Philip Morris USA has One of Worst Market Share Losses in History

The nation’s largest cigarette maker, Philip Morris USA (a.k.a. the Marlboro Man) had a more difficult time in the third quarter, marking one of the biggest U.S. market share declines for Altria Group’s (NYSE:MO) top-selling premium brand in at least four years. Higher prices and gains from its smokeless tobacco and cigar brands helped with a nearly 4 percent increase in its quarterly profit. In anticipation of an industry wide cigarette volume decline, Phillip Morris USA plans an additional $400 million in cost savings by the end of 2013.
Altria (NYSE:MO) has introduced several new products with the Marlboro brand, often with lower promotional pricing, but the company still faces pressure in the current economy from less-expensive brands like Pall Mall from Reynolds American Inc. (NYSE:RAI) and Maverick from Lorillard Inc. (NYSE:LO). Altria (NYSE:MO) is focusing on cigarette alternatives, such as cigars, snuff and chewing tobacco, like other tobacco companies for future sales growth, because the decline in cigarette smoking is expected to continue. The company saw revenue, from its smokeless tobacco brands such as Copenhagen and Skoal and its Black and Mild cigars grow 9 percent and 21 percent, respectively. Other makers, those of Camel, Pall Mall and Natural American Spirit brand cigarettes are getting on board with alternatives saying higher prices, productivity gains and selling more of its smokeless tobacco brands that include Grizzly and Kodiak offset cigarette volume declines of 6.8 percent.
“Lorillard, the nation’s No. 3 cigarette maker, said Monday its net income fell nearly 3 percent as higher costs offset selling more cigarettes at higher prices. It sold about 3 percent more cigarettes on gains on its Newport and its low-priced Maverick brand,” according to Yahoo Finance.