Philip Morris USA to test L&M Roll-Your-Own-Tobacco..

June 16, 2009 - Philip Morris USA will continue to grow its product reach this week with the beginning of a test market for the new L&M roll-your-own (RYO) tobacco product. Tobacco delivery of pouches and canisters of the new product to retailers in Maine and Michigan begins this week as a test markets.

Philip Morris USA to test L&M Roll-Your-Own-Tobacco..

Although Philip Morris USA (PM USA) spokesperson Greg Mathe would not say how many retailers are adding the two SKUs beginning tomorrow, he did say, "We're trying to get it into enough stores to gain some insights into the category."

The test is part of PM USA's continuing effort to expand its tobacco product offerings, Mathe told CSP Daily News in an exclusive interview.

"Philip Morris has had a growth strategy, and it's looking at growing adjacent categories," Mathe said." Cigars are growing, MST [moist-smokeless tobacco] is growing, and roll-your-own is growing about 11% a year. Although it's a fairly small segment of the tobacco category, it is growing. So this is our chance to learn about the category, to learn about the segment and see how adult smokers respond to this type of product."

The product is available to all channels of retail in the test markets in 0.75-oz. pouches and 6-oz. Sta-Fresh canisters. Mathe said price points will be "comparable to other roll-your-own products in the market place" and extend from the recent refresh of PM USA's L&M cigarette brand.

"About two years ago in the Midwest and West, L&M [cigarettes] got a refresh and a greater focus from Philip Morris. We redesigned the contemporary value brand to a similar price point as our Basic product," he said. "Then over the past two years, that's slowly rolled out to more and more regions across the country. So really we feel that brand and its position as a manufactured cigarette can translate well within the roll-your-own segment."

The introduction of the product comes at an interesting time, less than three months after an increase in the federal excise tax on roll-your-own tobacco products by more than 1,000%, leading some industry watchers to say the product category would be killed. While most indicators suggest roll-your-own still has a future, Mathe said PM USA's timing is "more of a coincidence than anything. We try to launch into new products when it's right--more on internal drivers than external."

For decades, PM USA was strictly a cigarette company; however, in the recent years, the company has expanded its reach through acquisition and new-product introductions. A brief timeline:
* In July 2006, the company began testing its Taboka Tobaccopaks. The test was discontinued about a year later.
* In August 2007, the company unveiled Marlboro Snus.
* In October 2007, the company began testing Marlboro MST.
* In December 2007, parent company Altria Group purchased John Middleton Inc., a leading manufacturer of cigars.
* And last year, Altria Group purchased smokeless tobacco company UST Inc.

Reference: PM USA Tackles Roll-Your-Own
New test has tobacco manufacturer entering yet another new OTP category by Steve Holtz, Convenience Store / Petroleum (CSP) Daily News, 6/16/2009.