Philip Morris USA

Philip Morris USA : advertising & marketing assignments

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Philip Morris USA is America's dominant tobacco company, and the biggest business within what is now investment umbrella Altria, previously the diversified congflomerate Philip Morris Companies. PM USA experienced severe erosion of its sales in the early 2000s following a flood of discounted "no name" cigarette brands from rival manufacturers, but it had recovered most of that lost ground by the end of the decade, and since then PM USA's market share has remained stable at around 50%, even as the market itself has been steadily shrinking. Lead brand Marlboro still alone accounts for at least four out of every ten cigarettes sold in the US, more than the next ten largest brands combined. PM USA's other brands include premium Parliament and Virginia Slims, and discount L&M. Total volumes were almost 117m cigarettes in 2017, down 5% on the year before. The group is also involved in developing a range of "heat-not-burn" tobacco products. It is partnered within Altria by a collection of smaller smoking-related business, including John Middleton, makers of Black & Mild cigars; US Smokeless Tobacco, which markets snuff and Scandinavian-style snus under the Copenhagen and Skoal brands; and Nu Mark, makers of the MarkTen and Green Smoke vaping brands. In 207, the group acquired premium cigar manufacture Nat Sherman. KC Crosthwaite is CEO of Philip Morris USA. Tobacco-related products accounted for 97% of Altria's revenues in 2017; $16.7bn after excise from smokeable products and $2.0bn from smokeless. It remains an immensely lucrative business, with profit margins of more than 40%. Philip Morris was originally a London tobacconist who started to make his own cigarettes in 1854. After his death the business continued to prosper, and went public, establishing a first presence in the US in 1902. It was acquired by an American syndicate in 1919 and did well during the Great Depression, though it remained a marginal force at best compared to leading manufacturers RJ Reynolds and American Tobacco. The big change came with the staggering success of Marlboro during the 1950s. Almost entirely as a result of the success of that brand, Philip Morris rose from being the #6 cigarette company in the US to the #1 worldwide by the early 1970s. Subscribers may access account assignments and contact information. The searchable account assignments database is available to full subscribers to premium services. Click here to access Adbrands account assignments (subscribers only); or see here for information on how to subscribe.

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Capsule checked 11th May 2018

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 Adbrands Weekly Update 17th Jul 2014: US tobacco companies Reynolds American and Lorillard agreed terms for a merger to create a stronger rival to local leader Altria, whose Marlboro brand still dominates the sector with more than 40% market share. Other brands contribute to Altria's total share in 2013 of just under 46%. Currently, #2 player Reynolds is some way behind at 24.7%, from products such as Pall Mall and Camel, but its share has been in slow decline for several years. Third-ranked Lorillard, on the other hand, has been growing because of the popularity of its menthol brand Newport, now the second best-selling cigarette after Marlboro. In 2013, its market share rose to 13.6%. Under the deal unveiled this week, Reynolds would acquire Lorillard for around $27.4bn in cash and stock. In order to ease regulatory concerns over the reduction of competition in what is already a highly controversial sector, Reynolds and Lorillard are also offering to divest several brands. Much smaller Imperial Tobacco, maker of discount brand USA Gold, has been lined up to acquire Reynolds' Winston, Salem and Kool brands, as well as Lorillard's Maverick and top-selling Blu e-cigarette brand, for around $7.1bn. That would reduce Reynolds/Lorillard's combined share to a little over 35% and lift Imperial to over 9%. At the same time, British American Tobacco, the largest shareholder in Reynolds, is investing $4.7bn in order to maintain its 42% holding in the merged group. The extraordinarily complex deal will require the approval of three sets of shareholders and is also likely to entail a long regulatory investigation.

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