So will this be a future headline that we will all be greeted by or is there another entity that will reach deep into their pockets and ante up a whole lot of peso’s. Or will Lorillard actually reach out and diversify their business? Is Swedish Match in their sights? How does Nat Sherman or National Tobacco fit? Or does Reynolds go down to Jacksonville and talk to the Swisher boys? So what are your thoughts? Are there any other combinations that make sense. So as the consolidation continues has it affected the business? Or is that all still to come in the future? I’d love to hear your thoughts.

I am Fuente and I have been in the Tobacco business many, many years I and appreciate the opportunity that Chris Crawley has offered me to post blogs on this very informative tobacco blog.


#1 Bill Godshall on 09.26.08 at 1:29 PM

I expect additional mergers and acquisitions in the tobacco industry.

But the one that could truly revolutionize the industry will be when a large tobacco company (e.g. PM, BAT, Japan Tobacco) merges with or acquires a large drug company or its nicotine gum, lozenge, or inhaler products.

#2 TAZ on 09.26.08 at 5:42 PM

Bill – you bring up an interesting thought.
This was on the TMA site this afternoon!

Philip Morris International has agreed to acquire for C$ 16 million (US$ 15.5 mn) a 49.9% stake in Quebec City, Canada-based vaccine developer Medicago Inc, in a deal that its CEO Andy Sheldon said fits PMI’s “expertise in and around tobacco” with Medicago’s use of tobacco plants “as our machinery … to produce the different types of vaccines (Canadian Press 09/22)

#3 TAZ on 09.26.08 at 5:44 PM

Furthermore –

On September 25th, Japan Tobacco Inc. (JT) and New Jersey-based pharmaceutical company Merck & Co. Inc. signed a global licensing agreement, under which Merck gets worldwide rights, except for Japan, to develop and commercialize JT’s JTT-305, an investigational oral osteoanabolic medication to treat osteoporosis, and JT will receive an upfront payment and additional cash payments upon achievement of certain preset drug development and approval targets.(Business Wire 09/25)

#4 Bill Godshall on 09.27.08 at 12:55 PM

My point was that if/when a large tobacco company acquires a nicotine skin patch, lozenge, gum or inhaler brand or company, tobacco harm reduction should flourish, and market competition should thrive (as tobacco consumers and the public health community will finally realize that cigarettes, smokeless, and clean nicotine products all compete against each other).

The biggest impact would be on health organizations and healthcare professionals, which/who have received lots of money from drug companies to promote their FDA approved nicotine products as “life saving medicine” and to denounce all other smokefree tobacco/nicotine products as “addictive, deadly and evil poisons” (despite the fact that nicotine products sold as smoking cessation aids are very similar to smokefree tobacco/nicotine products).

#5 Tobocatman on 10.02.08 at 1:22 AM

This would be an absolute disaster! Take the company that is losing volume and let them run the only tobacco that is growing volume and share in a business that has increasing challenges and it just can’t be good! I’d rather see Lorillard go buy Swedish or Swisher for goodness sake!

#6 BigMo on 10.07.08 at 11:34 PM

Pretty interesting new products at the Reynolds booth. Looked like a lozenge called orb, a dissolvable strip and a tobacco stick.

#7 The OTP Kid on 10.08.08 at 2:06 PM

RJR just fired all of their top sales executives; meanwhile, the Lorillard people have all been there forever and a day. Now let me think about it for second, which company seems to know what they’re doing here…..

#8 Sweetness on 10.08.08 at 4:04 PM

Those Lorillard folks are just awesome! They have a handle on their business! Great Product that will continue to gain share.

#9 Snowboarder on 10.14.08 at 5:01 PM

It would really be a shame to see RAI buy Lorillard. I mean I’m hearing that again Reynolds volume is seriously down and that Lorillard has strong numbers. What a messed up deal that would be if it where to happen. I mean I even hear that Lorillards Snus is better than the Camel Snus!

#10 Bill Godshall on 10.15.08 at 6:06 PM

Based upon the comments posted here, it might make very good business sense for RAI to buy Lorillard.

Perhaps that’s also why RAI recently cut ad spending for Kool (its leading menthol cigarette brand).

#11 Brave heart on 10.16.08 at 12:47 AM

Kool as a brand has been so over promoted with very little positive results. I would think they realized that Camel Menthol has more to gain in growth. With all the money spent on Kool & Salem with little results it just make good business sense. Not many retailers get excited about the two brands but they sure get excited about the NEWPORT brand! It’s a brand I focus on to drive sales in my locations.

#12 DEERHUNTER on 10.17.08 at 1:59 PM

I believe that as Reynolds continues to lose more industry volume that a deal to purchase Lorillard only becomes more of a reality. Whether people think it is good or bad has no bearing on how money speaks in the investment world. Lorillard is a solid company that still performs in spite of very trying times.

#13 Troubadour on 10.21.08 at 9:00 PM

Found out today that many of my friends in the sales team took packages at Reynolds. I was told that it could be over 100 folks affected outside of headquarters. Some I hear were prepared and others were totally surprised. Is this a strategic move related to a imminent purchase of Lorillard or is it just a move caused by shrinking volumes and rising costs?

#14 The OTP Kid on 10.22.08 at 10:25 AM

There’s an even bigger sales force reduction in the works at RJR coming that will affect a whole lot more people.

It’s definitely volume loss. The industry loss over the last 20 years is almost completely attributable to RJR, American and B&W. Lo and behold, that comprises Reynolds American today!

#15 BIG MO on 10.27.08 at 10:19 PM

I saw the Lorillard report and they sure seem like a company that would be pursued by Reynolds. I think folks are a bit nervous in Greensboro from what I hear. They might get rewarded for performing better than the industry by being a purchase of another company. You have to wonder especially when you see the only menthol emphasis at Reynolds is now within the Camel brand!

#16 Top Seller on 10.31.08 at 7:11 PM

Ok, Ok, Ok, everyone calm down. Yes, it makes business sense for Reynolds to attempt to acquire Lorillard, RJR is steadily losing share and Lorillard is steadily gaining share. But if Lorillard were to be sold,…it makes sense for ANY company to purchase. Lorillard is a well-ran organization with terrific productivity, particularly in sales from the top down. The question is WHO can pay the most to Lorillard’s shareholders? Do we really think it is Reynolds, I don’t. Perhaps the best fit is only on paper, with a foreign company such as Japan, Imperial, and others assuming the Lorillard organization and it’s people. This would offer the global giants an immediate opportunity to come and fight an expanding Phillip Morris in their own backyard, with strong brand recognition in the ever popular NEWPORT cigarette. If that were to occur, the time bomb would be lit on Reynolds’ U.S. business, and they could find themselves with a “FOR SALE” sign in the front yard,…How’s that for a long term plan?

#17 Top Seller on 10.31.08 at 7:24 PM


Pertaining to tax implications of SPUN-OFF companies

Has STRICT rules regarding the sale of any spun-off organization within the first 2 years, which could delay the purchase of Lorillard until June 2010. What could cause such a delay would be the appearance, whether real or not of a “plan” between the organizations involved. If RJR is cutting staff, divesting Kool, and otherwise setting the table for NEWPORT, then they would have a hard time proving in court no plan existed before or during June 2008 to June 2010.

Nothing concrete on the immediate horizon,…we will see what happens in a couple of years.

#18 Top Seller on 10.31.08 at 7:33 PM

All that being said,..Reynolds needs to do something to stay competitive in today’s challenging market, and it doesn’t seem like the answers are coming from them, with PM and LO having the #1 and #2 brands in the U.S. and RJR continually losing market share. Look for more immediate focus on GROWTH products for RJR, such as smokeless tobacco and their CAMEL brand. Further job cuts are also likely as RJR sheds their heavy staff in an effort to become leaner and put them in position to potentially acquire Lorillard after the JUNE 2010 date, but they should and will face stiff competition if LO were to entertain bids.

#19 Smoker Babe on 11.06.08 at 11:26 PM

There sure seems to be alot going on at Reynolds. See that they are looking to move out of the Reynolds building in Winston. But I’m hearing that they are dropping their EDLP program with several retailers. Pretty interesting times at Reynolds.

#20 Gamblingman on 12.04.08 at 12:07 AM

Top Seller – Give me a break RJR had to let folks go due to the lost volume. Plus they did upgrade their IT systems last year which was to see future benefits. A lot of seasoned folks have taken a hit on this last cut in the sales ranks.

#21 Top Seller on 12.04.08 at 6:03 PM


Yes, they HAD to let folks go because of lost volume, and the last I looked almost everyone was losing volume in the industry, but not everyone is letting people go (though most are not filling every spot as employees retire),…we may disagree about the reasons for the methods chosen, but the end goal is still the same, which is an increasingly efficient, leaner, more profitable organization.

#22 RENEGADE on 12.08.08 at 2:35 AM

Top Seller,

Do you really think Reynolds can compete with Imperial, JTI or PMI? They may want to purchase but Lorillard may be to costly? Is there anything out there that is as desireable?

#23 Sweetness on 12.21.08 at 1:08 AM

Can any one tell me what changes have been made to the Newport promotions? I know there was a price increase but I’m now hearing that they are changing the promotional discounts offered as they start back up?

#24 Top Seller on 12.29.08 at 4:14 PM


No, I don’t think Reynolds can compete with Imperial, JTI, or even other NON-tobacco companies that would be interested in acquiring Lorillard. $$$$ wins during a buyout, not proximity or convenience.

#25 Smoker Gal on 01.10.09 at 10:44 PM

I think it will be real interesting to see how RAI performs for the last quarter of 2008 and then we will know.

#26 Snowball on 02.01.09 at 7:03 PM

Any news out in the industry as to Lorillard being purchased? Is it still a possibility?

#27 DEERHUNTER on 02.09.09 at 3:53 PM

Any truth to the rumor that Lorillard is fighting over the retail contracts where Reynolds is placing their Snus refrigerated units in the racking. The battle being the heat from the unit heating up the Lorillard products in the racking. Lorillard is threatening to not pay contracted money if the unit is near their product! Can anyone enlighten? Is this true?

#28 Bertram52 on 02.09.09 at 4:31 PM

Sounds like Lorillard needs their own refrigerated units!

#29 RENEGADE on 02.10.09 at 10:43 AM

Bertram – The issue is Reynolds Snus needs to be refrigerated. Lorillards does not need to be refrigerated. Philip Morris needs no refrigeration either for their Snus.

#30 RockytheRealist on 03.31.09 at 6:32 PM

No snus needs to be refrigerated….it’s all marketing!

#31 AP on 06.17.09 at 9:49 PM

I actually heard that JTI is the one that is going to buy Lorillard.

#32 fedup on 06.19.09 at 1:07 AM

You have to wonder about all this now in light of the FDA having to do a study on menthol within the next 18 months at the expense of the taxpayers yes taxpayers = big misconception *** tobacco companies WILL NOT PAY FOR THE FDA costs – the Smoker will. The Marlboro protection act _ I heard they are celebrating in Richmond that they pulled it all of with the help of their crony Matt Meyers. Hes a absolute lost dude. Lets make sure we keep PM protected so he keeps getting those tobacco dollars and let’s make sure those 400,000 smokers have to options! Make them die! Matt my boy the blood of many will be plastered to your grave one day!

#33 Stewart Johnson on 03.07.14 at 6:59 PM

As a former employee of RAI, I pray this does not happen. The management of RAI have no souls, they sold them to the devil. The employees of Lorillard and the stockholders will be better off without them.

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