Reynolds American Inc., the second-biggest U.S. cigarette company, has aggressively promoted its Pall Mall brand in recent quarters as a longer-lasting, more affordable cigarette as smokers weather the weak economy and high unemployment.
The company says that half the smokers who try the brand continue using it.
Pall Mall sales are growing despite industrywide declines in the number of cigarettes sold as taxes, smoking bans, health concerns and social stigma all increase.
Reynolds sold 16 percent more Pall Mall cigarettes in the first quarter even as the Winston-Salem, N.C., company's overall volume fell 5.2 percent. Reynolds American said Pall Mall gained 2 points of U.S. retail market share to hold 8.5 percent in the quarter.
In a conference call with analysts regarding the company's first-quarter earnings, CEO Daniel Delen discussed Pall Mall.
QUESTION: The brand has experienced very good growth and the equity of the brand seems pretty resilient. How do you think about the price positioning of the brand and whether you can look forward to raising the profitability of the brand going forward?
RESPONSE: Pall Mall has had a great run more recently, but I would just remind everyone that Pall Mall was growing already even prior to this downturn over the last couple of years. ... I'm very, very pleased with the brand. It is contributing significantly to profitability. And over the last year and a bit, we've been able to actually increase profitability over and above the marketplace. We continue to look for opportunities like that to make sure that the growth isn't just a volume and market share growth.
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