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The world's fourth-largest tobacco company is considering entering the United States, a move that could have a big impact on two large Triad companies. Imperial Tobacco Group plc, a British company, sees the United States as a potentially profitable market with less risk of lawsuits than there was three or four years ago. CEO Gareth Davis told news agency Bloomberg last week that he considered the U.S. an attractive market. Such a move would likely shake up the U.S. cigarette market, and could pose new challenges to Winston-Salem-based Reynolds American Inc. (NYSE: RAI) and Greensboro-based Lorillard Tobacco Co. (NYSE: CG). Imperial is considerably larger than either of those companies, earning revenues of about $21.5 billion in 2005, based on Monday's exchange rates. By comparison, Reynolds, the second-largest U.S. tobacco company, had total revenues of $8.3 billion in 2005 and Lorillard, the No. 3 cigarette company, had revenues of $3.6 billion. Philip Morris USA, the country's biggest cigarette maker, had sales of $18.1 billion in 2005, though that was just a fraction of its overall business, as its parent company, Altria Group, brought in another $45.3 billion in overseas cigarette sales and $34.4 billion from its food operations. Imperial's cigarette brands include West and Davidoff. It already does business in 130 countries.




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Doral cigarettes is a brand that was introduced by RJ Reynolds Tobacco in 1969 when cigarette consumption in the United States was still growing. It was offered in a full variety of shapes and flavors. At that time all cigarettes carried the same price at retail, so the only point of difference from one cigarette to another was the marketing image created by the manufacturer./p>

In 1971 the cigarette companies lost their ability to market on the airwaves and the overall consumption of cigarettes started to slow. In the early 80’s, black and white generic cigarettes started to show up in the marketplace at prices well below the established brands. At that point RJ Reynolds got the idea that if they reduced the pricing of one of their established brands they could prevent the black and white cigarettes from capturing market share.

Doral was the brand they chose and it marked the beginning of tiered pricing in the US cigarette market. Today there are four or five major cigarette price points at retail, and Doral was the first major cigarette brand paving the way.

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