Philip Morris Cos. will invest $350 million to promote and market its premium cigarette brands at retail. It plans to increase promotional spending on its four focus brands, Marlboro, Parliament, Virginia Slims and Basic in an effort to continue to improve their share performance.
Market share for the company's four primary cigarette brands rose 0.2 points in the quarter, fueled by retail share growth of Marlboro and Parliament. Philip Morris' promotional support for these key brands decreased in the second quarter, compared to the same period last year. This, coupled with retailers heavily buying Philip Morris brands before the company's April 2002 price increase, led to a 13.8% decrease in shipment volume.
The domestic tobacco unit remained a money-maker. Operating income for the unit was up 5.1% to $1.5 billion from $1.4 billion in the second quarter of last year, despite the unit's 4.4% decrease in net revenue to $4.9 billion from $5.1 billion.
Combined net earnings for Philip Morris' tobacco, food, financial and beer units in the second quarter were up 14.1% to $2.6 billion, or $1.21 per share, from $2.3 billion, or $1.03 per share, in the year earlier period, and net revenue increased 1.5% to $21.1 billion from $20.8 billion last year.