Altria plans expansion of Marlboro snus

Philip Morris USA plans to make a bigger push into the still-uncertain market for snus, a Swedish-style oral tobacco, expanding an experiment it is now running in three cities.

The nation’s No. 1 cigarette-maker will market snus, using its flagship Marlboro brand name, more broadly this fall, said Michael E. Szymanczyk, chairman and chief executive of Philip Morris’ parent, Henrico County-based Altria Group.

Philip Morris also will try to boost its share of the market for full-flavor menthol cigarettes by launching a menthol version of its discount L&M brand, Szymanczyk told analysts yesterday at the Barclays Capital Back-to-School Consumer Conference.

At the same time, Altria’s U.S. Smokeless Tobacco subsidiary will boost its presence in the biggest segment of the oral tobacco market by introducing wintergreen-flavored moist snuff, Szymanczyk said. The new wintergreen variety could boost Copenhagen’s 23 percent share of the smokeless tobacco market by 9 percentage points, Szymanczyk said.

Philip Morris and U.S. Smokeless “are planning initiatives to take advantage of the rapid growth in pouches,” Szymanczyk said, adding that the expansion of Marlboro snus was part of that effort. Small, tea bag-like pouches containing tobacco are inserted between the lip and gum.

Philip Morris USA has been testing Marlboro brands in Dallas, Indianapolis and Phoenix.

Snus is a moist powdered tobacco, cured by steam instead of heat, that some analysts and public health advocates experts believe will be the focus of tobacco industry attention, especially now that the U.S. Food and Drug Administration is regulating tobacco.

Chesterfield County-based Swedish Match North America hopes to convince the FDA that snus can reduce harm to tobacco users and is an effective way to get smokers to quit.

Szymanczyk gave no details about the size of Philip Morris’ push on snus.

He told analysts that Philip Morris found a significant number of smokers were trying the company’s newest cigarette, a menthol called Marlboro Blend No. 54 it introduced this summer. Altria spokesman William R. Phelps said that for competitive reasons, he wouldn’t comment about how many smokers were switching after trying the new variety.

Szymanczyk said Philip Morris wants to boost its share of the market for menthol cigarettes, where it now has a 28 percent share, as opposed to more than 50 percent for the overall cigarette market.

He said the company will launch an L&M New Cigarettes this year to boost its offerings in the “full-flavor” menthol sector, the one area where he said the company does not think it has a strong position. Blend No. 54 is also described as a “bold” flavor, which smokers describe as offering a particularly strong tobacco taste.


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