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RAI CEO: 'Returning Value in a Challenging Time'
Date:4/30/2008

market-share gains, with a combined first-quarter increase of 0.5 share points. Due to declines on non-growth brands, the company's total market share of 28.0 percent was down 1.4 share points from the prior-year quarter.

Several factors contributed to the company's overall share and volume declines.

R.J. Reynolds' older, more price-sensitive consumers were disproportionately affected by ongoing economic pressures that included higher cigarette prices. That contributed to higher-than-normal cigarette volume declines in the first quarter.

R.J. Reynolds' volume and share were also affected by:

-- a significant increase in competitive discounting and promotion at a

time when R.J. Reynolds tested programs to increase the company's

promotional efficiencies;

-- higher-than-industry-average price increases the company took on

certain brands;

-- a lower level of wholesale inventory compared with the prior-year

quarter; and

-- the company discontinuing a number of lower-priced, low-margin brands.

"It's obvious that our first-quarter performance was weaker than expected and that our efforts to improve promotional efficiency and increase margins were not in sync with the economic and competitive environment," said Daniel M. Delen, R.J. Reynolds' president and chief executive officer.

"We are adjusting our programs to make sure that our brands are competitive in the marketplace," he said. "We will, however, continue to look for opportunities to increase promotional efficiencies going forward."

R.J. Reynolds' growth brands - Camel, Kool and Pall Mall - represented about 45 percent of the company's first-quarter volume. These brands posted a combined share gain of 0.5 percentage points from the prior-year period, with a first-quarter share of 13.2 percent. That performance was driven by continued growth of Camel and Pall Mall, and a slight decline on Kool.

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SOURCE Reynolds American Inc.
Copyright©2008 PR Newswire.
All rights reserved

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