Altria And Philip Morris Consider What Brand To Use if They Merge

Source from:  Wall Street Journal 08/29/2019

As Marlboro makers Philip Morris International Inc. and Altria Group Inc. pursue talks to merge, executives are beginning to wonder what to call the entity that would result.

Executives have discussed that it could be risky to name the company Philip Morris, which they consider too synonymous with cigarettes, according to people familiar with the conversations.

The Altria brand has a better shot, but some believe it already sounds dated and the companies have discussed the possibility of choosing an entirely new name if they merge, the people said.

Both companies get nearly all their revenue from selling cigarettes, but Philip Morris and Altria executives have been open about their plans to focus on alternatives, such as e-cigarettes. A new corporate moniker would help send such a signal to regulators and consumers.

Philip Morris rebranded itself as Altria in 2003, back when it still owned Kraft Foods. The company said the change better reflected the diversity of its portfolio beyond tobacco. It announced a roughly eight-week ad campaign in print, TV, the web and direct mail to spread the word.

Critics called the move a ploy to downplay tobacco’s continued importance at the company. “Changing the name always struck me as you were being a coward about who you really were,” said Robert Passikoff, founder and president of marketing firm Brand Keys Inc.

Philip Morris and Altria representatives declined to comment beyond the companies’ statements this week announcing discussions to merge.

The Philip Morris name has far higher recognition in the U.S., at 76% in surveys by research technology company Morning Consult, than Altria, at 24%. And it is well established around the world.

But it also has far higher negative perception in the U.S.: 31% of consumers have an unfavorable opinion of Philip Morris, compared with 4% for Altria, Morning Consult said.

If the companies are strongly concerned about perceptions of the Philip Morris name, they should conduct new research, said Aaron Hall, group director in the naming practice at brand-consulting firm Siegel+Gale. “Go find out how several thousand people feel about the brand,” he said.

These might seem like academic questions, given that consumers aren’t asked to buy products actually called Altria or Philip Morris. But corporate monikers are becoming more important and consumers are becoming more engaged and informed on company practices, according to Jenn Szekely, managing partner for the U.S. at branding firm Coley Porter Bell.

“In today’s world, people care about the companies behind the products they buy,” Ms. Szekely said.

And parent companies have sought the spotlight more often in recent years, with multibrand giants such as Procter & Gamble and Unilever promoting themselves by name this decade in ad campaigns during the Olympics and elsewhere.

Altria and Philip Morris International split in 2008 partly to insulate operations abroad from legal risk over tobacco in the U.S. The companies hold the same portfolio of cigarettes but divvy up sales between the U.S. and the rest of the world. They are considering getting back together as the legal troubles have abated and cigarette sales slow.  Enditem