RICHMOND, Va. -- Altria Group Inc. is expecting Copenhagen Wintergreen, its new smokeless product variety, which started selling in stores across the country this month, to have a big impact, reported The Richmond-Times Dispatch. It is only the fifth product in Copenhagen's 187-year history.
(Click here for previous CSP Daily News coverage.)
Altria chairman and CEO Michael Szymanczyk told the newspaper that he believes the new product could help Altria carve out another 8% of the growing market for smokeless tobaccoone of the fastest-growing lines in the nation's convenience stores, with a 7.7% rise last year on the heels of a 6.2% increase the previous year.
Based on revenues after this spring's 62-cent-a-can price cut, each percentage point of market share translates to about $25 million a year in revenue, a Times-Dispatch analysis of Altria's financial filings suggested.
"Smokeless is clearly very important to them," Steven F. Marascia, director of research at Capitol Securities Management Inc., Richmond, told the newspaper.
U.S. Smokeless Tobacco, which Altria acquired this year for $11.7 billion, long had wanted to move Copenhagen into the wintergreen-flavored segment, the biggest part of the smokeless market, said the report. But the company felt it could not get the flavor quite right. It was after the acquisition, working closely with the tobacco-flavoring experts at Altria's Philip Morris USA cigarette business, that U.S. Smokeless felt it had found the right taste, Altria spokesperson Bill Phelps told the paper.
There is always a lot at stake when a company modifies a brand like Copenhagen, which has intensely loyal followers, Harold Price, who owns four Richmond-area Cigarettes Unlimited stores, told the paper. He added that he is a little worried that offering a wintergreen variety could undercut an image based so strongly on tradition.
Copenhagen's 23% market share closely trails sister brand Skoal.
"Cope users are very loyal, though they will buy others' wintergreen occasionally just for a change of pace," he said. "They like [the new Copenhagen]. Other wintergreen dippers saw it and said they wanted to try it because it is Copenhagen."
Making sure that idea got through was a top marketing priority at Altria, the report said. That is why the can still is fiberboard with a metal top, instead of the plastic other firms use. The lettering on the can still is the stately serif-footed style Copenhagen has used for decades.
Every store is differenteven among Price's own four. In two, the new Copenhagen Wintergreen sold out, and he had to reorder quickly. In the other two, the new variety was slower to take off. Generally, though, Price said he thinks the new brand will win new customers. "In the moist smokeless area, Copenhagen is the gold standard," he opined.
The new product was the first launch of a smokeless product for the company's newly formed Altria Sales & Distribution operation.(Click here for previous coverage.)
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