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Show The Salt Lake Tribune BUSINESS Thursday,October 9, 2003 R.J. Reynolds revampsfocus on brands Winston and Doral slide: The tobacco companyis responding to lower revenues by promoting Camels and Salems By Pau NOWELL The Associated Press CHARLOTTE, N.C Long established but lately lagging, R.J. Reynolds Tobacco’s Winston and Doral cigarette brands ap pear headed for history's ashtray. When the troubled tobacco company announced last month that it was eliminating 2,600 jobs, it also said it planned to revamp how it marketsits four top brands. From now on, the bulk of RJR’s resources will go into sup porting the Camel and Salem brands. Less money will be devoted to Winston, which was the industry's top seller in the late 1960s and early 1970s, and Doral. “This combination gives [RJR] a single brand focus in both the nonmenthol and menthol categories,” said Lynn Bea- sley, RJR’s president and chief operating officer. The decision by RJR to offer only qualified support for famous brands such as Winston and Doral is one more example of the uncertainty facing Big Tobacco, which has been battered by marketing restrictions, legal costs, competition from discounters and steep new state excise taxes. One branding expert believes RJR’s move is more than just a temporary retreat. “They have no choice,” said Sheri Bridges of Wake Forest University’s Calloway School of Business and Accountancy. “They have limited dollars and they need to put their money where they can get the biggest return.” Bonnie Herzog, an analyst at Smith Barney, said RJR has been trying to support too many ciga- for years and is the only one of the company’s cigarette brands While Camel was an easy se- the brand has faltered over the years,” Herzog wrote. “However, it absolutely makes sense to us that the company needs to have a lection to support, some analysts presence in the very attractive were more surprised with RJR’s decision to put on a marketing press for Salem, which has lost market share, In 1994, the men thol cigarette captured 4.2 percent of the market. Its share is now about 2.5 percent. The “company’s decision to menthol segment.” RJR’s Crosslin agreed. “Some 26 percent of smokers prefer menthol,” she said. In that marketing effort, Salem was repositioned last spring with a new “Stir the Senses” campaign and Crosslin said RJR also focus on Salem took us a was “encouraged” by its share to actually gain market share in recent years. performance since then. little more by surprise given that Crosslin said RJR’s decision to back off from support the Winston and Doral brands was difficult, but not as painful as eliminating thousands ofjobs. “We are making significant changes and we evaluated each decision very carefully. The fact of the matter is we are stepping up to the realities of business. We’re making fundamental changes in the way we do business. The greatest risk would be if we did nothing.” Cruck Burton/TheAssociated Press Finishing touches are put on a sign Tuesday at Lowe's Motor Speedway in Concord, N.C. This will be the last year RJR sponsors the race. SPECIAL THANKS \S F F p e United Way for providing Loaned Executives to United Way of Salt Lake OF SALT LAKE The Mark & Kathie Miller Foundation Newspaper Agency Corporation UnitedHealthcare U.S. Bank of Utah I BRENT PLOWMAN sponsored by The Mark & Kathie rette brands. Miller Foundation “It’s better to be the master of one than a jackof all trades,” she wrote in a report to her clients. Fall from faver: Introduced in 1954, Winston was RJR’s flagship brand for years. For more than three decades, it has been the beneficiary of RJR’s most highprofile marketing effort title sponsorship of NASCAR's toplevel stock-car racingcircuit, the Winston Cup. But its fall from grace was swift and steep. A major marketing campaign based around the slogan “No Bull No Additives” failed to revive a brand that once was the main rival to current in- dustry top-seller Marlboro from Altria Group Inc.'s Philip Morris USA. While the campaign failed to dent Marlboro’s numbers, Winston was outflanked on the cheaper side by deep discount brands, which also have eaten into the market share for Doral, which wasintroduced in 1969 Amid plummetingprofit fore casts, RJR decided to drop the NASCAR sponsorship earlier this year, just one year into a five-year contract. Though therewill be plentyof homage paid to Winston and Winston-Salem-based RJR when the circuit hits Lowe's Motor Speedway in Concord this week end, drivers will race for the Nextel Cup next year Squeeze play: Doral's fate seems equally uncertain “Doral has been pressured and squeezed by both thefuil and the discount-price brands,” RJR spokeswoman Carol Crosslin said. “Cost-conscious adults are trading down to the deep discounts. Doral is a mid priced brand and it can't make as much money.” So far, the decision to alter marketing strategy has drawn praise from Herzog’s peers on Wall Street. Camel, introduced in 1913, has been RJR's best seller These and nine other generous corporations sponsor or loan employees to United Way. Their commitment makesit possible for United Way to developvital resources that address the most critical issues facing people in Salt Lake, DAVID CROSBY Summit, and Tooele counties. loaned by Newspaper Agency Corporation Corporations supporting United Way's Loaned Executive program receive exposure among more than 600 area businesses! And, their employees receive on-the-jobtraining that increases organizational, public speaking, and sales presentationskills. GAIL S. RAPP Employees also gain a thorough loaned by UnitedHealthcare understandingofthe critical needs facing people in our community. Troubled tobacco Youre in Good Company R.J. Reynolds's net income has dwindled overthe past few years When You Support United Way's GR Sales GR Net income loss Loaned Executive program. $3.0 billion 8.0 Call Jason Castor, Campaign Director, 7.0 6.0 5.0 at 801-736-7708 today to learn more. 4.0 3.0 DENISE BRENNAN sponsored by U.S. Bank of Utah 2.0 1.0 0 1.0 ~ $44 mil. 1999 2000 Source. Hoover's Ondine 2001 2002 AP This ad was generously sponsored by Newspaper Agency Corporation. |
