Survey: Retailers Optimistic About Newport Gold Launch

NEW YORK -- A new survey by Wells Fargo Securities LLC could be a sign of good things to come for Newport Gold.

Just weeks before Lorillard Inc.'s new product hits store shelves, tobacco retailers and wholesalers representing about 300,000 retail locations said they expect the rollout to outdo the rollout of Newport Red, according to Bonnie Herzog, managing director of tobacco, beverage and consumer research at Wells Fargo Securities.

Nearly 55 percent of Wells Fargo Securities' tobacco contacts were optimistic for a successful rollout of Newport Gold. That optimism appears to be driven by the attractive pricing at which Lorillard will initially offer Gold, particularly given today's increasingly value-seeking customers, Herzog said.

The initial retail price is in line with Newport Red's introductory price, she added. Greensboro, N.C.-based Lorillard introduced Newport Red -- its first non-menthol cigarette -- in fall 2010.

"As to whether Gold will be a 'game changer,’ many contacts think Gold will fill a void in the Newport franchise -- not necessarily a game changer, but a good complement to Lorillard's existing platform, mitigating the company's exposure to menthol," Herzog said.

Newport Gold could also mitigate Lorillard's menthol risk and exposure, she added.

According to the survey, most retailers are taking a conservative approach to building their Newport Gold inventory and they expect 10 percent of Lorillard's shelf space to be dedicated to the new product. In addition, retailers believe Newport Gold will likely take share from R.J. Reynolds' Camel brand and Philip Morris' Marlboro brand.

Lorillard plans to support the Newport Gold launch with direct mail coupons, national print media, point-of-sale advertisements and store-level education.