When it comes to cigarettes, there are a handful of companies that dominate the market. These big tobacco brands are in constant competition and always seem to be planning their next big acquisition or marketing ploy to attract consumers. Just a few months ago, Reynolds American made a brazen investment by purchasing Lorillard Inc. for roughly $29 billion. Now it looks like the purchase is paying off and rival Phillip Morris USA could lose their spot as America’s top selling tobacco company.
Now that Reynolds has control of Lorillard, they officially own Newport, the top selling menthol cigarette brand. While it’s only been a few months, Newport is already accounting for 37 percent of Reynolds’ cigarette sales, beating out Camel, which currently accounts for 26 percent of the tobacco giant’s smoking profits.
The Lorillard buy out also gave Reynolds a major advantage in the electronic cigarette sector. The tobacco company already had their own ecig called “Vuse” and it is currently holding a 34.7 market share. Lorillard owned top competitor Blu Ecigs, which remains a top choice among ecig fans nationwide. Now Reynolds is controlling both top selling vaping brands and raking in profits left and right.
The most recent data revealed that Reynolds has already enjoyed a 3.4 percent profit growth this year. Rival Phillip Morris is also showing growth, but it is much smaller at only around two percent. With the final sales quarter still to go, it looks like Reynolds might have a solid chance at taking the top spot in the Big Tobacco competition.
Bonnie Herzog, a financial analyst for Wells Fargo Securities, recently predicted that ecigarette sales would only continue to climb during the last few months of 2015. “We expect strong manufacturer pricing in 2015 to continue, which should generate robust profitability growth,” she said.
Now that Reynolds owns Lorillard, do you think they are on the path to dominate the world of Big Tobacco?