NEW YORK -- Marlboro is the most likely of the Big Three premium cigarette brands to gain share, but it's also the most likely to see negative pressure, according to the latest UBS-CSP Tobacco Survey.
Many of the survey's respondents, representing 55 chains and at least 7,500 stores, attributed both sides of that equation to the controversial Marlboro Leadership Price (MLP) option offered to retailers by PM USA, which asks operators to forgo part of their typical markup in exchange for incentives.
Underscoring this double-pointed edge, one retailer enthused, "We have [image-nocss] seen an increase in volume due to MLP option." While another operator suspected, "MLP will likely provide some short-term gains. I suspect that retailers will revolt and drop off the program."
Still another said the program had "changed things up" in Missouri. "Not many retails have taken the MLP program because margins were close to if not over 20%. We don't see Phillip Morris having many promotions with non-MLP accounts."
Overall, 47% of retailers expected Marlboro to gain the most share, followed by Newport, 30%, and Camel, 21%. UBS tobacco analyst Nik Modi wasn't surprised by those results, nor was he taken aback that 41% of the retailers said Marlboro is also seeing the most negative pressure (followed by Newport, 33%, and Camel 24%).
"Of course, the biggest player is going to have the most pressure," he told Tobacco E-News, companion newsletter to CSP Daily News.
But Modi's biggest surprise wasn't the mixed opinion on Marlboro, but rather the optimism surrounding another brand. "What I found interesting was that, compared to previous surveys, the sentiment on Newport Non-Menthol, and just Lorillard in general, is really improving."
Modi attributes the fact that 33% of retailers expect the total Newport brand to gain share, compared to 22% in the December 2009 UBS-CSP Survey, to the company's non-menthol foray last year. About 61% of respondents said Newport Non-Menthol sales have improved since its initial launch last November.
The question is whether some of its growth is owed to price discounts. "Lorillard non-menthol increases every month, time will tell with recent price increase," one retailer said.For more on the tobacco category,click here to subscribe to Tobacco E-News.
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