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A Peek into Reynolds American’s Portfolio: Top-Selling Brands

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Brand stable

Reynolds American’s (RAI) brand portfolio includes R. J. Reynolds Tobacco Company’s growth brands Camel and Pall Mall. It also includes support brands Doral and Misty. Camel is R. J. Reynolds’ premium growth brand, with a retail (XRT) share of 10.2% of the total share US retail cigarettes. Pall Mall, a value brand for R. J. Reynolds, offers longer-lasting cigarettes and thus continues to attract adult tobacco consumers.

R. J. Reynolds manages the export of tobacco products to certain US territories, US duty-free shops, and US military bases through arrangements with British American Tobacco (BTI) affiliates. R. J. Reynolds also manages the super-premium cigarettes Dunhill and State Express 555, licensed from BTI.

R. J. Reynolds’ cigarettes in the US compete with Marlboro from Altria (MO) and Lucky Strike from British American Tobacco (BTI). Philip Morris International (PM) handles Marlboro’s international operations. British American owns ~42% of RAI.

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American Snuff’s competitive brands

American Snuff Company’s largest selling moist snuff brands include Grizzly, in the price-value category, and Kodiak, in the premium category. In contrast to the declining US cigarette market, US moist snuff retail volumes grew by ~2% in 2014. Moist snuff accounted for 89% of American Snuff’s revenue in 2014.

According to a Nielson report cited in CSP, Grizzly was the top-selling moist-smokeless snuff brand in terms of units, with can sales of 49.2 million. Copenhagen (MO) had can sales of 45.6 million.

Afterthe completion of Reynolds’ acquisition of Lorillard, the US combustible cigarette brands of its subsidiaries include, among others, Newport. To learn more about this acquisition, read the next part of this series.

Vuse e-vapor and Natural American Spirit are some other famous Reynolds brands.

Brand building

Competition is primarily based on brand positioning, pricing, marketing, and retail presence. Reynolds American and other companies like Vector Group (VGR) and Altria (MO) are focused on sustaining product portfolios of profitable brands. Reynolds aims to strengthen its brand image by building brand awareness and switching adult smokers of competing brands to its own brands.

RAI has exposure in the iShares Core S&P 500 ETF (IVV), with 0.1% of the total weight of the portfolio as of September 10, 2015.

In the next part of this series, we’ll look at how Reynolds has been improving product distribution.

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