Channel: Independents

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

Published in: 

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

  Menthol Non-Menthol Total
PM USA 26% 57% 47%
Reynolds 24% 24% 24%
Lorillard 40% 3% 14%
Imperial 2% 9% 5%
Other 7% 10% 9%

Estimated Market Share by Premium vs Discount

  Premium Discount Total
PM USA 61% 13% 47%
Reynolds 19% 37% 24%
Lorillard 17% 7% 14%
Imperial 0% 18% 5%
Other 4% 24% 9%

Pro Forma (RAI/LO Combo) Snapshot

Estimated Market Share by Menthol vs Non-Menthol

  Menthol Non-Menthol Total
PM USA 26% 57% 47%
RAI/LO 64% 27% 38%
Imperial 2% 9% 5%
Other 7% 10% 9%

Estimated Market Share by Premium vs Discount

  Premium Discount Total
PM USA 61% 13% 47%
RAI/LO 36% 44% 38%
Imperial 0% 18% 5%
Other 4% 24% 9%

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

Estimated Market Share by Menthol vs Non-Menthol

  Menthol Non-Menthol Total
PM USA 26% 57% 47%
RAI/LO 56% 24% 34%
Imperial 11% 12% 10%
Other 7% 10% 9%

Estimated Market Share by Premium vs Discount

  Premium Discount Total
PM USA 61% 13% 47%
RAI/LO 30% 44% 34%
Imperial 6% 18% 10%
Other 4% 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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