• 22.12.2012 Berryville Bust Part Of $33M Cigarettes Sting

    A Federal Grand Jury sitting in the United States District Court for the Western District of Virginia in Harrisonburg has indicted dozens of individuals for conspiring to traffic in contraband cigarettes, money laundering and a variety of related charges.The defendants were charged by the grand jury in four separate indictments returned under seal on February 17, 2011, August 3, 2011 and October 6, 2011. Those indictments were unsealed earlier this week following the arrest and initial court appearances by the defendants.The charges are the result of a three-year investigation by the United...

  • 20.11.2012 Covenant Kicks The Habit

    Amy Olson-Yarbrough was tired of being a prisoner to tobacco."I decided I didn't want cigarettes to control my life any more," Olson-Yarbrough said. "When you're a smoker you have to figure out where you're going to be able to smoke cigarettes next, how long until my next cigarette, how am I going to hide it from my kids . . ."So, on Nov. 23, 2010, Olson-Yarbrough - a pack-a-day smoker who had been at it for close to two decades - quit smoking cigarettes.Now, Olson-Yarbrough can't stand anything about it."The smell of buy cigarettes really nauseates me," she said. "I'll never go back to...

  • 18.10.2012 No-smoking Policy For New Hires

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  • 09.09.2012 California Court Approves 16:1 Punitive Damage Award

    Corporate America has pushed hard for years to hold the line on punitive damages, with some successThe Supreme Court has ruled that excessively high punitive damage awards, designed to punish defendants for particularly egregious behavior, can violate the Due Process clause. And the California Supreme Court had held that punitive damages typically should not be more than nine to ten times the size of damages awarded to compensate injured parties.But in a smoking cigarettes case against Philip Morris, a California appellate court yesterday signed off on punitive damages that were 16 times...

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Since 1994, R.E.E.M.T.S.M.A. has continued to increase A.T.L. spend at over 10% p.a. on discount Davidoff cigarettes which has grown volume at 29% p.a. Davidoff's global sales of 8 bn sticks in 1998 represented 0.15% of the international cigarette market and 34% share in the global super premium segment.

Davidoff cigarette has established a unique selling proposition with a combination of luxury length, beveled edge boxes and charcoal filter in Japan. Davidoff cigarette was the first brand to launch beveled edge boxes worldwide. Key markets are currently Taiwan, China, Germany and Russia. We anticipate that the emerging markets will be Netherlands, Japan and Poland. In the last five years, Taiwan has demonstrated impressive growth rate of 35%, with sales increasing from 1 bn sticks in 1994 to 3.3 bn sticks in 1998. Germany has grown 35% whilst Netherlands and Russia grew at 40% and 135% respectively.

Strategically positioned in the super premium segment, discount Davidoff cigarettes has maintained its pricing for all variants at over 10% above Marlboro. Positioning Magnum as the Image Leading Variant for new market entry, Davidoff cigarette has created its "above all else" super premium image. It provides a destination brand for upgrading from Davidoff Classic cigarettes and Marlboro cigarettes variants. In the dark market environment Davidoff cigarette has invested in T.M.D.'s, Direct Mailing and BTL.

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Successful Davidoff cigarette T.M.D.'s such as Cool Water and Cool life fragrances as well as Davidoff Coffee were developed to create alibi advertising opportunities for the brand. These have made A.T.L. market communication possible even in dark markets such as Germany and Taiwan.

The development of a showcase feeder brand - Zino Davidoff, has indicated the brand's intent to attract ASU30 smokers. Rather than riding on existing brand imagery Zino imagery and packaging appear more ASU 30 oriented. In light of the rapid growth in the Global Super Premium Segment, it is anticipated that Davidoff's growth by year 2002 is likely to be focused on Europe and Asia.

Davidoff cigarettes coupons will be a major competitor for SE555 International and Dunhill International in the future. It is crucial to understand its strategic direction in terms of brand portfolio, market entry strategy and communication platform exploitations in order to implement successful pre-emptive moves with BAT brands.

In light of the growth of Davidoff cigarettes in the global premium segment over recent years, a strategic review of the brand's current performance, global positioning and possible future strategies was conducted. Davidoff cigarette was first launched by Zino Davidoff in 1985. The brand has established a unique brand positioning world-wide. It is a cigar heritage brand priced in the super premium segment. With extensive exploitations of different marketing communication platforms, it depicts a brand world of sophistication, exclusiveness and luxurious. The claim of the brand is to offer connoisseurs supreme pleasure.

Davidoff cigarette is a global rival to SE555 International and Dunhill International in the super premium segment. This brand may be a threat to SE555's positioning in Asia and Dunhill's in Europe. Its target market and consumer segments appear similar to SE555's and Dunhill's propositions.

Since 1997, Davidoff cigarette has overtaken More to become the leading brand in the global super premium segment. Davidoff cigarettes grew from 9% share in 1994 to 24% in 1998 at 8 bn sticks. SE555 International is the only other growth-contributing variant in this segment between 1994 to 1998. SE555 International grew from 1% share of segment in 1994 to 9% in 1998 at 3 bn sticks.

R.E.E.M.T.S.M.A. is likely to further exploit growth in the super premium segment by engineering new brand entries or introducing brand extensions in other super premium markets, e.g. Japan.

In the Global Duty Free Market, Davidoff Classic cigarettes is positioned fourth in the premium segment with 11% share of segment after Dunhill Int'l, 555 Int'l and Cartier. In 1998, the primary source of Davidoff's Duty Free business was Europe, followed by Asia Pacific and Japan. With the abolition of European Duty Free in July 1999, this has resulted in volume lost for Davidoff cigarettes from this market. It is anticipated that R.E.E.M.T.S.M.A. is likely to shift focus to other Duty Free regions, e.g. Asia Pacific, to support their growth in other duty paid markets such as Taiwan.

With the presence of Taiwan, Asia Pacific accounts for 78% of Davidoff's total volume. The region has established a growth rate of 38% for Davidoff cigarettes since 1992. The emerging region is Europe, driven by growth in Russia at over 100% and Germany at 40% over the past five years. Growth In APN Capitalise and further invest on the growth in China, Taiwan and Japan. Rebound strategy for Russia Invest in Russia to regain brand volume when it re-emerges from the economic crisis.

Davidoff cigarette is projected to maintain its market share in Germany, which provides the brand and company with heritage associations. Belgium and Greece are likely to be the secondary markets for expansion in the European markets. Davidoff cigarettes, though not positioned as a brand, has achieved relatively higher share vs market share in all markets except Taiwan.

Davidoff cigarettes smokers are predominantly male skewed except in Russia, where 60% of the smokers are female. The dominant smokers' group across markets is ASU 30 except in Taiwan , where the dominant group is older (30-44). Its ASU30 share is lower than that of Marlboro across all key markets, except in Germany by 2 p.p. In 1998, the focus of new brand launches was in Europe, where new Davidoff cigarettes variants were launched in seven countries. With new brand launches in four countries, Middle East was the second most popular region for brand launch in 1998. In China, over seven variants were launched between 1997 and 1998. These include Classic Slim, F&L, Supreme and Menthol. It seems that this was the strategy employed by Davidoff cigarettes to obtain sales quota from the CNTC.

R.E.E.M.T.S.M.A. has always applied a seeding strategy entering new markets with MAGNUM. Judging from the location of their new brand launches of 1998 in the region, R.E.E.M.T.S.M.A. is inclined to expand in the CIS markets in Europe. BAT should consider seeding these markets with a super premium variant and secure a first mover advantage ahead of R.E.E.M.T.S.M.A. After Taiwan, China is the key priority for R.E.E.M.T.S.M.A. in the Asia region. It is anticipated that further investment will be placed in the Chinese market to secure the super premium price positioning of the brand as the market is going dark. BAT should consider investing in a super premium variant to pre-empt further investment by R.E.E.M.T.S.M.A.

Magnum is always the first variant launch in all key markets. At the time of launch it is priced above the other Davidoff cigarettes variants. King variants are used as second wave launch brands. Priced at super premium segment above Marlboro cigarettes variants and below Davidoff Magnum. The third wave of brand launch often includes Slims and / or Classic Slim, which are launched as extensions to their parent versions. In markets such as China, Greece, Germany and Italy, variants such as, F&L and Menthol have also been launched in this wave. Continue to position Davidoff Magnum as the premium price destination brand and utilize this feeder strategy for future new market entries.

Consider positioning a super premium price destination brand to promote a line extension feeder strategy. This might be particularly useful for dark market entries to the super premium and premium segments. There were not many markets where Davidoff cigarette was launched and withdrawn. The only three cases in the last 20 years were Davidoff King in Canary Island and Luxembourg and Magnum in Greece. This does not indicate a history of Hit and Run practice for the brand.

The Davidoff Classic cigarettes and Magnum are both variants at 12-15 mg tar level. F&L are the medium tar variants similar to Marlboro in tar level. In other countries the variant is positioned at 3 mg and was launched in Abu Dhabi, Bahrain, Dubai, Japan, Kuwait, Oman, Qatar and Saudi Arabia. In Japan, Davidoff cigarette is characterized by its white tipping and charcoal filter, which is unique only to the Japanese market.

The top four variants of the super premium segment account for 85% of all the luxury length cigarette volume. 93% of all Davidoff cigarettes variants were in the luxury length category. These luxury length products are mainly for consumption in the Asia market.

Mostly consumed in Europe, 6% of the Davidoff cigarettes variants are of King Size length (83 - 87mm). 3% of Davidoff Classic cigarettes and 8% of Davidoff cigarettes are of king size length. These two variants need to be standardized in length to achieve global product alignment.

Menthol variants are launched in only three countries - Hong Kong, Italy and Taiwan. Japan is the only market where Davidoff cigarette has a charcoal filter. However, Magnum in Japan is still in a normal filter. R.E.E.M.T.S.M.A. is likely to standardise the product length of ail Classic variants. Small scale product launches are anticipated in markets such as Austria, France, Greece, Italy, Netherlands, UK, Lebanon, Slovenia and Macedonia. Taiwan is likely to continue to be the testing ground for future new variants.

The main driver of volume growth in the 1990s was Davidoff Classic cigarettes. Davidoff King cigarette has been diminishing in total house share since early 1990s.

Davidoff cigarette has been very clear and consistent in its communication of a brand world within each of its markets. Its communication employs some variation on "Heritage" and "The Connoisseur Experience", with an emphasis on philosophical and premium quality aspiration cues. Davidoff cigarettes projects sophisticated, successful and prestigious imagery. The communication fits well with Davidoff's pricing and upscale image, the claim of the brand is offer connoisseurs supreme pleasure.

After two rounds of strategic information review sessions with members of the IBG and global research team, two potential future scenarios projected over the next 10 years were developed. The purpose of these competitive scenarios is to stimulate thoughts and contribute to our current strategies in the super premium segment.

The future growth markets of Davidoff cigaretes are likely to be Taiwan and China in the Asia Pacific Region and Germany, Netherlands and Russia in the European region. Investigate the price repositioning of SE5S5 International and Dunhill International Both SE555 and Dunhill Internationals' pricing is sub optimal to Davidoff Magnum's in most markets. There is a need to investigate repositioning these super premium brands' pricing at parity or above Davidoff Magnum to project a super premium image.

Explore new channels for distribution for the Super Premium Brand Davidoff cigarettes will continue to exploit established cigar outlets for both product display and distribution. This facilitates the perception of a super premium image.

It is crucial to defend Asia and not allow Davidoff cigaretes to lead the Super Premium segment. Increased investment strategically in a super premium offer, such as Equinox. Defend the premium/ high price segment brands Global economic decline would lead to downtrading from Davidoff cigarettes and Marlboro cigarettes worldwide. It is necessary to defend BAT variants at premium / high price segments should Davidoff cigarettes pursue direct investment in a high price line extension.

Seed super premium brands in Asia If J.T.I. acquires R.E.E.M.T.S.M.A., it can assist in the growth of Davidoff cigarettes in the super premium segment. BAT need to seed and grow the super premium market in Asia to anticipate Davidoff's expansion.

The assumed smokers are status and prestige orientated smokers who demonstrate personal success through their choice of cigarette. They are prestige-orientated, success minded, extroverted, materialistic, efficient (smart) in business. Upwardly mobile, having quickly adapted to the western economic system. They have high to average income and lead extrovert, self-confident lives.