Reynolds American Reports 4Q revenues

Published on February 15th, 2010 13:07

Reynolds American, the second-largest tobacco company in USA revealed its net revenues for the 4Q were $215 million, a 16.7% drop from the similar period in 2008, whereas full-year net revenues reached $962 million, a 28.1% drop from 2008.

Reynolds American tobacco

The highlights of PAI performance included a decrease in overall shipments, but at the same time, an increase of RJ Reynolds and Conwood market share in corresponding divisions.

Overall cigarette sale volumes went down even faster last year than in previous years, as retailers and smokers cut on the expenses on cigarettes, because of hefty taxes and smoking bans.

The RJ Reynolds aggregate cigarette share has not seen significant moves in either side during the last two years, with slightly over 28 percent of the market. The company’s major growth brand, Camel, kept evolving into a completely tobacco brand, while Pall Mall impressed analysts by becoming the fourth best-selling cigarette across the country. These two brands showed a combined share of 12.3 percent, mainly due to considerable market share raise from Pall Mall. Growth brands currently account for nearly 50 percent of RJ Reynolds aggregate cigarette share and compensate drops in support brands share.

Camel Crush is the most successful extension of the Camel brand portfolio, is also popular among smokers as these cigarettes provide consumers with the one-of-a-kind opportunity to have both menthol and regular flavors in one single cigarette. This innovative brand helped R.J. Reynolds increase its market share in menthol category in 2009. The company as well anticipates further rise as they will launch two new styles of menthol cigarettes next month, and will change packaging of menthol brands to a more exciting one. The company also plans to continue extensive advertising campaign for Camel Crush.

Another innovation, launched under Camel brand name early in 2009 is already giving its share to Camel’s total tobacco share rise. Camel Snus sells much better than other products offered in this market share. However, since it is a new product category in the American tobacco market, raising consumers’ awareness is a major factor in the long-term perspective, so it’s too early to make conclusions.

Camel Dissolvables, which are currently selling in test-markets, also got very positive feedback from the consumers, including the ways to pack the products and promote them further. RAI’s smokeless division, Conwood reported a 6,4% growth in sale volumes for the full-year, much higher than average industry-wide increase of 4.4%. Grizzly’s all-year performance was very successful, as it gained 8.9% in spite of considerable pressure from major rivals. Overall, Grizzly’s market share rose to record high 25.3% in 2009.

Reynolds American CEO, Susan Ivey said that the company’s revenues dropped in 2009 due to several reasons. As the economy as a whole was in deep recession in the beginning of 2009, consumers reduced their expenses. In addition tobacco industry experienced a dramatic blow when the highest-ever federal tobacco tax increase took place in April, and average retail price per pack of cigarettes went up by almost 25%. So, it took time for the consumers to get used to new prices and economic reality.

By Kevin Lawson, Staff Writer. Copyright © 2010 TobaccoPub.com. All rights reserved.


Related tags: Reynolds American | tobacco | Camel | Winston | Pall Mall

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