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United States - Tobacco 0072 - 0817 - 2010
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INDUSTRY PROFILE
Tobacco in
the United States
Reference Code: 0072-0817
Publication Date: October 2011
EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY
Market value
The United States tobacco market grew by 2.2% in 2010 to reach a value of $95,599.9 million.
Market value forecast
In 2015, the United States tobacco market is forecast to have a value of $106,282.5 million, an increase
of 11.2% since 2010.
Market segmentation I
Cigarettes is the largest segment of the tobacco market in the United States, accounting for 91.9% of the
market's total value.
Market segmentation II
The United States accounts for 13.3% of the global tobacco market value.
Market share
Altria Group, Inc. is the leading player in the United States tobacco market, generating a 53.4% share of
the market's value.
Market rivalry
The US tobacco market is highly concentrated, with the top three players collectively accounting for 90%
of the total market value.
CONTENTS
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TABLE OF CONTENTS
EXECUTIVE SUMMARY 2
MARKET OVERVIEW 7
Market definition 7
Research highlights 8
Market analysis 9
MARKET VALUE 10
MARKET SEGMENTATION I 11
MARKET SEGMENTATION II 12
MARKET SHARE 13
FIVE FORCES ANALYSIS 14
Summary 14
Buyer power 15
Supplier power 16
New entrants 17
Substitutes 18
Rivalry 19
LEADING COMPANIES 20
Altria Group, Inc. 20
Reynolds American Inc. 24
Lorillard, Inc. 28
MARKET DISTRIBUTION 31
MARKET FORECASTS 32
Market value forecast 32
MACROECONOMIC INDICATORS 33
APPENDIX 35
Methodology 35
Industry associations 36
Related Datamonitor research 36
CONTENTS
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Disclaimer 38
ABOUT DATAMONITOR 39
Premium Reports 39
Summary Reports 39
Datamonitor consulting 39
CONTENTS
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LIST OF TABLES
Table 1: United States tobacco market value: $ million, 2006–10(e) 10
Table 2: United States tobacco market segmentation I:% share, by value, 2010(e) 11
Table 3: United States tobacco market segmentation II: % share, by value, 2010(e) 12
Table 4: United States tobacco market share: % share, by value, 2010(e) 13
Table 5: Altria Group, Inc.: key facts 20
Table 6: Altria Group, Inc.: key financials ($) 22
Table 7: Altria Group, Inc.: key financial ratios 22
Table 8: Reynolds American Inc.: key facts 24
Table 9: Reynolds American Inc.: key financials ($) 26
Table 10: Reynolds American Inc.: key financial ratios 26
Table 11: Lorillard, Inc.: key facts 28
Table 12: Lorillard, Inc.: key financials ($) 29
Table 13: Lorillard, Inc.: key financial ratios 29
Table 14: United States tobacco market distribution: % share, by value, 2010(e) 31
Table 15: United States tobacco market value forecast: $ million, 2010–15 32
Table 16: United States size of population (million), 2006–10 33
Table 17: United States gdp (constant 2000 prices, $ billion), 2006–10 33
Table 18: United States gdp (current prices, $ billion), 2006–10 33
Table 19: United States inflation, 2006–10 34
Table 20: United States consumer price index (absolute), 2006–10 34
Table 21: United States exchange rate, 2006–10 34
CONTENTS
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LIST OF FIGURES
Figure 1: United States tobacco market value: $ million, 2006–10(e) 10
Figure 2: United States tobacco market segmentation I:% share, by value, 2010(e) 11
Figure 3: United States tobacco market segmentation II: % share, by value, 2010(e) 12
Figure 4: United States tobacco market share: % share, by value, 2010(e) 13
Figure 5: Forces driving competition in the tobacco market in the United States, 2010 14
Figure 6: Drivers of buyer power in the tobacco market in the United States, 2010 15
Figure 7: Drivers of supplier power in the tobacco market in the United States, 2010 16
Figure 8: Factors influencing the likelihood of new entrants in the tobacco market in the United
States, 2010 17
Figure 9: Factors influencing the threat of substitutes in the tobacco market in the United States,
2010 18
Figure 10: Drivers of degree of rivalry in the tobacco market in the United States, 2010 19
Figure 11: Altria Group, Inc.: revenues & profitability 23
Figure 12: Altria Group, Inc.: assets & liabilities 23
Figure 13: Reynolds American Inc.: revenues & profitability 27
Figure 14: Reynolds American Inc.: assets & liabilities 27
Figure 15: Lorillard, Inc.: revenues & profitability 30
Figure 16: Lorillard, Inc.: assets & liabilities 30
Figure 17: United States tobacco market distribution: % share, by value, 2010(e) 31
Figure 18: United States tobacco market value forecast: $ million, 2010–15 32
MARKET OVERVIEW
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MARKET OVERVIEW
Market definition
The tobacco market consists of the retail sale of cigarettes, loose tobacco, chewing tobacco, and cigars
and cigarillos. The market is valued according to retail selling price (RSP) and includes any applicable
taxes. Any currency conversions used in the creation of this report have been calculated using constant
2010 annual average exchange rates.
For the purpose of this report the Americas comprises Argentina, Brazil, Canada, Chile, Colombia,
Mexico, Venezuela, Peru, Uruguay and the US.
MARKET OVERVIEW
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Research highlights
The US tobacco market generated total revenues of $95.6 billion in 2010, representing a compound
annual growth rate (CAGR) of 2.3% for the period spanning 2006-2010.
Cigarettes sales proved the most lucrative for the US tobacco market in 2010, generating total revenues
of $87.9 billion, equivalent to 91.9% of the market's overall value.
The performance of the market is forecast to decelerate, with an anticipated CAGR of 2.1% for the five-
year period 2010-2015, which is expected to lead the market to a value of $106.3 billion by the end of
2015.
MARKET OVERVIEW
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Market analysis
The US tobacco market grew at a sluggish rate during the period 2006-2010, as a result of sluggish sales
growth in the cigarettes category. Overall market growth is expected to decelerate in the forthcoming five
years.
The US tobacco market generated total revenues of $95.6 billion in 2010, representing a compound
annual growth rate (CAGR) of 2.3% for the period spanning 2006-2010. In comparison, the Chinese
market increased with a CAGR of 6%, and the Japanese market declined with a CARC of -1.4%, over the
same period, to reach respective values of $266.3 billion and $47.7 billion in 2010.
Cigarettes sales proved the most lucrative for the US tobacco market in 2010, generating total revenues
of $87.9 billion, equivalent to 91.9% of the market's overall value. In comparison, sales of cigars and
cigarillos generated revenues of $3.7 billion in 2010, equating to 3.9% of the market's aggregate
revenues.
The performance of the market is forecast to decelerate, with an anticipated CAGR of 2.1% for the five-
year period 2010-2015, which is expected to lead the market to a value of $106.3 billion by the end of
2015. Comparatively, the Chinese market will increase with a CAGR of 6.7%, and the Japanese market
will decline with a CARC of -1%, over the same period, to reach respective values of $368 billion and
$45.4 billion in 2015.
MARKET VALUE
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MARKET VALUE
The United States tobacco market grew by 2.2% in 2010 to reach a value of $95,599.9 million.
The compound annual growth rate of the market in the period 2006–10 was 2.3%.
Table 1: United States tobacco market value: $ million, 2006–10(e)
Year $ million € million % Growth
2006 87,153.9 65,633.4
2007 88,937.1 66,976.3 2.0
2008 91,515.5 68,918.0 2.9
2009 93,532.8 70,437.2 2.2
2010(e) 95,599.9 71,993.8 2.2
CAGR: 2006–10 2.3%
Source: Datamonitor D A T A M O N I T O R
Figure 1: United States tobacco market value: $ million, 2006–10(e)
Source: Datamonitor D A T A M O N I T O R
MARKET SEGMENTATION I
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MARKET SEGMENTATION I
Cigarettes is the largest segment of the tobacco market in the United States, accounting for 91.9% of the
market's total value.
The cigars and cigarillos segment accounts for a further 3.9% of the market.
Table 2: United States tobacco market segmentation I:% share, by value, 2010(e)
Category % Share
Cigarettes 91.9%
Cigars and Cigarillos 3.9%
Chewing tobacco 3.4%
Loose tobacco 0.8%
Total 100%
Source: Datamonitor D A T A M O N I T O R
Figure 2: United States tobacco market segmentation I:% share, by value, 2010(e)
Source: Datamonitor D A T A M O N I T O R
MARKET SEGMENTATION II
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MARKET SEGMENTATION II
The United States accounts for 13.3% of the global tobacco market value.
Asia-Pacific accounts for a further 50.8% of the global market.
Table 3: United States tobacco market segmentation II: % share, by value, 2010(e)
Category % Share
Asia-Pacific 50.8%
Europe 30.3%
United States 13.3%
Africa and Middle East 2.1%
Rest of the World 3.5%
Total 100%
Source: Datamonitor D A T A M O N I T O R
Figure 3: United States tobacco market segmentation II: % share, by value, 2010(e)
Source: Datamonitor D A T A M O N I T O R
MARKET SHARE
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MARKET SHARE
Altria Group, Inc. is the leading player in the United States tobacco market, generating a 53.4% share of
the market's value.
Reynolds American Inc. accounts for a further 28.2% of the market.
Table 4: United States tobacco market share: % share, by value, 2010(e)
Company % Share
Altria Group, Inc. 53.4%
Reynolds American Inc. 28.2%
Lorillard, Inc. 8.5%
Others 9.9%
Total 100%
Source: Datamonitor D A T A M O N I T O R
Figure 4: United States tobacco market share: % share, by value, 2010(e)
Source: Datamonitor D A T A M O N I T O R
FIVE FORCES ANALYSIS
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FIVE FORCES ANALYSIS
The tobacco market will be analyzed taking tobacco manufacturers as players. The key buyers will be
taken as retailers, and tobacco leaf farmers and other raw material suppliers as the key suppliers.
Summary
Figure 5: Forces driving competition in the tobacco market in the United States, 2010
Source: Datamonitor D A T A M O N I T O R
The US tobacco market is highly concentrated, with the top three players collectively accounting for 90%
of the total market value.
The US tobacco market has seen increasing legislation and government regulation with regards to
smoking, which limits existing players and discourages new entrants. Moreover, with a new proposal to
post graphic posters warning of the dangers of using tobacco products, is to be approved soon in the later
part of 2010. This would certainly bring many more regulations into market. Furthermore, due to the
dominance of large players such as Altria Group, Reynolds American and Lorillard, coupled with
advertising restrictions in many states, new entrants would find it increasingly difficult to establish a brand.
Also, because of the health implications associated with tobacco products, there are a number of benefits
to consumers from using substitutes, which is why there is a moderate threat from substitute non-durable
goods in this market. Rivalry in the market is boosted by the lack of product differentiation and the
pressure placed on market players by the illicit cigarette trade.
FIVE FORCES ANALYSIS
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Buyer power
Figure 6: Drivers of buyer power in the tobacco market in the United States, 2010
Source: Datamonitor D A T A M O N I T O R
The retailers are considered as buyers in the tobacco market. The main retailers for the US tobacco
market include independent retailers, service stations and supermarkets/hypermarkets. The concentration
of retail outlets is relatively fragmented in the tobacco market, as there are a number of outlets where the
products can be sold. In the US, independent retailers are the most dominant distribution channel, with
27.8% share of total distribution. Furthermore, tobacco products are just one of many products sold by
most retailers, which illustrates that in most cases retailers are not reliant upon tobacco sales, which
increases buyer power. Customers are likely to be loyal towards certain brands, so there is potentially
some pull-through of end-consumer demand on retailers, which decreases buyer power to some extent.
Overall, the buyer power in this market is moderate.
FIVE FORCES ANALYSIS
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Supplier power
Figure 7: Drivers of supplier power in the tobacco market in the United States, 2010
Source: Datamonitor D A T A M O N I T O R
Tobacco is an agricultural product and therefore key suppliers to the tobacco market include tobacco leaf
farmers. These farmers lack power in the supply chain because of their smaller size, with many farms
being family run businesses, particularly those in developing countries. Further inputs to the market
include processing aids, humectants (which keep the tobacco moist and pliable), preservatives and
brand-specific flavors. Other key inputs include packaging materials, such as paper/card, plastic, and foil
to protect and preserve the products of this market. Companies such as Alcan Packaging, who are a
leading global manufacturer of tobacco packaging, are key suppliers to the tobacco market. Alcan's inputs
include in-line rotogravure printed hinge-lid blanks and soft packs. They are also the world's largest
supplier of RYO (Roll Your Own) tobacco booklet covers, as well as printed OPP film (Oriented
Polypropylene film), bundle wraps and tobacco pouches. Another global tobacco packaging supplier is
Amcor. Due to the relative size of key suppliers, their respective influence over the market is increased.
There are limited alternative raw materials in this market, so players are unlikely to switch supplier, which
increases supplier power. Overall, supplier power is fairly moderate.
FIVE FORCES ANALYSIS
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New entrants
Figure 8: Factors influencing the likelihood of new entrants in the tobacco market in the United
States, 2010
Source: Datamonitor D A T A M O N I T O R
Legislation and government regulation with regards to smoking also continue to grow in this market, for
example, restrictions on smoking in public places and pictorial health warnings have been adopted in a
number of US states. For instance, in May 2010, the US government proposed that convenience stores
and other retailers in certain states be required to post graphic poster warnings of the dangers of using
tobacco products. Current tobacco control strategies seek primarily to decrease the demand for cigarettes
through measures that encourage individuals to adopt healthier behaviors, raising entry barriers.
Moreover, with a possibility of the FDA taking over regulation of tobacco in USA, will bring more
regulations in place, making it tough for new entrants. Furthermore, shelf-space in retail outlets is finite
and retailers may be unwilling to stock products of an entirely new, unproven brand. Overall, there is a
weak threat from new entrants to the US tobacco market.
FIVE FORCES ANALYSIS
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Substitutes
Figure 9: Factors influencing the threat of substitutes in the tobacco market in the United States,
2010
Source: Datamonitor D A T A M O N I T O R
Substitutes in the tobacco market may include various non-durable consumer goods, for example nicotine
gum, nicotine patches, and herbal cigarettes. However, there are inter-segmental substitutes apparent
within this market, alternatives to cigarettes and fine cut tobacco products include smokeless tobaccos,
cigars and pipe tobacco. Players and consumers alike may substitute one tobacco product for another,
with players who specialize in the manufacture of cigarettes diversifying into cigars for example. However,
inter-segmental substitution still involves essentially the same product. The benefits of substituting
tobacco products for alternate non-durable consumer goods are especially notable in concerns to
consumer health, largely due to the health implications associated with smoking (e.g. increased risk of
lung cancer, heart disease etc.). Furthermore, because of the addictive quality of nicotine present in
tobacco products, many smokers who want to quit, attempt to do so by substituting tobacco products for
products such as nicotine gum, or patches. These products fulfill the consumer's need for nicotine,
without the harmful effects of inhaling smoke. Unlike tobacco products, which face restrictions on
advertising in many markets, nicotine replacement products are highly promoted through a range of
media. Overall, there is a moderate threat from substitutes in the US tobacco market.
FIVE FORCES ANALYSIS
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Rivalry
Figure 10: Drivers of degree of rivalry in the tobacco market in the United States, 2010
Source: Datamonitor D A T A M O N I T O R
The US tobacco market is highly concentrated, with leading players such as Altria Group, Reynolds
American and Lorillard collectively holding 90% of the total market value. Product differentiation is
essentially limited between the core tobacco products, which include: chewing tobacco, cigars and
cigarillos, cigarettes and loose tobacco, which increases rivalry. Illicit tobacco supplies through smuggling
and counterfeit trade impact upon players' revenues, which will serve to boost rivalry. The fairly slow
market growth in the US tobacco market compared to other regions does very little to ease rivalry among
the players. Overall, there is a moderate degree of rivalry in the US tobacco market.
LEADING COMPANIES
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LEADING COMPANIES
Altria Group, Inc.
Table 5: Altria Group, Inc.: key facts
Head office: 6601 West Broad Street, Richmond, Virginia 23230, USA
Telephone: 1 804 274 2200
Website: www.altria.com
Financial year-end: December
Ticker: MO
Stock exchange: New York
Source: company website D A T A M O N I T O R
Altria Group (Altria) is a diversified company which has business interests in tobacco, alcohol, food and
financial services. The company operates through its subsidiaries that include Philip Morris USA, U.S.
Smokeless Tobacco Company, John Middleton, Ste. Michelle Wine Estates, and Philip Morris Capital
Corporation. In addition, Altria has 27.1% stake in SABMiller, one of the world's largest brewers. The
company primarily operates in the US.
Altria operates through five business segments: cigarettes, smokeless products, cigars, wine, and
financial services.
The cigarettes segment manufactures and markets cigarettes and smokeless tobacco products in the US
through Altria’s subsidiary Philip Morris USA. The company markets its products under brands like
Marlboro, other premium brands such as Virginia Slims, Benson & Hedges, Parliament; and discount
brands such as Basic and L&M among others.
The smokeless segment manufactures and markets smokeless tobacco products through the company’s
subsidiary U.S. Smokeless Tobacco Company (USSTC). The company markets its products under the
Copenhagen, Red Seal, Skoal and Husky brand names.
The cigars segment manufactures and markets machine-made large cigars and pipe tobacco through
Altria’s subsidiary John Middleton (Middleton). The company’s product portfolio comprises brands such as
Black & Mild, Prince Albert, Wine Berry, Carter Hall, Middleton's and Kentucky Club.
Altria operates in the wine segment through its subsidiary Ste. Michelle Wine Estates (SMWE), a
producer of premium varietal and blended table wines. The key brands of the company include Chateau
Ste, Michelle, Columbia Crest, Domaine Ste. Michelle, Villa, Conn Creek and Erath.
LEADING COMPANIES
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Altria’s provides financial services through its subsidiary Philip Morris Capital Corporation (PMCC), an
investment company engaged in leveraged and direct finance lease investments.
The group revised its reportable segments to cigarettes and other tobacco products, cigars and financial
services after it spun off Philip Morris International (PMI) in early 2008, and acquired Middleton in
December 2007.
In 2009, Altria acquired UST Inc., a holding company engaged in the manufacturing and marketing of
moist smokeless tobacco products through U.S. Smokeless Tobacco Company and premium wines
through Ste. Michelle Wine Estates.
In February 2011, it was announced that two Altria Group Inc. subsidiaries plan to test-market "tobacco
sticks", a form of smokeless tobacco, an alternative to conventional tobacco products. The company also
plans to expand its Marlboro Snus smokeless tobacco nationwide.
In May 2011, Altria Group Inc. introduced new filter cigarettes in Lithuania marketed under the L&M U-
Spin brand name.
Key Metrics
The company recorded revenues of $24.4 billion in the financial year (FY) ended December 2010, an
increase of 3.4% over FY2009. The net profit of the company was $3.9 billion in FY2010, an increase of
21.8% over FY2009.
During the FY2010, the cigarettes division recorded revenues of $21.6 billion, an increase of 3.4% over
2009.
The smokeless products division recorded revenues of $1.6 billion in FY2010, an increase of 13.6% over
2009.
The cigars division recorded revenues of $560 million in FY2010, an increase of 7.7% over 2009.
LEADING COMPANIES
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Table 6: Altria Group, Inc.: key financials ($)
$ million 2006 2007 2008 2009 2010
Revenues 18,790.0 18,664.0 19,356.0 23,556.0 24,363.0
Net income (loss) 12,022.0 9,786.0 4,930.0 3,206.0 3,905.0
Total assets 104,270.0 57,746.0 27,215.0 36,677.0 37,402.0
Total liabilities 64,651.0 38,844.0 24,387.0 32,573.0 32,175.0
Employees 175,000 84,000 10,400 10,000 10,000
Source: company filings D A T A M O N I T O R
Table 7: Altria Group, Inc.: key financial ratios
Ratio 2006 2007 2008 2009 2010
Profit margin 64.0% 52.4% 25.5% 13.6% 16.0%
Revenue growth (70.5%) (0.7%) 3.7% 21.7% 3.4%
Asset growth (3.4%) (44.6%) (52.9%) 34.8% 2.0%
Liabilities growth (10.5%) (39.9%) (37.2%) 33.6% (1.2%)
Debt/asset ratio 62.0% 67.3% 89.6% 88.8% 86.0%
Return on assets 11.3% 12.1% 11.6% 10.0% 10.5%
Revenue per employee $107,371 $222,190 $1,861,154 $2,355,600 $2,436,300
Profit per employee $68,697 $116,500 $474,038 $320,600 $390,500
Source: company filings D A T A M O N I T O R
LEADING COMPANIES
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Figure 11: Altria Group, Inc.: revenues & profitability
Source: company filings D A T A M O N I T O R
Figure 12: Altria Group, Inc.: assets & liabilities
Source: company filings D A T A M O N I T O R
LEADING COMPANIES
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Reynolds American Inc.
Table 8: Reynolds American Inc.: key facts
Head office: 401 North Main Street, Winston-Salem, North Carolina 227101, USA
Telephone: 1 336 741 2000
Fax: 1 336 741 0881
Website: www.reynoldsamerican.com
Financial year-end: December
Ticker: RAI
Stock exchange: New York
Source: company website D A T A M O N I T O R
Reynolds American (RAI) is engaged in the manufacture and sale of cigarettes. It is a holding company,
which was formed to facilitate the merger of RJR Tobacco Company with Brown & Williamson Tobacco
Corporation, the US subsidiary of British American Tobacco (BAT) in 2004. RAI manufactures and sells
cigarettes either independently or through joint ventures in France, Spain, Italy, and the US.
The company operates through two reportable business segments: RJR Tobacco and American Snuff.
The RJR Tobacco segment consists of the primary operations of R. J. Reynolds Tobacco Company. The
American Snuff segment consists of the primary operations of American Snuff Co. and Lane while the two
RAI’s wholly owned subsidiaries, Santa Fe Natural Tobacco
Company, Inc., referred to as Santa Fe and Niconovum AB is included in All Other segment.
RAI’s largest operating segment, RJR Tobacco, is the second largest cigarette manufacturer in the US.
RJR Tobacco’s largest selling cigarette brands are Camel, Kool, Pall Mall, Doral, Winston and Salem.
RJR Tobacco also manages a contract manufacturing business through arrangements with British
American Tobacco (BAT) affiliates and manages tobacco products sold to certain U.S. territories, U.S.
duty-free shops and U.S. overseas military bases.RJR Tobacco owns cigarette manufacturing facilities in
the Winston-Salem, North Carolina, and the Whitaker Park complex. The company's central distribution
center and a pilot plant for trial manufacturing of new products are located at the Whitaker Park complex,
Winston-Salem, North Carolina, the US. RJR Tobacco has a combined production capacity of
approximately 160 billion cigarettes per year.
RJR Tobacco offers two types of modern smoke-free tobacco, CAMEL Snus and CAMEL Dissolvables.
CAMEL Snus is pasteurized tobacco in a small pouch that provides convenient tobacco consumption.
LEADING COMPANIES
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CAMEL Dissolvables include CAMEL Orbs, Sticks and Strips all of which are made of finely milled
tobacco and dissolve completely in the mouth.
American Snuff is the second largest smokeless tobacco products manufacturer in the US. American
Snuff primary brands include its largest selling moist snuff brands, Grizlly and Kodiak. The company also
distributes a variety of tobacco products including Winchester and Captain Black little cigars, and Bugler
roll-your-own tobacco. American Snuff’s primary manufacturing facility is located in Memphis, Tennessee.
Other facilities are located in Clarksville, Tennessee, Winston-Salem, North Carolina; Bowling Green,
Kentucky and Tucker, Georgia. The company markets its products to distributors, wholesalers and other
direct customers, some of which are retail chains.
Santa Fe manufactures and markets cigarettes and other tobacco products under the Natural American
Spirit brand, as well as manages RJR Tobacco’s super premium cigarette brands Dunhill and State
Express 555, which are licensed from BAT.
In March 2011, Reynolds American Inc. sold off its subsidiary Lane Ltd. to Scandinavian Tobacco Group
A/S for $205 million.
Key Metrics
The company recorded revenues of $8.6 billion in the financial year (FY) ended December 2010, an
increase of 1.6% over FY2009. The net profit of the company was $1.1 billion in FY2010, an increase of
15.7% over FY2009.
During FY2010, the RJR Tobacco division recorded revenues of $7.4 billion, an increase of 0.2% over
2009.
The American Snuff division recorded revenues of $719 million in FY2010, an increase of 6.8% over
2009.
The all other division recorded revenues of $482 million in FY2010, an increase of 17% over 2009.
LEADING COMPANIES
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Table 9: Reynolds American Inc.: key financials ($)
$ million 2006 2007 2008 2009 2010
Revenues 8,510.0 9,023.0 8,845.0 8,419.0 8,551.0
Net income (loss) 1,210.0 1,308.0 1,338.0 962.0 1,113.0
Total assets 18,178.0 18,629.0 18,154.0 18,009.0 17,078.0
Total liabilities 11,135.0 11,163.0 11,917.0 11,511.0 10,568.0
Employees 7,500 7,100 6,600 6,400 5,700
Source: company filings D A T A M O N I T O R
Table 10: Reynolds American Inc.: key financial ratios
Ratio 2006 2007 2008 2009 2010
Profit margin 14.2% 14.5% 15.1% 11.4% 13.0%
Revenue growth 3.1% 6.0% (2.0%) (4.8%) 1.6%
Asset growth 25.2% 2.5% (2.5%) (0.8%) (5.2%)
Liabilities growth 39.8% 0.3% 6.8% (3.4%) (8.2%)
Debt/asset ratio 61.3% 59.9% 65.6% 63.9% 61.9%
Return on assets 7.4% 7.1% 7.3% 5.3% 6.3%
Revenue per employee $1,134,667 $1,270,845 $1,340,152 $1,315,469 $1,500,175
Profit per employee $161,333 $184,225 $202,727 $150,313 $195,263
Source: company filings D A T A M O N I T O R
LEADING COMPANIES
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Figure 13: Reynolds American Inc.: revenues & profitability
Source: company filings D A T A M O N I T O R
Figure 14: Reynolds American Inc.: assets & liabilities
Source: company filings D A T A M O N I T O R
LEADING COMPANIES
United States - Tobacco 0072 - 0817 - 2010
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Lorillard, Inc.
Table 11: Lorillard, Inc.: key facts
Head office: 714 Green Valley Road, Greensboro, North Carolina 24708 7018, USA
Telephone: 1 336 335 7000
Website: www.lorillard.com
Financial year-end: December
Ticker: LO
Stock exchange: New York
Source: company website D A T A M O N I T O R
Lorillard is a tobacco company engaged in the manufacture and marketing of cigarettes. It offers various
cigarette products in premium and discount segments. The company primarily operates in the US. Its
products are manufactured at Greensboro, North Carolina facility.
The company's flagship brand includes Newport, a menthol-flavored cigarette brand. Newport accounted
for 90% of the total sales of the company in 2010. The company also markets cigarettes through five
additional brands that include Kent, True, Maverick and Old Gold. These five brands are marketed in 43
different product offerings which vary in taste, flavor, length and packaging.
Lorillard uses burley, flue-cured and aromatic tobaccos which are grown in Turkey and other near Eastern
countries to manufacture its tobacco products. An affiliate of Reynolds American Inc. (RAI) manufactures
all of Lorillard’s reconstituted tobacco pursuant to its specifications. Lorillard purchases more than 66% of
the domestic leaf tobacco from Alliance One International. The company has 29 storage warehouses at
Danville, Virginia facility. The company produces cigarettes at their Greensboro, North Carolina
manufacturing plant, which has a production capacity of approximately 200 million cigarettes per day and
approximately 50 billion cigarettes per year.
Lorillard’s subsidiaries include Lorillard Tobacco Company (Delaware), Lorillard Licensing Company
(North Carolina) and One Park Media Services, Inc. (Delaware).
Key Metrics
The company recorded revenues of $5.9 billion in the financial year (FY) ended December 2010, an
increase of 13.4% over FY2009. The net profit of the company was $1 billion in FY2010, an increase of
8.5% over FY2009.
LEADING COMPANIES
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Table 12: Lorillard, Inc.: key financials ($)
$ million 2006 2007 2008 2009 2010
Revenues 3,755.0 3,969.0 4,204.0 5,233.0 5,932.0
Net income (loss) 826.0 898.0 887.0 948.0 1,029.0
Total assets 2,759.0 2,600.0 2,321.0 2,575.0 3,296.0
Total liabilities 1,464.0 1,587.0 1,690.0 2,488.0 3,521.0
Employees - 2,800 2,800 2,700 2,700
Source: company filings D A T A M O N I T O R
Table 13: Lorillard, Inc.: key financial ratios
Ratio 2006 2007 2008 2009 2010
Profit margin 22.0% 22.6% 21.1% 18.1% 17.3%
Revenue growth 5.2% 5.7% 5.9% 24.5% 13.4%
Asset growth (1.3%) (5.8%) (10.7%) 10.9% 28.0%
Liabilities growth 0.5% 8.4% 6.5% 47.2% 41.5%
Debt/asset ratio 53.1% 61.0% 72.8% 96.6% 106.8%
Return on assets 29.7% 33.5% 36.0% 38.7% 35.1%
Source: company filings D A T A M O N I T O R
LEADING COMPANIES
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Figure 15: Lorillard, Inc.: revenues & profitability
Source: company filings D A T A M O N I T O R
Figure 16: Lorillard, Inc.: assets & liabilities
Source: company filings D A T A M O N I T O R
DISTRIBUTION
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MARKET DISTRIBUTION
Independent Retailers form the leading distribution channel in the United States tobacco market,
accounting for a 27.8% share of the total market's value.
Service Stations accounts for a further 21.5% of the market.
Table 14: United States tobacco market distribution: % share, by value, 2010(e)
Channel % Share
Independent Retailers 27.8%
Service Stations 21.5%
Supermarkets / hypermarkets 11.7%
Others 39.0%
Total 100%
Source: Datamonitor D A T A M O N I T O R
Figure 17: United States tobacco market distribution: % share, by value, 2010(e)
Source: Datamonitor D A T A M O N I T O R
MARKET FORECASTS
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MARKET FORECASTS
Market value forecast
In 2015, the United States tobacco market is forecast to have a value of $106,282.5 million, an increase
of 11.2% since 2010.
The compound annual growth rate of the market in the period 2010–15 is predicted to be 2.1%.
Table 15: United States tobacco market value forecast: $ million, 2010–15
Year $ million € million % Growth
2010 95,599.9 71,993.8 2.2%
2011 97,695.6 73,572.1 2.2%
2012 99,818.9 75,171.1 2.2%
2013 101,968.8 76,790.1 2.2%
2014 104,146.1 78,429.8 2.1%
2015 106,282.5 80,038.6 2.1%
CAGR: 2010–15 2.1%
Source: Datamonitor D A T A M O N I T O R
Figure 18: United States tobacco market value forecast: $ million, 2010–15
Source: Datamonitor D A T A M O N I T O R
MACROECONOMIC INDICATORS
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MACROECONOMIC INDICATORS
Table 16: United States size of population (million), 2006–10
Year Population (million) % Growth
2006 298.4 1.0%
2007 301.4 1.0%
2008 304.2 0.9%
2009 306.7 0.8%
2010(e) 309.1 0.8%
Source: Datamonitor D A T A M O N I T O R
Table 17: United States gdp (constant 2000 prices, $ billion), 2006–10
Year Constant 2000 Prices, $ billion % Growth
2006 11,509.5 2.7%
2007 11,733.0 1.9%
2008 11,697.8 (0.3%)
2009 11,288.4 (3.5%)
2010(e) 11,627.0 3.0%
Source: Datamonitor D A T A M O N I T O R
Table 18: United States gdp (current prices, $ billion), 2006–10
Year Current Prices, $ billion % Growth
2006 13,475.5 6.0%
2007 14,129.5 4.9%
2008 14,627.9 3.5%
2009 14,065.8 (3.8%)
2010(e) 14,725.5 4.7%
Source: Datamonitor D A T A M O N I T O R
MACROECONOMIC INDICATORS
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Table 19: United States inflation, 2006–10
Year Inflation Rate (%)
2006 3.2%
2007 2.9%
2008 3.8%
2009 (0.4%)
2010(e) 1.6%
Source: Datamonitor D A T A M O N I T O R
Table 20: United States consumer price index (absolute), 2006–10
Year Consumer Price Index (2000 = 100)
2006 117.1
2007 120.4
2008 125.0
2009 124.6
2010(e) 126.6
Source: Datamonitor D A T A M O N I T O R
Table 21: United States exchange rate, 2006–10
Year Exchange rate (€/$)
2006 1.2547
2007 1.3683
2008 1.4633
2009 1.3905
2010 1.3279
Source: Datamonitor D A T A M O N I T O R
APPENDIX
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APPENDIX
Methodology
Datamonitor Industry Profiles draw on extensive primary and secondary research, all aggregated,
analyzed, cross-checked and presented in a consistent and accessible style.
Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys
and supported by analysis from industry experts using highly complex modeling & forecasting tools,
Datamonitor’s in-house databases provide the foundation for all related industry profiles
Preparatory research – We also maintain extensive in-house databases of news, analyst
commentary, company profiles and macroeconomic & demographic information, which enable our
researchers to build an accurate market overview
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parameters of each definition are carefully reviewed at the start of the research process to ensure they
match the requirements of both the market and our clients
Extensive secondary research activities ensure we are always fully up-to-date with the latest
industry events and trends
Datamonitor aggregates and analyzes a number of secondary information sources, including:
- National/Governmental statistics
- International data (official international sources)
- National and International trade associations
- Broker and analyst reports
- Company Annual Reports
- Business information libraries and databases
Modeling & forecasting tools – Datamonitor has developed powerful tools that allow quantitative
and qualitative data to be combined with related macroeconomic and demographic drivers to create
market models and forecasts, which can then be refined according to specific competitive, regulatory
and demand-related factors
Continuous quality control ensures that our processes and profiles remain focused, accurate and
up-to-date
APPENDIX
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Industry associations
International Tobacco Growers' Association
No. 30 - A, 1º dtº, 6000-081 Castelo Branco, Portugal
Tel.: 352 272 325 901
Fax: 352 272 325 906
www.tobaccoleaf.org
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Tobacco in Spain
Tobacco in the Czech Republic
Tobacco in Denmark
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Tobacco in Russia
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Tobacco in Sweden
Tobacco in Europe
Tobacco in Australia
APPENDIX
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Tobacco in China
Tobacco in India
Tobacco in Japan
Tobacco in Singapore
Tobacco in South Korea
Tobacco in Taiwan
Tobacco in Asia-Pacific
Tobacco in South Africa
APPENDIX
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