Reynolds American Inc.’s ability to raise traditional cigarette prices, particularly with recently acquired Newport, enabled the Winston-Salem, N.C.-based company to gain more ground on chief rival Philip Morris USA, according to Nielsen data.
The Nielsen data, containing year-over-year figures as of Oct. 3, also showed mixed consumer demand for electronic cigarettes.
Reynolds completed in June its $29.25 billion purchase of Lorillard Inc., essentially to acquire Newport, the nation’s top-selling menthol brand and No. 2 brand overall. Newport now represents 37 percent of Reynolds’ cigarette sales, while Camel is 26 percent.
As part of the deal, ITG Brands’ parent company, Imperial Tobacco Group PLC, spent $7.1 billion to buy Reynolds’ Kool, Salem and Winston cigarette brands, Lorillard’s Maverick cigarette brand and Lorillard’s blu eCigs.
Reynolds posted an overall 3.4 percent year-over-year gain, bolstered by a 3.8 percent increase in pricing partially offset by a 0.4 percent decline in cigarette stick volume.
Newport dollar sales are up 5.4 percent, while Camel rose 2.6 percent. The report did not include dollar sales data for Pall Mall and super-premium Natural American Spirit.
Meanwhile, Marlboro dollar sales grew by 1.2 percent, representing a 3.6 percent increase on pricing and a 2.4 percent decline in volume.
Overall sales at Henrico County-based Altria Group Inc.’s Philip Morris USA unit were up 2 percent.
Bonnie Herzog, an analyst with Wells Fargo Securities, said part of the sales gain comes from consumers upgrading back to premium brands as they feel better about the economy and their disposable income levels.
“We expect strong manufacturer pricing in 2015 to continue, which should generate robust profitability growth,” Herzog said.
In terms of e-cigarettes, R.J. Reynolds Vapor Co.’s Vuse brand had a 34.7 percent market share as measured by all distribution channels for e-cigs. That’s up from 33.3 percent on Sept. 5.