tocacco plant Native American Tobaccoo flower, leaves, and buds

tocacco Tobacco is an annual or bi-annual growing 1-3 meters tall with large sticky leaves that contain nicotine. Native to the Americas, tobacco has a long history of use as a shamanic inebriant and stimulant. It is extremely popular and well-known for its addictive potential.

tocacco nicotina Nicotiana tabacum

tocacco Nicotiana rustica leaves. Nicotiana rustica leaves have a nicotine content as high as 9%, whereas Nicotiana tabacum (common tobacco) leaves contain about 1 to 3%

tocacco cigar A cigar is a tightly rolled bundle of dried and fermented tobacco which is ignited so that its smoke may be drawn into the mouth. Cigar tobacco is grown in significant quantities in Brazil, Cameroon, Cuba, Dominican Republic, Honduras, Indonesia, Mexico, Nicaragua, Sumatra, Philippines, and the Eastern United States.

tocacco Tobacco is an agricultural product processed from the fresh leaves of plants in the genus Nicotiana. It can be consumed, used as an organic pesticide, and in the form of nicotine tartrate it is used in some medicines. In consumption it may be in the form of cheap cigarettes smoking, snuffing, chewing, dipping tobacco, or snus.

tocacco

Big tobacco seller from past boosted by lower prices

Recognizing the signs of the economic times has enabled R.J. Reynolds Tobacco Co. to breathe new life into a 110-year-old cigarette brand.

Analysts say that the near doubling of Pall Mall’s market share in the past 12 months to 4.24 percent could eventually chip away at Marlboro - the top-selling U.S. cigarette brand.

Reynolds acquired Pall Mall in the 2004 purchase of Brown & Williamson Tobacco Corp.

Pall Mall’s gains are simple to explain even as they defy shrinking overall U.S. cigarette sales, analysts said.

Give consumers a less-expensive product and hope they like it enough to stick around when prices go back up.

A temporary price discount on Pall Mall in the spring attracted smokers wanting to spend less on cigarettes in the recession. As a result, Pall Mall’s market share doubled in the second quarter to 5.2 percent compared with a year ago.

Even after the discount ended in May and prices were raised to accommodate increases in federal and state excise taxes, Pall Mall maintained a higher market share over the past year.

By comparison, the sales of Marlboro and Camel have been flat over the same time, according to Information Resources Inc./Capstone, a group that specializes in tobacco research.

“Pall Mall is a high-quality, longer-lasting cigarette at an attractive price, so it’s particularly appealing in today’s economic environment,” said Daniel Delen, the chairman, president and chief executive of Reynolds Tobacco.

“The brand’s most recent promotional period, which coincided with the federal excise-tax increase, was widely welcomed by adult smokers as they re-evaluated brand choices in light of higher prices.”

David Howard, a spokesman for Reynolds, said that the company believes that Pall Mall’s market share gains are sustainable.

Since Pall Mall was positioned as one of Reynolds’ two growth brands — signifying increased marketing efforts — its market share has increased from 1.86 percent in October 2006.

Howard also credited Reynolds’ investment in smokeless products, such as Camel Snus, for bolstering overall market share of tobacco products.

Pall Mall could gain more market share beginning Monday when Reynolds begins another discount program that will reduce the cost of a carton by $5, said Pat Shehan, the owner of Tarheel Tobacco of Winston-Salem.

Howard said that Reynolds would not confirm the start of a new discount program. He did say that the company relied on overtime production to handle the first discount promotion.

“We have everything in place to manage all promotions, and should we need to run overtime, that would be a good problem to have,” Howard said.

Shehan said he believes that the discounting is enabling Reynolds to shift market share from Doral, which receives limited marketing support, to Pall Mall.

“Doral has been the No. 1 brand for the 14 years I’ve been running the stores,” Shehan said.

“Since Reynolds began discounting Pall Mall, it has become the cheapest cigarette among the national brands. That has made Pall Mall more appealing to blue-collar customers.”

Thilo Wrede, an analyst with Credit Suisse, recently raised his earnings forecast for Reynolds based on market share gains by Pall Mall and Grizzly, the leading smokeless tobacco product for the company’s Conwood division.

Wrede raised his earnings forecast by 4 cents to $4.56 for fiscal year 2009 and by 10 cents to $4.70 for fiscal year 2010. In July, Reynolds raised its earnings guidance for 2009 to a range of $4.40 to $4.60 a share.

Wrede also raised his share-price target from $45 to $52.

“Even though we still believe that they do not maximize the short-term profit of Pall Mall, we now see them as a successful — and profitable — long-term investment,” Wrede said.

So successful, Wrede said, that it’s likely Pall Mall will compel Philip Morris USA to drop its price on Marlboro to put the brakes on Pall Mall’s market-share gains.

“With Pall Mall gaining market share, it allows us to attack Marlboro and Newport at different price points,” Howard said.

The resurgence of Pall Mall is reintroducing the brand — the top U.S. seller in the 1960s — to smokers who have favored Marlboro, Newport and Camel in recent years, according to Stephen Pope, the chief global-market strategist with Cantor Fitzgerald Europe.

“Having slipped from a premium brand of regular choice to be a faded star requires extensive market research as to how the product can be repositioned,” Pope said.

“Pall Mall is probably best suited to seeking maximum sales through the mass market. The top end is probably too small a marketplace to allow re-admittance.”

The market-share gains also likely are the payoff from a marketing push from 2007, in which Reynolds unveiled a new orange packaging that seemed “edgier and hipper” than Marlboro or Newport, said Michelle Roehm, a marketing professor and a senior associate dean of faculty at the Schools of Business at Wake Forest University.

“Younger adult smokers may very likely find it more compelling to display the fresher look of Pall Mall rather than the stodgier statement that, say, a Marlboro pack might make,” Roehm said.



By Richard Craver 2.journalnow

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