Question-and-Answer Session
Operator
Thank you. The question and answer session will be conducted electronically. (Operator Instructions). And we will take our first quarter from Judy Hong with Goldman Sachs.
Judy Hong
Thanks. Good morning everyone.
Susan Ivey
Good morning Judy.
Thomas Adams
Good morning.
Judy Hong
Susan, I was wondering to start with just if you could provide with some perspective on industry consumption trends for cigarette and then down trading, its sounds like a down trading, it’s still only pretty modest and maybe limited to 13 to 14 state that you alluded in the past, is that the case and then just in terms of the overall consumption what you are seeing there?
Susan Ivey
Sure Judy. We see the industry decline this year about 3.5% it’s been very stable the last two quarter. As you infer there is modest growth in the non-big three as we talked they are up about 0.4 share points year-over-year. We saw a little bit of growth in that sector in the second quarter, it’s a little bit down actually in the third, but year-over-year its up about 0.4 and a little bit of softness in the premium segment but very, very small. So there is no runaway growth but it is certainly focused on the 13 states that we have talked about before primarily in that Southeast corridor.
Judy Hong
Okay. And then, Susan, you strategy in the menthol segment, you pointed out that menthol continues to be a share of the overall market, you are moving Kool to the non-growth plan and with Camel Menthol really being the core menthol brand that brand is still 1.4% share of the growing menthol segment. So I mean it seems like you may be for the time being a little bit underrepresented in the growing segment within cigarette. How can you be a more meaningful player in this more important segment?
Susan Ivey
Yeah, thanks Judy, I mean, first I think it's important to recognize that Kool is new to the support brand category. So it will receive price support, and therefore it will continue to be a key contributor. But as I would express before our research has shown that we have more growth potential in Menthol with Camel, we are very encouraged by the early (technical difficulty) Camel Crush. Camel Crush is performing very well in its national rollout. Although it's early days. And we have also continued to see growth in Camel's core menthol styles. So I believe that our strategy focusing on premium menthol with Camel and continuing to innovate in that category will be successful.
- To read the full transcript on Seeking Alpha, click here »
