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Reynolds’ domestic cigarette volume down by 6.8 percent last year

| February 12, 2014

R.J. Reynolds Tobacco’s U.S. domestic cigarette volume during the year to the end of December, at 64.2 billion, was down by 6.8 percent on that of 2012, 68.9 billion.

Camel volume fell by 1.4 percent to 20.9 billion, and Pall Mall volume fell by 2.7 percent to 21.3 billion, so the company’s total “growth brands” volume was down by 2 percent to 42.2 billion.

The volume of RJR’s other brands was down by 14.8 percent to 22 billion.

Reynolds American Inc., whose business sectors take in RJR, Santa Fe and American Snuff, announced its full-year and fourth-quarter results yesterday.

RJR’s volume during the fourth quarter to the end of December, at 15.6 billion, was down by 8.6 percent on that of the fourth quarter of 2012, 17.1 billion.

Camel volume fell by 3.5 percent to 5.1 billion and Pall Mall volume fell by 6.6 percent to 5.3 billion, so the company’s total growth brands volume was down by 5.1 percent to 10.4 billion.

The other-brands volume fell by 14.8 percent to 5.2 billion.

RJR’s share of the domestic cigarette market during the year to the end of December, at 26 percent, was down from 26.5 percent during 2012.

Camel’s share was increased by 0.3 of a percentage point to 8.8 percent and Pall Mall’s share rose by 0.4 of a percentage point to 9 percent.

The share held by the company’s other brands fell by 1.1 percentage points to 8.3 percent.

Meanwhile, Santa Fe’s cigarette (Natural American Spirit) volume during the year to the end of December, at 3.6 billion, was increased by 15.1 percent on that of 2012, while its volume during the three months to the end of December, at 0.9 billion, was 9.6 percent up on that of the three months to the end of December 2012.

Santa Fe’s share of the retail market during 2013, at 1.4 percent, was up by 0.2 of a percentage point on that of 2012.

American Snuff’s volume during the year to the end of December, at 465.8 million cans, was up by 6.5 percent on that of 2012.

Grizzly volume increased by 7.7 percent to 419.3 million cans, while sales of the company’s other moist snuff products fell by 3 percent to 46.5 million cans.

American’s volume during the three months to the end of December, at 121.7 million cans, was up by 8.2 percent on that of the three months to the end of 2012.

Grizzly volume was increased by 9.6 percent to 109.8 million cans, while the volume of the company’s other brands fell by 2.5 percent to 11.9 million cans.

American’s share of the moist snuff market during the year to the end of December, at 33.2 percent, was increased by 0.8 of a percentage point on that of 2012.

Grizzly’s share was up by 1.2 percentage points to 30.1 percent, while the share of other brands was down by 0.3 of a percentage point to 3.1 percent.

RAI had net sales of $8,236 million during the 12 months to the end of December, 0.8 percent down on those of 2012.

Reported operating income was increased by 41.5 percent to $3,132 million, while adjusted operating income was up by 5.5 percent to $3,021 million.

Reported net income was increased by 35.1 percent to $1,718 million, while adjusted net income was up by 3.4 percent to $1,744 million.

And reported net income per diluted share was up by 40.2 percent to $3.14, while adjusted net income per diluted share was up by 7.4 percent to $3.19.

“Reynolds American delivered growth in fourth-quarter earnings and margin despite lower-than-expected wholesale inventory levels,” said Daniel M. Delen, president and CEO, in announcing the results.

“This performance wrapped up a successful year for all our reportable business segments. Our companies continued to make progress in their strategy to transform the tobacco industry, while demonstrating solid fundamental business dynamics and excellent execution in a challenging economic environment. I’m particularly pleased with the market-share gains on our companies’ key brands, which were driven by strong brand equity and efficient execution of their strategies.”

Delen said that a 2013 highlight was the “exciting performance of R.J. Reynolds Vapor Company’s Vuse digital vapor cigarette, which presents a superior option for adult smokers as they consider switching to smoke-free alternatives.”

Vuse is now widely available in Colorado stores—its first major market—and the brand’s recent expansion in neighboring Utah is said to be progressing smoothly.

“Vuse is a highly differentiated product that symbolizes the very best of our companies’ rich history of innovation,” said Delen. “Vuse is already the market leader in Colorado and importantly, the brand is driving significant category growth in the state. In Utah, early indications are that consumers there also appreciate the brand’s distinctive features.”

Looking ahead, Delen said that RAI and its operating companies were well positioned for profitable growth in 2014.

“We will continue to invest in Vuse in 2014 as we expand the brand into national distribution,” he said. “This is further evidence of our companies’ focus on building their businesses for sustainable long-term success.

“RAI’s commitment to delivering value to shareholders was again evidenced by the 6.3 percent increase in our dividend that we announced today, and we remain focused on finding new opportunities to return value to our shareholders.”

Public smoking ban might include shisha

| February 12, 2014

The health ministry of India is considering extending the existing ban on smoking tobacco in enclosed public places to cover shisha, according to a story in the latest issue of the BBM Bommidala Group newsletter.

The ministry appears to be concerned that the consumption of shisha is growing, especially among young people.

Nevertheless, the ministry is said not to be considering a total ban.

Although, under proposed rules, clubs and lounges would not be allowed to serve shisha in places where food was also served, those with seating for 30 people or more, and hotels with more than 30 rooms, would be allowed to set up special enclosures for shisha smoking.

Tobacco industry cutting smoking

| February 12, 2014

Retailers across Jordan were reported on Sunday to have been low on cigarettes for a few days, with manufacturers and storeowners trading accusations about who is to blame for the shortages, according to a story in The Jordan Times.

Some retailers have said that cigarette manufacturers and distributors have not delivered cigarettes since the government imposed a tax increase on Feb. 4.

But the manufacturers and distributors say their production levels and deliveries have not changed.

Whatever the reason for the shortages, smokers have been left in a position where they cannot buy their favorite domestic brands.

Unless supplies get moving again, the tobacco industry is in danger of achieving what the anti-tobacco industry has tried and failed to do—stop people smoking.

PMI to webcast presentation and Q&A

| February 12, 2014

Philip Morris International is due to host at a live audio webcast of a presentation and question-and-answer session at the Consumer Analyst Group of New York (CAGNY) Conference starting about 1:45 p.m. Eastern Time on Feb. 18.

PMI’s CEO, André Calantzopoulos, who will make the presentation, will be joined for the question-and-answer session by CFO Jacek Olczak.

The webcast, which will be in listen-only mode, will provide live audio of the entire PMI session.

An archived copy of the webcast will be available at until 17.00 hours on March 19.

The presentation slides and script will be available at

Feb. 17 opening for Andhra auctions

| February 11, 2014

Flue-cured tobacco auctions are scheduled to begin on Feb. 17 in the Indian state of Andhra Pradesh, according to a story in the latest issue of the BBM Bommidala Group’s newsletter, quoting the Tobacco Board of India Chairman Koothati Gopal.

The chairman said that every effort was being made to conclude the flue-cured tobacco auctions in the state of Karnataka by that date.

The Andhra crop has been fixed at 172 million kg, a figure set by the board following discussions with the Indian Tobacco Association, which represents tobacco dealers, exporters and manufacturers.

Based on what has happened in Karnataka, Andhra growers are expecting much higher prices this year than they received last year.

E-cigarettes are best quit aids

| February 11, 2014

New research has indicated that smokers of tobacco cigarettes who use e-cigarettes to try to quit their tobacco habit have better outcomes than those who use no aids or those who used an over-the-counter (OTC) nicotine replacement therapy (NRT), according to a blog by Grzegorz Krol on the Nicotine Policy website.

The research was presented by Dr. Jamie Brown, of University College London, and colleagues at the 20th annual meeting of the Society for Research on Nicotine and Tobacco in Seattle on Feb. 8.

The study was conducted on a large representative sample of the English population, and was based on people who had smoked during the past 12 months. It looked at those who had made at least one quit attempt using only an e-cigarette, using only an OTC NRT, or using no aid in their most recent quit attempt. The outcome assessed was abstinence from cigarettes up to the time of the survey.

Users of e-cigarettes performed best, with 19.9 percent having stopped smoking. Of those who used no aids, 15.1 percent were successful, while only 10 percent were successful using OTC NRT.

Krol cautioned that care was needed in looking at these results, which were taken from an abstract of the research paper.

Krol’s blog and the abstract are at

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