Camel brand will increasingly become the face of Reynolds.

September 10, 2008 - Reynolds American Inc. (RAI) and its subsidiary R.J. Reynolds Tobacco Co. (RJR) said Tuesday (9/9/2008) they were cutting about 10 percent (will layoff 570 - 16 percent in Winston-Salem, N.C. - their home base), of their American work force as the company restructures its portfolio. The cuts are expected to begin in the third quarter and last through the end of 2009.

Reynolds' plans are designed to focus on core businesses (the total tobacco business model)and redirect resources to areas of growth. Among the changes: The company is scaling back marketing and promotional support for its Kool menthol brand cigarettes, while boosting the amount of money it spends on Camel brand menthol products. The Pall Mall label will remain one of the company's growth brands. The Camel Family.

R.J. Reynolds had been focusing its investment in Camel, Kool, and Pall Mall to accelerate the brands' market-share growth. Other brands like Winston, Salem, Doral, Misty, Capri,.. are called Support Brands and are only provided limited marketing support. RAI for the 1st quarter of 2008 had very disappointing financial results due mainly to declines in sales of these support brands and pressure from competitors amid the weak U.S. economy. Also, RJR has spent large sums of money promoting Camel SNUS without success. RJR has had so many promotions mainly giving away free cans of Snus that they most have given away more cans than they sold.

The acquisition of smokeless tobacco maker Conwood has been one of the bright spots for Reynolds. Second-quarter 2008 growth on Conwood's flagship Grizzly brand accounted for almost half of the industry's total moist-snuff volume growth of 7.7% compared with the prior-year quarter.

Reynolds' move comes after its bigger rival, Philip Morris USA owner Altria Group, said Monday it would buy UST, the maker of Skoal and Copenhagen, for $10.4 billion. Some tobacco analysts have projected that Reynolds may be positioning itself to acquire Lorillard Tobacco Co. of Greensboro. Lorillard has the No. 1 menthol brand, Newport. (Menthol cigarette shipments declined by 3.9 percent last year, compared with a 5.5 percent decline for regular cigarettes. Last year about 28% of cigarette sales were menthols.) RJR has gone national with Camel Crush - a cigarette that can be converted into a menthol.

References: Reynolds to cut 570 jobs Company dealing with 'realities' of its market by Richard Craver, Winston-Salem Journal, 9/10/2008; "Reynolds Bets on Camels As It Grows Cool on Kools" by Laureen Etter, The Wall Street Journal, B1, 9/10/2008; and Reynolds American aims for smoke-free tobacco growth, Silobreaker.com, 9/10/2008.

Click on image to enlarge.. - RJR Headquarters Building built in 1929, the 2--story building was the South's 1st skyscraper and later became the model for the Empire State Building in NYC.

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