RAI''s American Snuff Outpaced Industry Growth of 2.5% Yet Again

Source from:  Market Realist 02/24/2016

American Snuff's 4Q15 revenue and operating income

Reynolds American's (RAI) 4Q15 revenue for the American Snuff Company rose 11.9% to $0.23 billion compared to $0.20 billion in 4Q14. The increase was primarily due to higher pricing. The reported operating income increased 22% to $0.13 billion in 4Q15.

Rise in operating income

Adjusted operating income rose 18.4% to $0.13 billion. The increase in operating income came about due to higher pricing and volume. American Snuff's 4Q15 moist-snuff retail (XRT) market share rose 0.8 percentage points to 33.5% on volume growth of 6.0%, which outpaced industry growth of about 2.5% for the second consecutive quarter.

The increase in retail market share was driven by American Snuff's flagship brand Grizzly. Grizzly's market share increased to 30.8% on volume growth of 6.6% in 4Q15.

Grizzly versus peers

Other companies like Altria Group (MO), Japan Tobacco (JAPAF), and Imperial Tobacco Group (ITYBY) have a presence in the smokeless tobacco space. However, British American Tobacco (BTI) and Philip Morris International (PM) do not have a presence in this space.

Focus on innovation

American Snuff Company is planning to focus on market share and profits from its Grizzly branded products through innovation, branding, and promotions. For example, Grizzly's continued strong leadership position in the popular wintergreen style was supported by its recently expanded Dark Wintergreen.

American Snuff also offers Grizzly pouches, which provide pre-measured portions and are more convenient than traditional moist snuff.

Reynolds American makes up 0.6% of the iShares Russell Top 200 Growth ETF (IWF). Enditem