboro brand was sold for $5.74 in comparison to $4.22 for the lower-priced brand.

Altria as well as other tobacco companies is looking for cigarette alternatives, as chewing tobacco, snuff or cigars n order to increase marker share. So, at present tobacco experts want to see how particular Altria’s smokeless products perform. It also has a wine business, which demonstrated positive results in the quarter. Smokeless tobacco volumes were quite slack flat in the 3Q and owned 55.2 % of the market, which can’t be compared with smoking products. As about the volume for cigars it increased about 4 % within this period.

Altria, one of the nation’s giant tobacco companies continues to reduce general and manufacturing prices. Previous quarter the company declared its plans for an additional $400 million in cost savings by the end of 2013 prior to expected cigarette volume decreases covering all parts of the industry. Increased spending on premium cigarette brands as for example Marlboro, could demonstrate that consumers are switching to paying more for tobacco products after federal and state tax increases. Tobacco experts estimate that Altria will earn 50 cents per each share on sales of $4.18 billion. In 2011, Altria announced net income of 44 cents per share on profit of $4.14 billion.

By Kevin Lawson, Staff Writer. Copyright © 2011 All rights reserved.

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