Proposition 56 A $2 Increase in the California Cigarette Excise Tax - - PowerPoint PPT Presentation

1 I Altria Group Distribution Company l Document Owner: GLA AM l 10/06/2016 l Final I Confidential

Proposition 56

A $2 Increase in the California Cigarette Excise Tax Will Harm Legitimate Retail and Wholesale Businesses

1 Retail locations based on CA BOE SB1400 Study, 2/19/16 https://www.boe.ca.gov/legdiv/pdf/1400sb021916cw.pdf. 2 NACS State of the Industry Report – 2014, National Association of Convenience Stores, 28th Edition, Table 9A. 3 Bill Orzechowski & Rob Walker, The Tax Burden on Tobacco, vol. 49 (February 2015); funded in part by Altria Client Services Inc. 4 ALCS Retail Experience of Adult Tobacco Consumers. June 2010.

Cigarette Volume Affect Ask you Rep for POP Resources

• 1. Tear Pad
• 2. Backbar POP

Optional:

• 3. Door Strike
• 4. Hanging Sign
• 5. Counter Mat

Marlboro Multi Pack

1 I Altria Group Distribution Company l Document Owner: GLA AM l 10/06/2016 l Final I Confidential

9-Jan 16-Jan 23-Jan 30-Jan 6-Feb 13-Feb 20-Feb 27-Feb 5-Mar 12-Mar 19-Mar 26-Mar 2-Apr 9-Apr 16-Apr 23-Apr 30-Apr 7-May 14-May 21-May 28-May 4-Jun 11-Jun 18-Jun 25-Jun 2-Jul 9-Jul 16-Jul 23-Jul 30-Jul

109 117 100 130

Q1 ’16 vs. Q1 ‘15 % Vol. ∆ SOM ∆

(1.0%) 0.1

WE 4/9 – 7/30/16 vs. SPYAGO % Vol. ∆ SOM ∆

2.3% 0.7

Business Success

Source: MI Connect STARS Data YTD Week Ending 7/30/16 as of 8/19/16. Data reflects only reported vol. By PM USA direct and non-direct

• distributors. Mkt. defined as AGDC workload stores in the same zip code areas as key account stores, excluding key account stores. Pricing is

Sourced from 7-Eleven Cost/Retail File

Program Details(April 4th) $ 5.47

• 100% Altria Funded $0.25 per pack
• ~23% 1 Pack Margin
• ~12% 2 Pack Margin(Increased)
• Customer will now save $_._ _

when they buy 2 or 3 packs

~2.5 T-Count Increase Per Day

POP Steps to Success Door Strike Back Bar POP(FC Provided)

Copenhagen Multi Can Funding

1 I Altria Group Distribution Company l Document Owner: GLA AM l 10/06/2016 l Final I Confidential

1.4% 1.3% 4.5% 4.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

IND USSTC

7-Eleven Market

Volume Change

YTD vs. YAGO

Source: MI Connect STARS Data YTD Week Ending 8/27/2016 as of 9/7/16. Data reflects only reported vol. By PM USA direct and non- direct distributors. Mkt. defined as AGDC workload stores in the same zip code areas as key account stores, excluding key account stores. Pricing is Sourced from 7-Eleven Cost/Retail File

Program Details(July 25th)

• Copenhagen Premium SKUs
• 100% Altria Funded $0.20 per can
• ~38% 1 Can Margin
• ~35% 2 Can Margin(Increased)
• Automatically scans via Promo Master
• Accept Download
• In Stock & Carry 3 Focus SKUs
• Upsell every Customer will now save

$_._ _ when they buy 2 cans

Steps to Success

October 2016

Marlboro Brand Management

7-Eleven Meeting

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1H 2016

Marlboro Menthol Share Growth

Including Product Expansions (Yearly)

Menthol Segment

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201…

Menthol Segment Share Performance

(Yearly)

Consistent Growth

Source: IRP SymphonyII Group/Capstone Projected Retail Panel Database – Total US Ending 12/29/12 IRI/MSAi Cigarettes 2016 – Total U.S. Blended Share as of 04/03/16; IRI/Capstone Projected Database, 1997-2002; IRI/ Capstone – TRP 2003 – 2007; IRI/MSAi Info Scan Cigarette 2015 – Blended as of 07/02/16

Emerging Adult Smoker 21+ Trends

Adult Smokers 21+ are seeking variety and choice in taste and flavor Adult Smokers 21-29 smoke different products for different occasions

Source: CATTS 3.0 – 9mm ending Dec’15; CMI

Marlboro Slate

Product Packaging Promotional Support

Special Price Promotion Product Promotions

Questions?