Tobacco

Newport Gives Reynolds “Opportunities to Lead”

Reynolds and Lorillard’s CEOs discuss Newport, EDLP and jobs post-merger

WINSTON-SALEM, N.C. -- Reynolds American Inc.’s chief executive officer Susan Cameron has promised more sales force behind the Newport brand in the wake of the $25 billion acquisition of Lorillard Inc. Though Camel and Pall Mall were Reynolds’ largest brands prior to the merger going through last Friday, Newport is the second-largest U.S. cigarette brand and the country’s top-selling menthol brand with what The Wall Street Journal described as “a disproportionate market share” of smokers under 30.

Susan Cameron

“We have opportunities to lead those segments,” Cameron said told the Journal, adding that as of this week, Newport will start being represented by Reynolds’ 2,300-person sales team.

Former Lorillard chief executive officer Murray Kessler added there’s an opportunity for the combined company to benefit from a larger geographical footprint than Reynolds and Lorillard held on their own. While Newport performs better in urban areas and the Northeast region, Camel is strong in rural areas and the West.

Cameron went on to address questions about Reynold’s Every Day Low Price (EDLP) retail agreement. Though analysts such as Bonnie Herzog of Wells Fargo have speculated that Newport will be added to the EDLP (both to entice retailers to sign up and to drive Newport sales), Cameron said the company will evaluate this option and update investors in July.

Reynolds will also consider launching additional Newport products, Cameron said.

Less up in the air is the fate of Reynolds’ and Lorillard’s employees post-merger: on Monday, approximately 75 people who worked on Newport transferred to Reynolds to continue work with the brand.

Otherwise, the merger resulted in very few layoffs, thanks to Imperial Tobacco Group’s role in the deal: along with a number of divested brands, the U.K.-based company also acquired Lorillard’s Greensboro, N.C. headquarters and infrastructure. The Journal reports most of Lorillard’s 2,900 employees (including its 1,200-person sales team) will move to Imperial.

“Almost everyone got a job,” Kessler said. “It’s highly unusual.”

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