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Cigarette Share of Market Pre- & Post-RAI/Lorillard Merger

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NEW YORK -- How close does the merger of Reynolds American Inc. (RAI) and Lorillard Inc. (LO) move the combined company to tobacco-industry leader Altria/Philip Morris USA (PM USA)? A merger model created by Wells Fargo Securities outlines the two companies'--plus Imperial Tobacco's--likely cigarette share of the market in terms of menthol/nonmenthol and premium/discount cigarettes before and after the deal announced on July 14.

Not surprisingly, the real challenge comes in menthol cigarettes.

Current Snapshot

Estimated Market Share by Menthol vs Non-Menthol

 MentholNon-MentholTotal
PM USA26%57%47%
Reynolds24%24%24%
Lorillard40%3%14%
Imperial2%9%5%
Other7%10%9%

Estimated Market Share by Premium vs Discount

 PremiumDiscountTotal
PM USA61%13%47%
Reynolds19%37%24%
Lorillard17%7%14%
Imperial0%18%5%
Other4%24%9%

Pro Forma (RAI/LO Combo) Snapshot

Estimated Market Share by Menthol vs Non-Menthol

 MentholNon-MentholTotal
PM USA26%57%47%
RAI/LO64%27%38%
Imperial2%9%5%
Other7%10%9%

Estimated Market Share by Premium vs Discount

 PremiumDiscountTotal
PM USA61%13%47%
RAI/LO36%44%38%
Imperial0%18%5%
Other4%24%9%

Pro Forma (RA/LO Combo) Snapshot With RAI Brands Sold to Imperial (Commonwealth)

Estimated Market Share by Menthol vs Non-Menthol

 MentholNon-MentholTotal
PM USA26%57%47%
RAI/LO56%24%34%
Imperial11%12%10%
Other7%10%9%

Estimated Market Share by Premium vs Discount

 PremiumDiscountTotal
PM USA61%13%47%
RAI/LO30%44%34%
Imperial6%18%10%
Other4%24%9%

Source: Nielsen Scantrack enhanced AOC, company reports and Wells Fargo Securities LLC estimates

Source: 
Nielsen Scantrack enhanced AOC, company reports and Wells Fargo Securities LLC estimates
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