R.J. Reynolds Revamps Wholesale Discount Program

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R.J. Reynolds Revamps Wholesale Discount Program

NEW YORK -- Just one week after leading cigarette maker Philip Morris USA said it would discontinue it Wholesale Leaders 2003 program, number-two U.S. tobacco company R.J. Reynolds Tobacco Co. today said it would not eliminate but alter its discount program for wholesalers.

R.J. Reynolds began announcing the changes to wholesalers on Tuesday and the terms of the plan will be amended effective Sept. 29, according to Reuters. R.J. Reynolds did not disclose financial details of the changes but said it is not eliminating the plan completely. The company said it would introduce a plan for 2004 in the future, the report said.

R.J. Reynolds, which makes cigarettes including Camel and Salem, is appealing a court-ordered injunction granted in a case brought earlier this year by Smith Wholesale and joined by other wholesalers. Smith Barney analyst Bonnie Herzog said that while a change to R.J. Reynolds' wholesale program could cut costs, she expects the program would be replaced with another, less expensive one.

The move comes after top competitor Philip Morris USA on Aug. 28 said it would end its discount program for wholesalers, which is the subject of another lawsuit brought by 16 wholesalers unhappy with its terms, the report said. New York-based Philip Morris, which makes brands including best-selling Marlboro cigarettes, told wholesalers it will stop giving "cents per carton" payments for shipments after Sept. 28 and said that its full program would end on Dec. 27.