RAI Makes 'Substantial' Progress in Transforming Tobacco

WINSTON-SALEM, N.C. — Reynolds American Inc. (RAI) is carrying on its strategy to transform tobacco with new alternative products and line extensions.

Speaking Tuesday morning during the company's fourth-quarter 2014 earnings call, RAI President and CEO Susan Cameron reported that VUSE rolled out nationally last year and is now in approximately 100,000 retail outlets. The digital vapor cigarette is available primarily in convenience/gas stores, she said.

According to Cameron, VUSE has become the top-selling electronic cigarette brand in the channel, noting that it has earned "the trust and credibility of the skeptical vapor user."

Building on that, RAI's subsidiary R.J. Reynolds Vapor Co. is now adding four more VUSE styles in Colorado and Utah — the first two markets to sell VUSE. The new adult-oriented styles are expected to have a "broader appeal," the chief executive said.

At the same time, RAI's subsidiary Niconovum USA continues to expand the national reach of​ ZONNIC, a nicotine replacement therapy gum. This process began late in the third quarter of last year. Niconovum is also introducing new ZONNIC flavors: cinnamon and fruit, according to Cameron.

ZONNIC is now available in approximately 18,000 retail outlets and, like VUSE, it is primarily in convenience/gas stores as well as some grocery chains.

In addition, R.J. Reynolds Tobacco Co. is three weeks into its Wisconsin launch of REVO. The heat-not-burn product is a reposition of the company's former Eclipse brand, as CSNews Online previously reported.

While innovative new products are leading RAI's charge to transform tobacco, the company is also adding to its core lineup. For example, it will launch Camel White, an extension of its Camel cigarette brand, in 21 states next month. The Winston-Salem-based company is also expanding Grizzly Dark Wintergreen, which has performed well in Indiana, Cameron said.

She also shared that the company continues to work with the Federal Trade Commission (FTC) on RAI's proposed acquisition of Greensboro-based Lorillard Inc. The deal also calls for London-based Imperial Tobacco Group plc to acquire certain brands from both companies.

Shareholders from all three tobacco companies approved the deal late last month and RAI "has substantially complied with a second request from the FTC," Cameron stated Tuesday. There is not a definitive timeline, but she expects the deal to close in the first half of this year.

"It was another great quarter overall in what can only be characterized as a fantastic year," she concluded.