NEW YORK -- A variety of findings good and bad came from an exclusive UBS-CSP Daily News survey on the Menthol segment, with retailers reporting little surplus inventory, Newport Menthol showing its staying power, and mixed responses to Philip Morris USA's newest offerings of Marlboro Menthol Black and Marlboro Black NXT.
Retailers were overall pleased by the performance of menthols--especially a manageable surplus inventory on most major menthol brands; 11% of survey participants reported a surplus of Pall Malls; a 16% surplus of Newport Menthol; 19% for Camel Menthol; 23% for Marlboro Reds and 29% for Marlboro Menthol. While one retailer estimated having eight weeks' worth of surplus inventory, most had manageable levels of around 1.5 weeks.
Also making retailers smile is Newport Menthol: an impressive 80% of operators reported sales had not slowed down in recent months, with one retailer commenting that "Newport is on fire in our stores." Another said that Newport Menthol has "a strong brand following, despite the higher price."
Others weren't so enthusiastic, describing Newport sales as stagnant. "Whereas Newport was running up 4%, it is now flat," said one such retailer. Still, many operators were pleased by Lorillard's efforts to keep Newport Menthol sales up, noting that cents off offerings and discounts have helped the product.
If Philip Morris succeeds with Marlboro Menthol Black, Newport may have some additional competition. "Marlboro Menthol Black has taken all of the lost share of Newport Menthol from 2011 to 2012," one retailer said. "It is priced right."
Most respondents, however, were lukewarm on the product, with 42% rating it a five (on a scale of one to 10). While Philip Morris has flooded the market with discounted Marlboro Menthol Black, most retailers doubt the product's ability to perform without such promotions.
"It really only sells when it is on sale," commented one operator. "It rarely sells at regular price." Another retailer predicted Marlboro Menthol Black "would have no legs at all if it was not discounted."
Philip Morris is also looking to take on RJ Reynolds' Camel Crush with its newest menthol product, Marlboro Black NXT. Like Crush, NXT features a crushable capsule that allows smokers to go from a traditional tobacco flavor to a fresh burst of menthol.
Not surprisingly, the majority of respondents believe Camel Crush will be most impacted by NXT's release--although a number of operators predicted it's Marlboro's own products that will lose sales to NXT. "I don't think that it will have that much impact," said one operator of this belief. "It will only pull from another Marlboro."
With Marlboro Black NXT not shipping out until September 26th, retailers will have to wait until then to get a full grasp on the impact the product will have on the menthol market.