Ex best-seller resurges shaking cigarette market
In order to cope with declining sales, R.J. Reynolds Tobacco Co. used innovative marketing strategy to restore to life a cigarette brand with a 110-year-old history.
Industry experts admit almost doubling of Pall Mall’s share within the last year to 4.24 percent market share could ultimately impact on Marlboro – the nation’s best-selling cigarettes.
Reynolds obtained Pall Mall bran five years ago after the acquisition of Brown & Williamson Tobacco Corp.
According to analysts, Pall Mall’s rise is easy to explain as RJ Reynolds simply provided customers with a high-quality and inexpensive products and convinced them to remain with that brand when the prices went up back.
Reynolds decided to lower the prices of Pall Mall in the spring, the move which captured many smokers eager to cut expenses on cigarettes during the economic downturn. The wise strategy led to doubling Pall Mall’s share, which rose to 5.2 percent in the second quarter.
And when the discount program closed in the summer and prices went up to cover taxes, Pall Mall still retained an increased market share in comparison with the same period last year.
In contrast, the sale volumes of the three leading cigarette brands – Marlboro, Camel and Newport, remained even in the second quarter, as it was reported by Inc./Capstone, a company dealing with researches in the US tobacco market.
The president of Reynolds American, Daniel Delen said that Pall Mall has been a premium quality cigarette with a great aftertaste and nice price, and those three features are the components of a major success in current economic environment.
He added that the discount campaign that coincided with April’s tax rise, has received a huge feedback from adult smokers, who revised their preferences adjusting to new prices.
Three years ago Reynolds revealed their latest marketing strategy making Pall Mall along with flagship Camel the principal brands, meaning that they would be the objective of excessive marketing efforts. Since that time, Pall Mall’s market share increased from 1.86% to 4.9%.
Reynolds spokesman David Howard as well mentioned the company’s investment in other tobacco products like Grizzly, the top-selling snuff brand in America and Camel Snus, which contributed to the increase of overall market share of RJ Reynolds.
Tony Kane, the owner of Tobacco Paradise in Charlotte says he thinks that altering prices helps Reynolds to move market share from Doral to Pall Mall.
Kane said that when Reynolds started discounting the brand it was the least expensive brand in the mainstream class, what didn’t come unnoticed by blue-collars and other customers who mainly prefer discount brands.
Kenneth Floam, a Morgan Stanley tobacco industry analyst said that he recently lifted the profits forecast for Reynolds American because of market successes of Camel Nr. 9, Pall Mall and Grizzly, the top-selling smokeless product manufactured by Reynolds Conwood division.
Flaom even said that the huge success of Pall Mall will likely force Philip Morris to reduce its price on flagship Marlboro to hamper the rise of Pall Mall market share.
The rebirth of Pall Mall is giving the brand, which was a best-seller in the early ‘60s, a chance to capture customers from Marlboro, Camel and Newport, said Morgan Stanley analyst.
The marketing efforts by Reynolds have been astonishing and worthy of great respect, according to analyst, because it is very difficult to resurge an ex-premium brand that was almost forgotten by the consumers.
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