marlboro cigarettes

Altria Group Inc.’s Philip Morris USA is introducing a new menthol version of its Marlboro cigarette this week that will compete with Lorillard Inc.’s Newport and Reynolds American Inc.’s Camel Crush.

The cigarette, called Marlboro Blend No. 54, has a “richer, bolder” flavor than Philip Morris USA’s regular Marlboro menthol and Marlboro Smooth menthol cigarettes, Greg Mathe, an Altria spokesman, said by telephone today.

Retailers and distributors began receiving shipments on June 17, according to an information sheet distributed to wholesalers and confirmed today by Bill Phelps, another spokesman for Richmond, Virginia-based Altria. It’s the first new Marlboro menthol cigarette since 2007.

Tobacco companies are pursuing menthol sales, which account for a growing share of the shrinking cigarette market. Reynolds, the second-largest U.S. tobacco company after Altria, has introduced products such as Camel Crush, a cigarette that contains a menthol capsule in the filter that provides flavoring when compressed.

“If Altria wants to obtain more market share, it has to expand where the consumer has shown a preference,” Thomas Russo, who manages $2.5 billion of assets at Gardner Russo & Gardner, said in a telephone interview. Menthol is “the only territory where Altria can probably hope to gain share from other brands.”

Gardner Russo & Gardner, based in Lancaster, Pennsylvania, owned 6.9 million Altria shares as of March 31.

Marlboro Blend No. 54 follows Philip Morris USA’s introduction of Marlboro Smooth in March 2007, Phelps said.

‘Modern, Contemporary’

“We saw consumers respond” to Marlboro Smooth, said Phelps. A “small” sampling of adult smokers in December described the new cigarette as “modern” and “contemporary,” according to the wholesaler information sheet.

The company won’t discuss how it creates different flavors and it won’t comment on how the new cigarette compares with rivals’ menthol offerings, Mathe said.

Altria advanced 3 cents to $16.41 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have risen 9 percent this year, compared with a 23 percent gain for Lorillard and a 6.3 percent decline for Reynolds.

Philip Morris USA trails Lorillard in the menthol category and is using promotions to increase initial deliveries of Marlboro Blend No. 54.

Cigarette Promotion

To spur distribution to retailers, wholesalers that ship the cigarette to more than 90 percent of their retail customers between June 17 and July 4 will get $5 per store, according to the information sheet. Retailers will receive $2 for each pack of the new cigarette they sell through July 26.

On average, a pack of Marlboros sold for $4.50 in the first quarter.

Hannah Sloane, a Lorillard spokeswoman, declined to comment.

“Certainly the industry recognizes that menthol in the cigarette category is a growing segment,” David Howard, a spokesman for Reynolds’s R.J. Reynolds Tobacco Co. unit in Winston Salem, North Carolina, said today by telephone. He declined to comment on Marlboro’s new cigarette.

Reynolds makes Camel in menthol and non-menthol varieties.

Manufacturers shipped about 100 billion menthol cigarettes last year, or 28.6 percent of the total U.S. market, according to the Web site of Greensboro, North Carolina-based Lorillard. Menthol’s share has advanced for four straight years from 26.4 percent in 2004, according to the Web site.

Menthol Market

Total U.S. cigarette shipments dropped 3.4 percent last year, said Lorillard, the third-largest U.S. tobacco company. It says on its Web site it’s the biggest in menthol cigarettes with its Newport brand accounting for 33.7 percent of shipments in 2008. Marlboro’s menthol market share is about 18 percent, Phelps said.

Philip Morris USA makes about half of the cigarettes sold in the U.S. It relies on Marlboro, the top-selling cigarette, to drive profit and market-share gains.

Altria anticipates 2009 profit will increase to $1.70 to $1.75 a share from $1.65 last year, Chairman and Chief Executive Officer Michael Szymanczyk said last month.

Todays Notice: Rothmans extra resources.