Altria expecting Copenhagen Wintergreen to have big impact..

Click to enlarge..
December 30, 2009 - Altria Group Inc. is expecting Copenhagen Wintergreen, which started selling in stores across the country this month, to have a big impact, as well. It's only the fifth product in Copenhagen's 187-year history.

Altria chairman and chief executive Michael Szymanczyk believes the new product could help Altria carve out another 8 percent of the growing market for smokeless tobacco -- one of the fastest-growing lines in the nation's convenience stores, with a 7.7 percent rise last year on the heels of a 6.2 percent increase the previous year.

That's not chicken feed: Based on revenues after this spring's 62-cent-a-can price cut, each percentage point of market share translates to about $25 million a year in revenue, a Richmond Times-Dispatch analysis of Altria's financial filings suggests.

"Smokeless is clearly very important to them," said Steven F. Marascia, director of research at Capitol Securities Management Inc. in Richmond.

Directly related news brief:
C-Store Update - Copenhagen Long Cut Wintergreen, another new Marlboro coming..;
C-store Update - Camel Dissolvable Sampler Packs, Skoal pouches, etc..;
Altria Group q3 2009 Earnings Call Transcript - keypoints..

U.S. Smokeless Tobacco, which Altria acquired this year for $11.7 billion, long had wanted to move Copenhagen into the wintergreen-flavored segment, the biggest part of the smokeless market. But the company felt it couldn't get the flavor quite right. It was after the acquisition, working closely with the tobacco-flavoring experts at Altria's Philip Morris USA cigarette business, that U.S. Smokeless felt it had found the right taste, Altria spokesman Bill Phelps said.

The new product, meanwhile, was the first launch of a smokeless product for the company's newly formed Altria Sales and Distribution operation. The whole idea of the unit is that the same selling system that made Philip Morris USA's Marlboro the nation's No. 1 cigarette brand would work for other kinds of tobacco, as well.

Copenhagen's 23% market share closely trails sister brand Skoal.

"Cope users are very loyal, though they will buy others' wintergreen occasionally just for a change of pace," he said. "They like [the new Copenhagen]. Other wintergreen dippers saw it and said they wanted to try it because it is Copenhagen."

Making sure that idea got through was a top marketing priority at Altria, the report said. That is why the can still is fiberboard with a metal top, instead of the plastic other firms use. The lettering on the can still is the stately serif-footed style Copenhagen has used for decades.

Every store is different—even among Price's own four. In two, the new Copenhagen Wintergreen sold out, and he had to reorder quickly. In the other two, the new variety was slower to take off. Generally, though, Price said he thinks the new brand will win new customers. "In the moist smokeless area, Copenhagen is the gold standard," he opined.

Copenhagen's 23 percent market share closely trails sister brand Skoal.

"'Cope' users are very loyal, though they will buy others' wintergreen occasionally just for a change of pace," Altria spokesman Bill Phelps said. "They like this," he added, about the new Copenhagen. "Other wintergreen dippers saw it and said they wanted to try it because it is Copenhagen." Making sure that idea got through was a top marketing priority at Altria.

Generally, though, Harold Price with four Richmond-area Cigarettes Unlimited stores, thinks the new brand will win new customers. Price: "In the moist smokeless area, Copenhagen is the gold standard."

References: Altria expects big impact from Copenhagen Wintergreen by David Ress, Richmond Times-Dispatch, 12/26/2009; Wintergreen Gold Altria, retailers expect big impact from new Copenhagen variety Convenience Store / Petroleum (CSP) Daily News, 12/28/2009.