"There's a limited time frame for turning around the business. They are looking at multiple options, and there's not a lot of time to hone and retool," said an executive familiar with the situation.
After a long review on the $40 million business, RJR last fall decided not to award Salem officially to an agency, but in October did give the green light to testing the effort from WestWayne, Tampa, Fla. The ads are themed "It's not what you expect."
But sales in the New York test market haven't been what RJR expected, despite a radical overhaul, including one green-tip cigarette in each package, and wildly new and different package graphics, including a sphere with an S symbol and die-cut advertising images.
Its failure comes in stark contrast to RJR's experience with Winston, whose "No bull" effort from Long Haymes Carr, Winston-Salem, N.C., has been a success for the brand.
The company also has had a relatively smooth transition from Camel ads using Joe Camel to the current effort, via Mezzina/Brown, New York.
"You can't have three home runs in a row," said Gary Black, analyst at Sanford C. Bernstein, adding that the Salem test effort has amounted to "a big nothing."
"RJR needed a big idea for that brand. The `Big S' isn't it," he said.
According to PaineWebber analyst Manny Goldman, Salem unit sales volume fell 3% in 1997. Although the regional campaign wouldn't necessarily be reflected in RJR's national shares, Mr. Goldman found Salem volume was down 1% for the month of December 1997, two months after the campaign broke.
By contrast, full-year sales for Winston showed the brand's unit volume flat, but up 7% in the month of December, Mr. Black's most current.
WINSTON DOES WELL
"Winston has done very well," said Mr. Black.
Well enough, in fact, that at least two executives familiar with RJR believe Long Haymes Carr may get a clear shot at Salem before the year is out.
Rival Brown & Williamson Tobacco Corp. also has been active on the menthol front, beginning the rollout this week of a new package for its Kool brand that features a picture of a waterfall.
The new package is being unobtrusively added to the brand's existing "B Kool" ad effort, beginning with May issues of magazines, via Grey Advertising, New York.