PMI Focusing on "Innovation Leadership"

Source from:  tobaccoreporter.com International, Monday, July 2, 2007 07/03/2007

A focus on innovation leadership will be used to restore the global growth momentum of Marlboro, Andre Calantzopoulos, Philip Morris International's chief executive officer, told a JP Morgan Global Tobacco Conference in London on Friday. This was one of a number of "portfolio priorities" that Calantzopoulos identified and that included also turning around L&M; reinforcing and expanding the company's other corporate brands: Chesterfield, Parliament, Virginia Slims and Muratti; growing where there were niche opportunities for products such as menthol and slims; and strengthening PMI's position in profitable, low-price segments in both cigarettes and fine cut. Calantzopoulos told the meeting that Marlboro was the only "true global cigarette brand". Forty one per cent of Marlboro's volume sales were made in the EU, 25 per cent in PMI's EEMA region [Eastern Europe, the Middle East and Africa], 21 per cent in Asia and 13 per cent in Latin America. While the brand had been impacted by the decline of mature markets, its volume last year had reached 316 billion units, with growth in many emerging markets, such as Russia, Ukraine and Mexico. "The key to success with Marlboro is to stay relevant to our existing adult smoker base, particularly among legal age (minimum age 18) to 29 year-olds, and to respond to changes in consumer preferences and trends," he said. "We intend that Marlboro remains the modern market leader through enhanced consumer understanding and innovation leadership. "Innovation is already to be found in our three current Marlboro product initiatives. The shorter, smoother Wides is aimed at full-flavor young adult smokers. The revolutionary Filter Plus line targets consumers who want an ultra light product with improved flavor. New enhanced menthol variants are directed mainly at Asia, where the menthol segment is growing. "We are continuing to geographically expand the Wides variants, which we introduced in selected European markets last year. Wides has an unexpected smoothness for a full-flavor product and these different taste characteristics have resulted, not unexpectedly, in slow initial consumer adoption. However, importantly the consumer profile of Wides is on target. "While Wides is predominantly targeted at full-flavor consumers, our second key initiative, called Filter Plus, is aimed at markets where the super and ultra light taste segments are growing. This is an innovative product with unique packaging and a four-chambered filter that adds flavor. "The first market where we have launched Marlboro Filter Plus is Korea, one of the lightest taste markets in the world with a one-milligram segment representing 29% of the total market... We launched Marlboro Filter Plus in the one-milligram segment during the fourth quarter of 2006. It has already had a visible positive impact driving the Marlboro franchise to a historical high and benefiting the other variants. Moreover Marlboro has an excellent profile in Korea with a 16% share of the legal age (minimum age 18) to 24 year-old smoker category. "For other Asian markets, we have developed in response to consumer demand a number of new, innovative, enhanced menthol products to support the Marlboro franchise and expand the menthol segment. Crisp and fresh mint variants were launched earlier this year in Hong Kong, while icy mint is being launched next month in Japan. "Because Marlboro is iconic does not mean it should not evolve. It is important that we continue to ensure that adult consumers retain a high-quality perception of the brand. This is coming through evolutionary refreshments of the main line product and pack." Enditem