Imperial's 'Big' Jump to No. 3 in U.S.

Chief executive outlines strategic plans for Reynolds-Lorillard acquisitions

Published in CSP Daily News

By  Melissa Vonder Haar, Tobacco Editor

Cooper added that the brand has already proven that, when given the proper attention, it can be a dominant player. Outside of the U.S., the brand is owned by JTI, which has increased volume by more than 100 billion cigarettes over the past 10-plus years, making Winston the world's No. 2 brand.

"It has strong residual-brand equity with consumers, a great quality perception and is widely recognized," said Cooper. "What has been lacking is focus, investment and clear and consistent positioning ... and that is what we can put right."

Imperial intends to compliment Winston with either KOOL, Maverick or USA Gold on a state-by-state basis. Cooper said that Salem "will be largely run for cash in line with our existing portfolio strategy."

"We have a plan ready for execution on day one that has the portfolio clearly segmented into primary and secondary focus for each individual state, with appropriate investment allocations," she continued.

As valuable as inheriting three top-10 cigarette brands might be, it's perhaps Imperial's acquisition of blu that could cause the most shakeup within the industry; with 45% of the U.S. retail share, blu is the clear industry leader of the more than $1.5-billion electronic-cigarette industry.

"This gives us immediate leadership in e-cigarettes with the No. 1 brand in the U.S., and it has great international growth potential," Cooper said. "[blu] is a strong brand franchise, and it's recognized that Lorillard has done a great job at building the brand in what remains a highly fragmented market."

She said that blu would nicely compliment Imperial's existing e-cigarette business, The Netherlands-based Fontem Ventures.

"It is a rapidly evolving market where consumer interest and trial has possibly run ahead of the ability of the technology to deliver consistent consumer satisfaction," said Cooper. "But that is what provides us the opportunity in future."

Besides the cigarette and e-cigarette brands, Imperial will be landing Lorillard's established infrastructure within the United States, something Cooper said would be key in expanding the company's presence from 19 states to all 50.

Most notably, former Lorillard CEO Marty Orlowsky will immediately take on the title of executive chairman designate over Imperial's expanded U.S. business, overseeing the upcoming transition.

"In management, Marty, together with senior resource from Imperial, will lead the integration, preparing for the combined business to get going immediately once the transaction completes," Cooper said. "Beneath him, we will have access to management formerly at Lorillard. Within sales, we will significantly add to our capabilities as we assimilate an experienced and proven team. The combination of the assets being acquired, together with Commonwealth-Altadis, will give us strength in management, in sales force capability, in manufacturing and in infrastructure."

Cooper expressed confidence that this more powerful and experienced sales force, combined with a more complete portfolio, would be more appealing to consumers and provide "critically far more relevance" for retailers.

"We will now be more important to retailers nationally and to more key accounts," she said. "More sales visits and better account coverage will help us achieve a more significant share of voice, meaning greater shelf space, merchandising and point-of-sale presence. Overall, we will have greater retail influence."

"Behind all of this, we will create a team which will be made up of the best of both organizations, a team with strong relationships with both the brands and the customers," Cooper said. "A well-planned and well-executed integration process will mean that we hit the ground running."

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