Minus an overall advertising strategy for Winston, the Salem brand dropping, and Camel just holding its own, RJR needs major marketing revamping, say analysts.
"They are seriously mismanaged," said Gary Black, a former brand manager himself who now is a stock analyst with Sanford C. Bernstein, New York. "It's not that they are in trouble, but they are not keeping up with Philip Morris."
Manny Goldman, an analyst with PaineWebber, said RJR's failure to come up with a '90s image and campaign for Winston, whose '50s "Tastes good like a cigarette should" tagline is still the brand's most remembered, is costing the company dearly.
"It's not complicated. It's not like putting a probe around Neptune," he said. "They have got to do it with Winston. They did not succeed against Marlboro."
KKR sold its remaining shares of RJR in March, and last month RJR jettisoned Exec VP-Marketing James C. Schroer in a move that is rumored to have been dictated by parent RJR Nabisco CEO Charles "Mike" Harper's unhappiness with the tobacco unit.
The unit subsequently announced it was looking at adding some additional agency resources. Asked for comment, a spokesman for Mr. Harper said the tobacco unit, headed by new President Andrew Schindler, manages its own affairs.
The problems are apparent:
Last year shipments dropped 7.4% and its market share to 26.7% from 30.6% at a time overall industry shipments increased 6.2%, according to the Maxwell Consumer Report. Worse, Winston slipped 7.7% in volume to 28.59 billion units with its brand share down to 5.8% from 6.7%. It ranked second among brands in 1994.
While Camel, with advertising from Mezzina/Brown, New York, did well last year-up 7.8% in volume, 19.33 billion units, and up slightly in brand share to 4%-first-quarter results weren't as good. Camel just held its own and showing for other brands was dismal. Analysts say Brown & Williamson's GPC discount brand passed Winston to become the country's No. 2 cigarette, while B&W's Kool passed RJR's Salem (3.8% share, 18.53 billion units) for eighth place. (Information Resources Inc./Marlin data says the main Winston brand had dropped to No. 3 behind Marlboro and Doral in the year ending April 30.)
Even more ominous, RJR's drop came against a background of major growth for its chief rival, Philip Morris USA. In 1993, Philip Morris had 42.2% market share compared with RJR's 30.6%. But last year, mainly on the strength of Marlboro's growth, Philip Morris saw its total share grow to 44.8% while RJR's declined to 26.7%.
RJR's measured advertising dipped to $66 million in 1994 from $74 million in 1993.
Just as important, analysts say there appear to be behind-the-scenes problems with some of RJR's biggest brands.
Winston appears to have no overall image and positioning campaign, a result of RJR repeatedly giving out only project assignments for the brand and stressing new extensions like Winston Select in 1992 and Winston Select Light a year later or Winston weekend programs. Several of the programs were executed by Trone Advertising, Greensboro, N.C. Analysts say that despite some growth by Winston Select, the lack of clear positioning and imagery has hurt Winston in luring new smokers.
"Winston has a serious problem in that it appeals to those 45 to 55. I don't want to be harsh, but you got to go after the younger smoker," said Mr. Black. "You have to have somebody in charge of the brand's positioning who manages the brand personality."
Mr. Goldman also said Winston badly needs an identity.
"What's the Winston tagline? The point is they haven't come up with anything. It's not having anything to do with spending money. Someone hasn't been doing something right."
The slowing growth of Camel is yet another headache.
"Camel should be growing at same level of Marlboro and it is not," said Mr. Black, suggesting recent advertising from Mezzina/Brown has spent too much time discussing taste and not enough project a cutting edge humorous image.
John Maxwell Jr., who publishes the Maxwell Consumer Report, suggests that the exit last year of KKR as RJR's biggest stockholder could put the company in better position to spend.
"KKR was fiddling around on how to make the stock go up," he said. "With KKR out of there, [Mr.] Harper and [RJ Reynolds Tobacco Chairman James] Johnson will sort of focus on what should be done there."