Two Reynolds Cigarette Brands Defy Downward Sales Trend

Source from:  Winston-Salem Journal 03/09/2018

In a less-bad-is-good revenue month for traditional cigarettes, Newport and Natural American Spirit proved to be the only shining light for February, according to a leading tobacco industry analyst

As a result, No. 2 Newport, made by Reynolds American Inc., continued to chip away at No. 1 Marlboro’s market share, as did electronic cigarettes.

The retailers and wholesalers surveyed by analyst Bonnie Herzog represent about 300,000 U.S. convenience stores — the largest market revenue stream for traditional cigarettes.

Reynolds’ sales growth rose overall by 0.6 percent, compared with an industry decline of 2.5 percent for the four-week period that ended Feb. 24.

Newport sales were up 0.6 percent, with a 2.5 percent increase in pricing offsetting a 1.9 percent decline in volume.

Herzog has said the recent 10-cent per pack list-price increase by Reynolds and Philip Morris USA enables the manufacturers to gain additional revenue from smokers not deterred by the additional $2 excise tax that went into effect in California in April 2017.

Herzog said Newport, the top-selling menthol cigarette, continues to gain momentum with millennials through its heightened promotional strategy, although the platinum style is struggling to connect with smokers.

Natural American Spirit, a top-10 U.S. brand, had a 2.9 percent increase. Camel sales were down 0.1 percent, while Pall Mall was down 7.4 percent as more smokers have moved away from discount cigarettes.

Meanwhile, Marlboro had a 7.5 percent volume decline, which suggests that brand pressure persists in and outside of California, Herzog said.

Herzog also said Marlboro is being affected by “ineffective promotional strategies, heightened competitive pressures and faster growth of e-cigs, in particular Juul.”

“We remain optimistic that Marlboro should show signs of overall share stabilization in the second quarter.”

ITG Brands LLC had a 2.4 percent decline, with sizable volume decreases for Winston (down 10.3 percent). ITG’s market share remains at 7.5 percent overall, while Winston stayed at 2.3 percent and Kool and Maverick up slightly to 1.6 percent.

In regard to electronic cigarettes, Herzog reported Juul held a 49.6 percent market share, up from 40 percent just two months ago.

At that level, Juul has exceeded the top market share (46.2 percent) of Marlboro brand for traditional cigarettes.

Meanwhile, Vuse of R.J. Reynolds Vapor Co. rose from 20.7 percent to 21.4 percent.

The current sales represent a drastic switch from a year ago, when Vuse held a 35.4 percent market share and Juul was at 25 percent.

Juul entered the mainstream retail marketplace in 2015, and is sold in the form of a pen or a USB device.

Juul’s market-share growth has drawn criticism from anti-tobacco advocates, who say the discreet shape of the product makes it easy to hide its usage, including by teenagers.

Juul Labs Inc. has said in response that its mission “is to eliminate cigarette smoking by offering existing adult smokers with a better alternative to combustible cigarettes. JUUL is not intended for anyone else.”  Enditem