UST, Inc. (principal subsidiaries: U.S. Smokeless Tobacco Company and Ste. Michelle Wine Estates) NOT Worried About New Moist Snuff Entry - Marlboro

January 25, 2008 - Murray Kessler, President, Chief Executive Officer & Director (Q4 2007 Earnings Call - 1/24/2008); Marlboro snuff; when Philip Morris USA announced an Atlanta rollout into our category last August 2007 there was much speculation that the competitive dynamics would shift for both us and the category. While we appreciated investors concern we believe the street had underestimated Copenhagen and Skoal’s brand equities (each worth more than $1 billion at retail - TW). Clearly Marlboro is a great cigarette brand. That said, history clearly shows that it is difficult to extend brands from one category to another particularly in one such as ours where the existing brand equities are so ubiquitous. The Copenhagen and Skoal equities are proving their loyal consumer following and while it is still early our brands are as strong as ever for perspective UST’s premium brands in Atlanta are growing at a 3.4% rate following Marlboro’s launch which is above the national average and category growth has remained strong. We were able to achieve this with a response to their launch that was measured and in no case included lowering prices. Furthermore, this was achieved despite the fact that Marlboro promoted down to a deep discount level of $1.49 a can. Said simply, what we see in the marketplace so far is similar to what has been written by several sell side analyst. So, while again it is early, we agree that this new entry is not a game changer for the snuff category and we remain confident in our ability to keep growing. (UST Inc. Q4 2007 Earnings Call Transcript, January 24, 2008) It has been found that brand loyalty is even stronger than a good promotion. Nearly 7 out of 10 adult consumers will go to another store if their brand is out of stock. (TobaccoWatch,org) Philip Morris USA continues to Stumble in the Smokeless Tobacco Arena



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