Altria - Copenhagen long-cut wintergreen, more sites for Marlboro snus, L&M Bold Menthol..

Background: Altria Group Inc said on Tuesday, January 6, 2009 it completed its $10.4 billion acquisition of UST, Inc. greatly expanding Altria's presence in the faster-growing smokeless tobacco segment. Michael E. Szymanczyk - Chairman and Chief Executive Officer at Altria has indicated a little tweaking is necessary for the UST's premium brands - Copenhagen and Skoal to return these brands to some modest share growth. (Altria Group, Inc. Agrees to Acquire UST Inc. - Altria Group and UST Conference Call, Seeking Alpha, 9/10/2008.)

Ten years ago, UST owned more than 80% of the smokeless tobacco market. By late 2004, the company's market share had slipped to 68%. Today, it's less than 60% and trending down.


Grizzly, the nations number one moist snuff brand, in the second quarter 2009 expanded its market share to 25.5 percent, up 2.2 percentage points, according to data from Management Science Associates Inc., a research group. Conwood's overall market share was up 1.9 percent to 29.4 percent. By far the best selling type of Grizzly is the long cut wintergreen. Skoal already has this type of moist snuff but Copenhagen does not. The new product could drive Copenhagen's share of the segment from 23% to 32%, according to an Altria spokesperson.

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, VA-based Altria Group.

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.

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 (Love the Moment) Bold Menthol 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.

References: Altria plans expansion of Marlboro snus by David Ress, Richmond Timdes_Dispatch, 9/10/2009; Altria Blazes On by Colleen Paulson, The Motley Fool, 9/11/2009.