Marlboro Brand Hurt by California's Cigarette Tax Increase, Altria Says
October 26 2017 - 1:49PM
Dow Jones News
By Jennifer Maloney
California's $2 tax increase on cigarettes in April was a "big
shock to the system" that continues to weigh on Marlboro's market
share in the U.S., Altria Group Inc. said Thursday.
Marlboro, the leading U.S. cigarette brand by sales, captured
43.2% of the market in the third quarter, down from 43.5% in the
previous quarter and 43.6% in the first three months of the year.
Because of Marlboro's outsize share of the California market, at
more than 50%, the brand was particularly sensitive to the tax
increase, Altria Chief Executive Marty Barrington said on a call
with analysts.
New products introduced by competitors also made a dent, he
said, adding that he expects the decline to stabilize. "But it's
going to take some time," he said.
Cigarette price increases, which for years have offset falling
sales volumes for U.S. tobacco companies, didn't fully make up for
the drop in Altria's cigarette sales in the quarter.
Revenue for its smokable products fell 2.8% while volume fell
6.2%. Nevertheless, profit on Altria's smokable products, including
cigarettes and cigars, increased 7.7%, boosted by cost cuts, and
their adjusted profit margin expanded 4.5 percentage points to
52.2%.
To stabilize Marlboro's market share, Mr. Barrington said, the
company is reallocating marketing resources and adjusting
promotional programs. Altria also said it targeted California and
Washington state in its recent launch of Marlboro Black Label, a
matte-packaged line of Marlboro cigarettes.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
October 26, 2017 14:34 ET (18:34 GMT)
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