Cowen Company has not long ago organized appointments with the administration team from Reynolds American, including the soon-to-be president Deborah Crew. “Whilst just a couple of months since the purchase closed, the chance for outsized market share benefits for each of Newport, Camel and Natural American Spirit look quite inspiring,” Cowen expert Vivien Azer published in a research note. “Reynolds today sits in the sweet spot of numerous shifts in consumer dynamics, whereas also located to make profit on much better retail presence, cost savings and top brands and e-cigs.”
The likely addition of Newport’s retail network also seems to advantage Reynold’s current brands, particularly Camel.
“Just before the addition of Newport, the Camel brand provided multiple roles in Reynold’s portfolio, as it was the leading rival to Marlboro, however also aimed to be the major growth driver in the menthol category,” explained Azer. “Reynolds will consider taking a more concentrated strategic technique with the brand, while capitalizing on geographic opportunities, mostly in the East, as they take advantage of the Newport distribution network. Looking ahead, we count on the combination of Newport and Camel and that they will place Reynolds well to keep on merging market share with the adult smoker under-30 consumer, which is a major driver of upcoming market share profits,” she explained.
At present, Reynolds estimates the e-vapor category is liable for about 5% of the entire U.S. tobacco category. Therefore, the Reynolds team projects to broaden its portfolio of next-generation tobacco products. “Reynolds continues to be our top pick,” stated Azer. “Profit synergies, cost savings and extensively advantaged market positioning places Reynolds well along a number of growing consumer trends.