WINSTON-SALEM, N.C. – In a move to further consolidate its sales and advisory services to the convenience wholesale and retail channels, Reynolds American Inc. has created a new entity in RAI Trade Marketing Services Co. (TMS), essentially bringing the Santa Fe Natural Tobacco Co. sales operations and those of its other affiliated companies under one umbrella subsidiary.
Effective Jan. 1, 2017, RAI TMS will facilitate the sales, distribution and both the retail and wholesale strategy execution for R.J. Reynolds Tobacco Co., American Snuff Co., Santa Fe Natural Tobacco Co. and R.J. Reynolds Vapor Co. under common service agreements.
Prior to this organizational shift, Santa Fe was the only Reynolds company not operating under a service agreement, officials told CSP Daily News. Bringing in Santa Fe was an opportunity to create the newly formed RAI TMS subsidiary.
“With the creation of RAI TMS, the industry’s leading trade marketing teams will be united in purpose behind the industry’s best brand portfolio,” said Mike Auger, president of RAI TMS, in a press release. “This new organization capitalizes on an opportunity to create an even stronger team, and to accelerate the marketplace momentum and long-term growth of RAI operating company brands.”
One of the benefits for retail and wholesale partners will be “a single point of contact, and the field trade-marketing team will continue to offer valuable guidance on business growth across the total tobacco category to retail partners,” Auger said.
Over the years, RAI had linked the trade-marketing, sales and advisory groups of newly acquired companies to its own via service agreements. Santa Fe was the one left outstanding, R.J. Reynolds spokesperson David Howard told CSP Daily News. “It helps coordinate that operation so there’s a central point of management for all brands,” Howard said.
The new trade-marketing structure will not result in job eliminations among current trade-marketing employees, officials said. All trade-marketing employees interested in moving forward with RAI TMS will have the opportunity to do so, the company said.
The move will merge R.J. Reynolds and Santa Fe’s sales teams possibly in February of next year, said analyst Bonnie Herzog, managing director of beverage, tobacco and convenience-store research for Wells Fargo Securities, New York. She also said the move shows efforts at rationalization, boding well for Reynolds American’s potential sale to London-based British American Tobacco.
Though Reynolds said no layoffs are planned, Herzog said in her newsletter, “We can’t help but think there will be at least some attrition as natural redundancies surface and some people opt for severance packages—in which case, we don’t see RAI seeking to hire replacements.”
RAI is the parent company of R.J. Reynolds Tobacco Co., Santa Fe Natural Tobacco Co., American Snuff Co., Niconovum USA, Niconovum AB and R.J. Reynolds Vapor Co. R.J. Reynolds is the second-largest U.S. tobacco company, officials said. R.J. Reynolds’ brands include Newport, Camel and Pall Mall. Santa Fe Natural Tobacco Co. manufactures and markets Natural American Spirit products. Officials said American Snuff Co. is the nation’s second-largest manufacturer of smokeless tobacco products. Its leading brands are Grizzly and Kodiak. Niconovum USA and Niconovum AB market nicotine-replacement therapy products in the United States and Sweden, respectively, under the Zonnic brand name. R.J. Reynolds Vapor Co. is a marketer of digital vapor cigarettes, manufactured on its behalf by R.J. Reynolds, under the Vuse brand name in the United States.
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