WINSTON-SALEM, N.C. -- R.J. Reynolds Tobacco Co. is rolling out a new style of Camel cigarettes aimed at female smokers attracted to the brand, but put off by its masculine imagery, reported The Winston-Salem Journal.
Reynolds begins with two styles of Camel No. 9nonmenthol packaged in a black-and-fuchsia box and menthol packaged in a black-and-teal box, said the report. The cigarettes will have a white bottom.
Camel No. 9 is expected to arrive in stores by mid-February, although some local convenience stores already have the [image-nocss] packs, Reynolds officials told the newspaper.
It is not only the first Camel style focused on female smokers, but also the first such product among the three dominant brandsCamel, Marlboro and Newportfavored by male smokers, according to analysts cited by the report.
The feedback we've gotten from female smokers is that Camel is a great brand and they like the fun and irreverent attitude, but there wasn't really a product that spoke to them, Todd Holbrook, the senior director of marketing for Reynolds, told the paper. That feedback eventually led to the development of Camel No. 9. We chose the name because it is easy to say and because it has a cloud nine' feel to it.
Reynolds has had mixed results with targeting specific consumers with cigarette brands and styles, the report said. In 1989, the company planned to introduce Uptown, a milder menthol cigarette aimed at black smokers. But protests by black leaders and health officials, specifically in Philadelphia where a test market had been planned, prompted the company to drop the brand by January 1990.
Reynolds does not expect that Camel No. 9 will dampen the overall brand's appeal among male smokers. Male smokers seeing the product for what it is, designed for female smokers, and they say it should have done it years ago, Holbrook said.
Over the years, Camel had made some headway with female smokers, primarily with its light cigarettes, said the report. According to Holbrook, female smokers make up about 30% of Camel customers compared with 40% of Marlboro and 50% with Newport. That's why we believe Camel No. 9 represents a huge business opportunity in gaining incremental market share with female smokers, he said.
Holbrook said that Reynolds is not concerned about Camel No. 9 cannibalizing sales of Camel's light-cigarette styles. If a Camel light smoker sees No. 9 and she thinks it is even better for her than what's she smoking, that's a good thing for us because it's making a current franchise smoker feel even better about the brand, he said.
Michelle Roehm, an associate marketing professor at Wake Forest University, said that Camel No. 9 appears to be a solid marketing strategy for appealing to female consumers. We show our openness to male products when we decide to wear our husband's or brother's sweatshirts and baseball caps, and occasionally borrow their razors in the shower, she told the Journal. . But she cautioned that when she raised the Camel No. 9 concept with a class of MBA students, many thought that the strategy could be a big risk because it might irritate core male Camel users.
Pat Shehan, the owner of Tarheel Tobacco in Winston-Salem, said he has got plenty of calls from female consumers about Camel No. 9 since his stores began advertising the cigarettes last month. It will serve as a point of differentiation for Reynolds and Camel with the macho brands, Shehan told the paper.
Reynolds has always been a very innovative company, and Camel No. 9 seems like a great brand to attract the female smoker with its catchy packaging and attractive magazine advertisements, Citigroup analyst Bonnie Herzog wrote in a separate report.
She added, The menthol market continues to be very attractive during the fourth quarter. The menthol category has been one of only a few tobacco categories where volumes remain fairly strong.
Our retailer and wholesaler respondents estimate that the menthol category increased by around 3.5% during the fourth quarter compared with the year ago period. Obviously this is impressive considering we estimate that the overall cigarette industry volume declined by around 2% during the quarter. Also, the majority of retailers and wholesalers indicated that Newport volume either increased (34%) or stayed the same (47%) during the fourth quarter versus last year and this is in light of much lower levels of spending on the brand.
Therefore, it certainly appears clear that Lorillard has struck the right balance between profitability and volume/market share growth, which is encouraging; however, it appears that wholesalers and retailers remain skeptical about Lorillard's ability to maintain this level of promotional support and keep increasing volumes, as 59% of retailers and 45% of wholesalers believe Lorillard's level of promotional spending will need to change soon for Newport to maintain its dominance in the growing menthol segment.
Additionally, Lorillard's Newport brand will now have to deal with increased competition in the menthol segment with the introduction of PM USA's new menthol brand Marlboro Smooth, which received solid reviews from our industry contacts. In our survey, 64% of retailers and 58% of wholesalers believe Marlboro Smooth will take share in the menthol category, and most survey participants believe that PM USA with a price reduction to gain share. We also asked our trade contacts what brand they expect will lose the most market share to the new Marlboro Smooth, and it was interesting to note that while 53% of retailers and wholesalers believed Salem would suffer from Smooth's entrance, 53% of retailers and 42% of wholesalers also believed that Marlboro Menthol would stand to lose market share.
If indeed our trade contacts are correct, and Marlboro Menthol stands to lose the market from the entrance of Smooth, PM USA will unfortunately be cannibalizing its own brands.
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