WINSTON-SALEM, N.C. --“The integration of Newport is going smoothly,” Susan M. Cameron, president and CEO of Reynolds American Inc. (RAI), said in commenting on the company’s third-quarter 2015 results, as well as on the company’s assimilation of the brand acquired with Lorillard Inc..
“Even with the route to market restrictions on retail merchandising in place through mid-November, Newport is demonstrating solid marketplace momentum, and R.J. Reynolds’ consumer marketing and sales teams are focused on identifying additional growth opportunities for the brand,” she said.
“Our operating companies delivered excellent key-brand performance in the third quarter, and that helped drive further gains in Reynolds American’s net sales, earnings and margin,” said Cameron.
RJR Tobacco’s reported third-quarter operating income increased 54.4% from the prior-year quarter, to $1.1 billion, benefiting from the addition of the Newport brand, higher cigarette pricing and the expiration of the federal tobacco-quota buyout program last year.
RJR Tobacco’s retail market share is reflected on a pro-forma basis for the company’s new brand portfolio following the Lorillard acquisition and the divestiture to ITG Brands LLC (ITG). The company’s total third-quarter cigarette retail market share was down 0.1 percentage points from the prior-year quarter, at 32%.
The company’s third-quarter cigarette shipments were up 30.2% from the prior-year quarter, benefitting from the first full quarter of Newport’s incorporation into the company’s cigarette portfolio.
RJR Tobacco’s performance was driven by its powerful key brands in the third quarter. The combined retail market share of Newport, Camel and Pall Mall increased 0.2 percentage points from the prior-year quarter, to 29.4%. These brands now make up about 92% of RJR Tobacco’s total cigarette retail market share.
Newport, the nation’s No. 1 menthol brand, demonstrated strong momentum in the third quarter, growing retail market share by 0.5 percentage points from the prior-year quarter, to 13.3%. Under terms of the route to market agreement in the consent decree reached with the U.S. Federal Trade Commission, no changes can be made to Newport’s retail merchandising until mid-November, when the company will add the brand to its new retail programs.
RJR Tobacco’s Camel brand delivered steady performance in the quarter, and the company remains focused on building the brand’s equity. Camel maintained its third-quarter cigarette retail market share in line with the prior year quarter, at 8.3%.
Pall Mall continued to play a key role in RJR Tobacco’s cigarette portfolio strategy. Its third-quarter retail market share was down 0.3 percentage points from the prior-year quarter, at 7.8%, and was flat sequentially.
The company continues to focus on balancing share and profitability for the brand.
R.J. Reynolds Tobacco's brands include Newport, Camel and Pall Mall cigarettes; American Snuff's brands include Grizzly and Kodiak smokeless tobacco products; Santa Fe Natural Tobacco manufactures and markets Natural American Spirit 100% additive-free natural tobacco products, including styles made with organic tobacco; Niconovum USA and Niconovum AB market nicotine replacement therapy products in the United States and Sweden, respectively, under the Zonnic brand name; and R.J. Reynolds Vapor manufactures and markets Vuse electronic cigarettes.
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