Reynolds Volumes Down, Conwood Sales Up

Source from:  Tobacco Reporter 10/26/2009

R.J. Reynolds' cigarette volume during the third quarter to the end of September, at 20.6 billion, was 11.0 per cent lower than that for the third quarter of 2008. Growth-brand volume increased by 6.4 per cent to 9.3 billion, while support-brand volume fell 20.1 per cent to 9.3 billion and non-support-brand volume fell by 27.3 per cent to 2.0 billion. Premium-cigarette volume, at 12.2 billion, was down by 15.1 per cent, while value-brand volume was down by 4.1 per cent to 8.4 billion. Reynolds estimated that the total industry volume during the third quarter of this year, at 80.1 billion, was down by 12.6 per cent, with the premium sector down 14.6 per cent to 56.5 billion and the value sector down by 7.4 per cent to 23.6 billion. The company's share of the domestic market during the third quarter was down by 0.2 of a percentage point to 28.2 per cent. Its growth-brand share was up by 2.1 percentage points to 12.7 per cent, but its support-brand share was down by 1.8 percentage points to 12.7 per cent and its non-support-brand share was down by 0.6 of a percentage point to 2.8 per cent. Meanwhile, Reynolds' cigarette volume during the nine months to the end of September, at 61.7 billion, was 9.1 per cent lower than that for the first nine months of 2008. Growth-brand volume increased by 10.2 per cent to 26.4 billion, while support-brand volume fell 17.9 per cent to 29.1 billion and non-support-brand volume fell by 26.4 per cent to 6.2 billion. Premium-cigarette volume, at 36.8 billion, was down by 13.4 per cent, while value-brand volume was down by 1.8 per cent to 24.9 billion. Reynolds estimated that the total industry volume during the first nine months of this year, at 238.3 billion, was down by 8.9 per cent, with the premium sector down by 11.3 per cent to 168.7 billion and the value sector down by 2.6 per cent to 69.7 billion. Commenting on R.J. Reynolds' performance, Daniel M. Delen, chairman, president and CEO, said the company's growth brands, Camel and Pall Mall, had increased third-quarter cigarette market share by 2.1 percentage points, bringing their combined share to 12.7 per cent. These brands had grown to represent 45 per cent of R.J. Reynolds' total cigarette share. Delen said Camel's innovative smokeless tobacco products - Camel Snus and three styles of Camel Dissolvables - continued to make good progress. "Camel Dissolvables - Orbs, Sticks and Strips - are currently in three lead markets," he said. "These products are made of finely-milled tobacco and completely dissolve in the mouth, offering consumers the most discreet and convenient way to enjoy tobacco today. We're excited about the potential of these new products, and we're gaining valuable consumer insights about Dissolvables in their three lead markets." Conwood's moist snuff volume during the three months to the end of September, at 94.4 million cans, was up by 11.7 per cent on that of the three months to the end of September 2008. Premium-product volume was down by 6.2 per cent to 13.4 million cans, while value-product volume was up by 15.3 per cent to 81.0 million cans. Conwood's share of the US moist snuff market during the three months to the end of September was up by 1.9 percentage points to 29.9 per cent, with its premium-product share down 0.1 of a percentage point to 4.2 per cent and its value-product share up by 2.1 percentage points to 25.7 per cent. Meanwhile, Conwood's moist snuff volume during the first nine months of this year, at 256.1 million cans, was up by 6.6 per cent on that of the first nine months of 2008. Premium-product volume was down by 9.3 per cent to 37.7 million cans, while value-product volume was up by 9.7 per cent to 227.4 million cans. Overall, Reynolds American Inc reported operating income for the three months to the end of September up by 59.4 per cent to $636 million and net income up by 71.6 per cent to $362 million on net sales down by 5.3 per cent to $2,152 million. Adjusted operating income was down by 4.1 per cent and adjusted net income was down by 4.0 per cent. Enditem