WHAT TO WATCH FOR: Continued growth in Reynolds American Pall Mall brand despite industrywide declines in the number of cigarettes being as taxes, smoking bans, health concerns and social stigma all increase.
The Winston-Salem, N.C., company has promoted Pall Mall as a longer-lasting and more affordable cigarette as smokers weather the weak economy and high unemployment, and the company has said half the people who try the brand continue using it. Reynolds also sells Camel and Natural American Spirit cigarettes, and Kodiak and Grizzly smokeless tobacco.
Pall Mall's fourth-quarter volume grew 19 percent, and its share of the U.S. market increased 2.3 percentage points to 8.3 percent. Camel volumes grew 8.5 percent during the fourth quarter, and the brand's market share rose to 8 percent.
While its growth brands like Camel and Pall Mall continue to do well, increasing 13.5 percent last quarter, its other brands are dragging down overall volumes, which fell about 5 percent in the fourth quarter.
Analysts also will be looking at the company's smokeless tobacco products - a segment of the tobacco industry that's growing and becoming increasingly competitive as companies seek products to offset the decline in cigarette sales. (Reynolds American Inc. highlights business report q4 and entire 2010..)
Reference; Earnings Preview: Reynolds American by MICHAEL FELBERBAUM, Asssociated Press 4/19/2011
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