RJR Retools Its Salem Brand In 'Stir the Senses' Campaign
In 2001, Andrew J. Schindler, chairman of R.J. Reynolds Tobacco Holdings, took a radical step. He pulled the plug on advertising for the company's flagship menthol cigarette, Salem.
Sales of the 46-year-old brand were sliding amid stiff competition from rival brands including menthol-market leader Newport, made by Lorillard Tobacco. And Mr. Schindler sent his marketing team back to their drawing boards.
What they have come up with is a broad retooling of the brand. Starting next year, the cigarettes will sport new names, Salem Black Label and Salem Green Label, revamped packaging, and a slick print campaign that promises a smoke that will "stir the senses."
The question is: Will all the changes be enough to stir sales?
The competitive environment is tough. The market for cigarettes flavored with menthol -- a minty-tasting extract also used in cold medicines and salves -- is dominated by Lorillard, a unit of Loews, of New York, and its Newport brand, which accounts for more than 8% of all U.S. cigarette shipments, up from 6.5% in 1997.
All the big cigarette makers are trying to enlarge their share of menthol sales. Menthol cigarettes account for about 25% of all the smokes sold in the U.S. They are disproportionately popular with African-Americans.
Philip Morris has been muscling its way in with menthol versions of its top-selling Marlboro brand. British American Tobacco's Brown & Williamson unit has been promoting its Kool menthol brand with newly redesigned packs and ads that link the brand to house music, an urban dance genre. Through the first nine months of the year, Kool accounted for 3.1% of all cigarettes shipped in the U.S., down from 3.4% in 1997.
Newport's continued market-share gains have come despite unprecedented turmoil in the U.S. cigarette market. Major tobacco companies have been forced to cut prices to beat back inroads by small makers of bargain-basement smokes. But Lorillard has been able to boost Newport's share while offering smaller discounts than makers of some other premium brands.
The market upheaval has hit Reynolds hard. The company has twice lowered its 2002 profit estimates and, earlier this month, said it would cut its work force by 8% in an effort to reduce costs. Reviving sales of Salem would obviously help. In the first nine months of 2002, Salem accounted for 2.4% of cigarettes shipped in the U.S., down from 3.5% in 1997.
The new Salem campaign will focus on the cigarettes' taste. The Green Label cigarettes have more menthol flavor than the Black Label, which have a "richer tobacco flavor," according to Ronda T. Plummer, the marketing vice president who oversees Salem. "We want to make that distinction clear and build on it." A planned ad proclaims: "One world. Two sensations."
The print campaign, devised by Philadelphia agency Gyro Worldwide, represents an effort to "visualize the sensation" that menthol gives smokers, Ms. Plummer says.
The company won't disclose spending plans. Preliminary versions of the ads, which will start appearing in magazines in the second quarter of 2003, are suffused with a neon green glow. One shows a swirling green galaxy against a black sky that is reflected in a man's sunglasses.
As the promotional efforts start, distribution for Salem Black Label will be expanded, says Ms. Plummer. Those cigarettes are now sold only on the East Coast. The Green Label styles are already sold nationally. "We think this really does carve out a distinct space for Salem," says Ms. Plummer.