Marlboro Rebate Cut 50 Cents

Philip Morris scales back promotional allowances

Published in CSP Daily News

RICHMOND, Va. -- Most retailers in Philip Morris USA's Retail Leader program will be getting less back from the country's biggest cigarette producer beginning today. The cigarette giant has quietly been letting retailers know they are reducing by one-third the retail promotional allowance on two of its biggest brandsMarlboro and Basicfor a majority of the Retail Leader members.

What we have done is reduced the current Reward Fund promotional allowance offered as part of our Retail Leaders program on certain segments of that program, Peggy Roberts, senior [image-nocss] director of communications for PM USA, Richmond, Va., told CSP Daily News. For Retail Leaders at the second, third and fourth levels, the total promotional allowance on Marlboro and Basic will be reduced by 50 cents per carton from $1.50 to $1, or 5 cents per pack.

Retailers at the first level, which is generally retailers with the lowest volume of cigarette sales, do not receive an allowance, Roberts said. The reduction will not affect the 55-cent-per-pack off-invoice wholesale promotional allowance.

When asked why the change, which includes cartons and packs already on retailers' shelves, was being made, Roberts said, We're continuously looking at the marketplace to determine the proper level of promotional spendingkeep in mind, this is commercial spendingto achieve our business objectives, and we felt this was the appropriate move at this time.

Roberts said retailers were likely being informed of the change by their PM USA sales representatives.

Retailer Sam Turner of Dalton, Ga.-based Favorite Markets said his understanding was that the change was temporary until the tobacco company decided on further promotional changes. Roberts would not confirm that.

Turner, however, said he will do what he has to in order to keep his profit margin the same. We're raising our price a nickel [per pack], so it's not going to matter to us, he said. If they're going to play the game that way, we're going to pick up the difference.