Altria Group Earnings Call Insights: The Marlboro Architecture and Promotional Spending

Altria Group Inc. (NYSE:MO) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

The Marlboro Architecture

Nik Modi – UBS: So, just a quick question on the Marlboro architecture. I guess now that’s been in place for a year and you saw some pretty good retail share gains with pricing improving, just curious if there is any diagnostics that you have or you share giving us some insight on how effective this has been, so we can think about next year and the years after in terms of some of the benefits you’ll get from this initiative.

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Martin J. Barrington – Chairman and CEO: Sure, we have diagnostics, some of which were internal and some of which we talk about in settings like this. I think you’ve already alluded to one, which is the – we had nice share gain, which is consistent with PM USA’s objective to maximizing comp up trying to keep Marlboro healthy. We have a diagnostic, Nik, on resetting retail, one of our objectives during the year was to try to get a number of retail stores reset to better reflect the Marlboro architecture and I think our sales and distribution group did an excellent job of doing if you’ve been in stores I think you’ve seen the improvements that have been made on the presentation of the Marlboro brand at retail. But at the end of the day, it’s always about that balance about trying to maximize income, while taking the steps that are appropriate to make sure that Marlboro is healthy over the long-term and we’re very pleased with how PM USA executed on that this year.

Nik Modi – UBS: Marty just a quick follow-up to that, I don’t think I remember two quarters in a row were Marlboro has gained this much market share, which is quite a feat given how big the brand is and just philosophically you said you want to maintain market share momentum and optimize income. Would it be crazy to think that this is just too much share gains for a brand of that size?

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