October 22, 2010 - Susan M. Ivey - Chairman, President and CEO of Reynolds American, President of RAI. Ivey, 51, said she would retire as chairwoman on October 31, 2010 then as chief executive, president and member of the board of directors on February 28, 2011.
Increases in adjusted earnings and margins were driven by gains in our operating company's powerful key brands, all of which posted record consumer uptake market share in the third quarter. Reynolds' market share was unchanged at 28.2 percent compared with a year ago.
Ivey noted that the expansion of R.J. Reynolds' field trade-marketing organization to serve American Snuff, through a services agreement has been largely completed. This change gives both companies greater speed to market, provides stronger support for the retail trade, and gives the company's brand a strong retail presence, and will significantly benefit American Snuff brand.
Reynolds American - consolidating smoking plants, expanding smokeless plants..
R.J. Reynolds - cigarette growth brands:
Camel and Pall Mall, the lower-cost cigarette option, represent 55 percent of Reynolds' 20.1 billion in cigarette volume during the quarter. Overall volume, however, was down 2.5 percent from a year ago. Reynolds said that higher prices and increased sales of Camel and Pall Mall helped offset lower cigarette-shipment volumes. Although Camel remains the brand face of Reynolds, Pall Mall continued its notable climb. Camel's market share was 8 percent, compared with 7.7 percent a year ago. By comparison, Pall Mall's market share was 7.8 percent, compared with 5 percent a year ago. Pall Mall is the nation's fourth largest and fastest growing major cigarette brand.
For the first nine months, R.J. Reynolds’ cigarette shipment volume was down 5.1 percent, but down only 2.2 percent excluding private-label brands. By comparison, industry volume declined 3.5 percent from the prior-year period.
Pulse promotions used in marketing Pall Mall, i.e., lower the price for a short period and the raise it. They see around a 50% retention rate after the price is raised.
“Camel’s menthol styles, which utilize R.J. Reynolds’ capsule technology, are contributing to Camel’s strong performance,” Delen (Chairman, President and CEO, R.J. Reynolds Tobacco) said. “These styles offer adult smokers fresh menthol flavor when they choose, and are appealing to competitive menthol smokers.” Camel Crush also enhanced the brand’s share performance in the menthol segment. Using the same capsule technology, this style offers adult smokers the choice of regular or menthol with each cigarette. Including Camel Crush, Camel’s third-quarter menthol market share increased 0.5 percentage points to 1.9 percent.
Smokeless tobacco, American Snuff and R.J.Reynolds (Camel Snus, Camel Dissolvables)..
American Snuff continued to show gains in total moist-snuff shipment volume, increasing 1.2 percent in the third quarter from the prior-year quarter, and gaining 5.0 percent in the first nine months from the prior-year period. American Snuff’s total moist-snuff share of shipments of 29.2 percent was down 0.7 percentage points in the third quarter.
Levels of competitive promotional shipments and changes in the largest competitor’s returned-goods reporting continued to distort industry moist-snuff shipments. Industry shipments were up 8.6 percent in the third quarter.
Grizzly, the company’s flagship brand, increased third-quarter shipment volume by 2.3 percent in the third quarter. “As we anticipated, the upgrade to the Grizzly family’s packaging and addition of embossed metal lids in April has helped the brand return to growth.
Grizzly's market share shrank 0.3 percentage points to 25.3 percent as Altria raised its marketing of Copenhagen during the quarter. However, Grizzly's shipment volume rose 1.8 percent to 82.5 million cans.
Grizzly continued to capture share in the rapidly growing pouch segment, which represents almost 9 percent of total moist-snuff category sales. Grizzly accounted for 23.6 percent of all pouch sales in the third quarter, and has the No. 1 wintergreen pouch style in the marketplace.
American Snuff’s premium brand, Kodiak, remained relatively stable in the third quarter, with share of shipments of 3.6 percent, down 0.3 percentage points from the prior-year quarter. Kodiak’s volume was down 5.2 percent in the third quarter, but for the first nine months it was in line with the prior-year period.
Camel Dip, the company’s newest premium introduction, remained relatively stable in the third quarter. American Snuff continues to evaluate opportunities to strengthen Camel Dip’s marketplace performance.
“Camel SNUS, the brand’s first modern smoke-free product, is holding steady on a volume basis even with lower promotional levels,” Delen said. “Two new styles — Robust and Winterchill — were introduced in the third quarter, and they are attracting additional interest.” Packed in larger pouches, the new styles offer adult tobacco consumers a richer, more full bodied tobacco taste, as well as smoke-free, spit-free convenience. All four Camel SNUS styles are being sold in select stores nationwide.
R.J. Reynolds continues to gain valuable consumer insights on Camel’s new line of
innovative dissolvable tobacco products — Orbs, Sticks and Strips. These insights will help the company as it continues to refine its dissolvable product offerings.
RAI’s Santa Fe Natural Tobacco Company subsidiary continued to deliver excellent results in the third quarter, with its Natural American Spirit brand again driving gains in earnings and volume, with record market share. Santa Fe hit a record market share, marching towards the one share point area. And we see double-digit volume and double-digit earnings growth at Santa Fe. And so, despite the economy this uniquely positioned super-premium all natural product is continuing its growth trend.
References: Earnings Call Transcript; Reynolds posts profit, Source: Winston-Salem Journal, by Richard Craver, Winston-Salem Journal, N.C., 10/22/2010.
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