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Tobacco company Reynolds American 4Q profit falls on charges

Reynolds American, the nation’s second-biggest tobacco company, saw its fourth-quarter profit fall 54 per cent on pension and trademark-related charges and other costs.

But earnings for the maker of Camel, Pall Mall and Natural American Spirit cigarettes, excluding one-time charges, rose about 6 per cent as consumers bought more smokeless tobacco brands like Grizzly and Kodiak.

Smokeless tobacco sales, as well as higher prices and productivity gains, offset cigarette volume declines and increased promotional spending.

Reynolds American Inc., based in Winston-Salem, NC, said its net income fell to $139 million, or 25 cents per share, for the three-month period ended Dec. 31, down from $304 million, or 52 cents per share, a year ago. Adjusted earnings were 76 cents per share, beating Wall Street expectations by three cents.

Revenue excluding excise taxes fell slightly to $2.08 billion. Analysts polled by FactSet expected $2.06 billion.

Citi analyst Vivien Azer said Reynolds had a “solid finish in a tough competitive environment,” in a note to investors.

The number of cigarettes sold by its RJ Reynolds Tobacco Co. subsidiary fell about 3 per cent during the quarter to 17.1 billion, compared with its estimate of a total industry decline of less than 1 per cent. It sold 5.5 per cent more of its Pall Mall brand and volumes of Camel fell slightly. The brands account for more than 60 per cent of its total cigarette volume.

Camel’s market share remained stable at 8.6 per cent of the US market, while Pall Mall’s market share grew 0.3 percentage points to 8.9 per cent.

The company has promoted Pall Mall as a longer-lasting and more affordable cigarette for smokers who are weathering the weak economy and high unemployment. The company has said that half of the people who try the brand continue using it.

The number of Santa Fe Natural Tobacco Co.’s Natural American Spirit cigarettes it sold grew more than 20 per cent to about 800 million.

Reynolds American and other tobacco companies are focusing on cigarette alternatives such as snuff and chewing tobacco for growth as tax hikes, smoking bans and social stigma make the cigarette business tougher.

Volume for its smokeless tobacco brands rose 7 per cent compared with a year ago. The brands had a 32.6 per cent share of the US retail market, which is tiny compared with cigarettes.

Reynolds American also said it expects full-year adjusted earnings in the range of $3.15 to $3.30 per share. Analysts expect earnings of $3.12 per share.

Company shares slipped 82 cents to $43.40 in premarket trading.

 
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Posted by on March 25, 2013 in Tobacco News

 

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BAT plans new cigarette brands

Global tobacco giant British American Tobacco is looking to launch new brands, including a budget-oriented one, in the Philippines as part of efforts to increase its market share and tap a wider client base.

British American Tobacco

BAT Logo

BAT produces famous selling brands Lucky Strike, Dunhill, Kent, and Pall Mall, which accounted for more than 30 percent of the group’s worldwide volumes in 2011 or 226 billion cigarettes.

It only sells Lucky Strike in the Philippines with total sales of a few million cigarette sticks last year.

“We’re looking at introducing new brands.  We have Lucky Strike now but we’ll have multiple brands in the market as we go along.  Lucky Strike is quickly establishing itself in the marketplace.  We’re seeing an opportunity to bring in new brands here.  We may bring in a low-tier brand,” BAT Philippines general manager James Lafferty said in a briefing.

Lafferty said the introduction of new brands is also part of BAT’s commitment to invest around $200 million over a five-year period in the Philippine market  following  the passage of  the controversial sin tax bill.

Lafferty said the group is mulling the establishment of a manufacturing plant in the Philippines but noted that  nothing has been firmed up.

 
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Posted by on February 19, 2013 in Tobacco News

 

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History of Cigarettes and Smoking

Tobacco and smoking has a long and checkered history dating. The tobacco plant is believed to be widely spread in America since the 1st Century. Pictorial records of smoking date back to the 11th century. Below is a synopsis of the history of smoking: cigarettes, cigars and tobacco.

Smoking History
Man and woman sitting at the table and smoking with a cigarette holder

1492:Columbus Discovers Tobacco.
1518:
Juan De Grijalva lands in Yucatan, observes cigarette smoking by natives.
1531:
Santo Domingo: European cultivation of tobacco begins.
1556-1558:
Tobacco introduced to France, Spain and Portugal.
1564-1565:
Tobacco introduced to England.
1600:
– Sir Walter Raleigh persuades Queen Elizabeth to try smoking.
1683:– Massachusetts passes the nation’s first no-smoking law. It forbids the smoking of tobacco outdoors, because of the fire danger. Soon after, Philadelphia lawmakers approve a ban on “smoking seegars on the street.” Fines are used to buy fire-fighting equipment.
1794:– The U.S. Congress passes the first federal excise tax on tobacco products.
1860:– Manufactured cigarettes first appear in the United States. A popular early brand, Bull Durham, commanded 90% of the market.
1864:– First American cigarette factory opens and produces almost 20 million cigarettes annually.
1875:– Allen & Ginter cigarette brands, Richmond Straight Cut No. 1 and Pet, begin using picture cards to stiffen the pack and protect the cigarettes. The cards, with photos of actresses, baseball players, Indian Chiefs, and boxers are enormously successful and represent the first modern promotion scheme for a manufactured product.
1900:– Washington, Iowa, Tennessee and North Dakota outlaw the sale of cigarettes.
1901:– 3.5 billion cigarettes and 6 billion cigars are sold. Four in five American men smoke at least one cigar a day.
1902:– Tiny Philip Morris sets up a corporation in New York to sell its British brands, including Philip Morris, Blues, Cambridge, Derby, and a cigarette named after Marlborough Street, where its London factory is located. Marlboro is one of the earliest woman’s cigarette, featuring a red tip to hide lipstick marks. It does not catch on with the public.
1910:– Most popular brands: Pall Mall, Sweet Caporals, Piedmont, Helmar and Fatima.
1913:– RJ Reynolds introduces Camel, considered by historians as the first ‘modern’ cigarette.
1917:– There are now 3 national brands of cigarettes on the US market: Lucky Strike, Camel and Chesterfield.
1921:– RJ Reynolds spends $8 million in advertising, mostly on Camel. Inaugurates the highly successful “I’d Walk a Mile for a Camel” slogan.
1923:Camel captures 45% of the US market.
1924:– Philip Morris re-introduces Marlboro with the slogan “Mild as May,” targeting “decent, respectable” women. “Has smoking any more to do with a woman’s morals than has the color of her hair?” the advertisement reads. “Marlboros now ride in so many limousines, attend so many bridge parties, and repose in so many handbags.”
1927:– A sensation is created when George Washington Hill blatantly aims Lucky Strike advertising campaign at women, urging them to “reach for a Lucky instead of a sweet.” Smoking initiation rates among adolescent females triple between 1925-1935, and Lucky Strike captures 38% of the American market.
1930:– Most popular brands: Lucky Strike, Camel, Chesterfield, Old Gold and Raleigh.
1936:– Brown and Williamson introduces Viceroy, the first national brand to feature a filter of cellulose acetate. Advertising increases the use of physicians to counter the claims that cigarettes are a major health problem.
1940:– Most popular brands: Camel, Lucky Strike, Chesterfield, Raleigh and Old Gold.
1950:– Most popular brands: Camel, Lucky Strike, Chesterfield, Commander and Old Gold.
1952:Kent introduces the ‘Micronite’ filter, which Lorillard claims “offers the greatest health protection in cigarette history.” It turns out to be made of asbestos. Kent discontinues use of the Micronite filter four years later.
1954:– RJ Reynolds:- introduces:- Winston:- filter cigarettes, but promotes the taste benefit, not health. Winston dominates the US market for the next 15 years.
1954:– Marlboro advertising taken over by the Chicago ad agency Leo Burnett. “Delivers the Goods on Flavor” ran the new slogan in newspaper ads. Design of the campaign, which features ‘Marlboro Men,’ is credited to John Landry of Philip Morris. Prior to initiating this campaign, Marlboro had <1% of the US market.
1963:– Marlboro:- dispenses with tattooed sailors and athletes as the Marlboro Man and settles on the exclusive use of cowboys. For several years, Philip Morris research had shown that sales increased whenever they cowboys appeared in their campaigns.
1964:– Marlboro Country ad campaign is launched. “Come to where the flavor is. Come to Marlboro Country.” Marlboro sales begin growing at 10% a year.
1968:– Philip Morris introduces Virginia Slims with the slogan, “You’ve come a long way, baby.” Five yeas later, Billy Jean King, wearing Virginia Slims colors, defeats Bobby Riggs in the televised ‘Battle of the Sexes.’ Virginia Slims continues to promote tennis matches to this day.
1970:– Most popular brands: Winston, Pall Mall, Marlboro, Salem and Kool.
1971:– TV cigarette advertising banned. The ban was scheduled to begin on January 1, but was delayed for one day to allow a final glut of Super Bowl ads. Fairness Doctrine anti-smoking ads also disappear. Cigarette sales begin rebounding from their four year decline. RJ Reynolds’ top-selling Winston brand, which had been challenged by Philip Morris’ Marlboro for most of the 60s, is particularly hard-hit. While the Marlboro cowboy translates into print advertising beautifully, Winston’s only identifier was the jingle, “Winston tastes good, like a cigarette should.” Winston focuses on promoting car racing, but steadily loses market share to Marlboro.
1972:– Marlboro becomes the best-selling cigarette in the world. It remains so today by a wide margin.
1980:– Most popular brands: Marlboro, Winston, Kool, Salem, and Pall Mall.
1987:– Joe Camel’s USA Debut. A North Carolina advertising agency uses Joe Camel to celebrate “Old Joe’s” 75th anniversary. Four years later, the Journal of the American Medical Association publishes two reports on Joe Camel and kids. One study finds that 91% of 6 year olds recognize Joe Camel, similar to the percent who recognize Mickey Mouse. The other study finds that since the inception of the Joe Camel campaign in 1987, Camel’s share of the under-18 (illegal) market has risen from 0.5% to 32.8%, worth >$400 million per year.
1990:– Most popular brands: Marlboro, Winston, Salem, Kool and Newport. However, Marlboro actually outsells Winston by a 3 to 1 margin.
1990:– The US realizes a $4.2 billion trade surplus from tobacco products. Despite 2.5 million deaths worldwide due to smoking, Vice President Quayle remarks, “We ought to think about opening up markets.”
1999:– About 10 million Americans smoke cigars.
1999:– Britain’s royal family orders the removal of its seal of approval from Gallaher’s Benson and Hedges cigarettes.

 
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Posted by on February 22, 2012 in Tobacco Facts

 

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