"With this new organization comes the same professional sales service you've always received from Philip Morris USA, now covering cigarettes, cigars and smokeless tobacco products," Altria Group chairman and CEO Michael Szymanczyk said in a speech earlier this year. "Altria Sales &[image-nocss] amp; Distribution is focused on helping you identify and uncover new opportunities and strengthen your business in multiple tobacco categories."
Altria Sales & Distribution Services was created by combining the sales forces from PM USA and U.S. Smokeless, according to Szymanczyk. The new entity serves all three tobacco companies with an organization the size of PM USA's sales force before the UST integration. "We expect this new organization will provide increased retail-store coverage and better execution at retail, including improved product freshness, better merchandising and more-effective management of promotions."
Richmond, Va.-based Altria Group would not share any details of the new business unit beyond sharing Szymanczyk's earlier comments; however, details of the service are available to "participating retailers" at Insightsc3m.com, the company's new "category-management resource." Among things available on the website are: Downloadable Altria Sales & Distribution payment details to the store level. PM USA Price Promotion information specific to retail stores. PM USA Product Promotion details for retailers. 24/7 access to tobacco category news and other information to help retailers responsibly merchandise cigarettes.
(Click here to visit the website's introduction page.)
Although Altria did not mention how much the combining of the sales teams will save the company, in a quarterly earnings call in April, Szymanczyk noted that USSTC had already relocated its corporate headquarters to Richmond as part of the effort.
"We plan to absorb substantially all of the costs related to the integration of UST in 2009 and remain on track to deliver an estimated $300 million in integration cost savings," he said. "Across the Altria family of companies, we achieved $140 million in cost savings in the first quarter. Altria expects to achieve approximately $720 million in additional cost savings by 2011, bringing the total projected cost reductions to $1.5 billion versus the 2006 cost space."
As for the rest of Philip Morris USA, U.S. Smokeless Tobacco Co. and John Middleton, Szymanczyk said, "Today, in our total tobacco business model, our three tobacco operating companies will focus primarily on two things: brand management and manufacturing. These businesses share similar trade and distribution channels, and some adult consumer overlap, allowing us to leverage services across all three businesses."
Altria Group purchased John Middleton Inc., a manufacturer of cigars, in December 2007. It purchased UST Inc. this past year.
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