R. J. Reynolds Tobacco Company
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R. J. Reynolds Tobacco Company (RJR), based in Winston-Salem, North Carolina and founded by R. J. Reynolds in 1874, is the second-largest tobacco company in the U.S. (behind Altria Group). RJR is an indirect wholly owned subsidiary of Reynolds American Inc.
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[edit] Recent history
In 1987, a bidding war ensued between several financial firms to acquire RJR Nabisco. Finally, the private equity takeover firm, Kohlberg Kravis and Roberts & Co (commonly referred to as KKR) was responsible for the 1988 leveraged buyout of RJR Nabisco. This was documented in several articles in The Wall Street Journal by Bryan Burrough and John Helyar. These articles were later used as the basis of a bestselling book, Barbarians at the Gate: The Fall of RJR Nabisco, and then into a made-for-TV film. As a result, in February 1989, RJR Nabisco paid executive F. Ross Johnson US$53,800,000 as part of a golden handshake clause, the largest such deal in history at the time, as severance compensation for his acceptance of the KKR takeover. He used the money to open his own investment firm, RJM Group, Inc.
In 1998 the company was part of the Master Settlement Agreement.
In October 2002, the European Community accused R. J. Reynolds of selling black market cigarettes to drug traffickers and mobsters from Italy, Russia, Colombia and the Balkans.
On July 30, 2004, R. J. Reynolds merged with the U.S. operations of British American Tobacco (operating under the name of Brown & Williamson). A new parent holding company, Reynolds American Inc., was established as part of the transaction.
In May 2006 former R. J. Reynolds vice-president of sales Stan Smith pleaded guilty to charges of defrauding the Canadian government of $1,200,000,000 (CDN) through a cigarette smuggling operation. Smith confessed to overseeing the 1990s operation while employed by RJR. Canadian-brand cigarettes were smuggled out of and back into Canada, or smuggled from Puerto Rico, and sold on the black market to avoid taxes. The judge referred to it as biggest fraud case in Canadian history. [1]
[edit] Marketing, sponsorships and criticisms
From 1972, R. J. Reynolds was a title sponsor of NHRA drag racing, the NASCAR Winston Cup Series and until 1993, the IMSA Camel GT for sportscars.
The NHRA sponsorship lasted up to 2001, before a new governing rule stated the Master Settlement Agreement, restricting R. J. Reynolds to one sponsorship of a sporting event; as a result, they chose NASCAR, which lasted up to 2003.
In 1987, RJR resurrected the mascot for their Camel brand of cigarette, Joe Camel. Joe Camel, an anthropomorphic, cartoon camel with a head resembling male genitalia, was claimed to be a ploy to entice and interest the underaged in smoking. R. J. Reynolds maintained that Joe's "smooth character" was meant only to appeal to adult smokers.
This criticism was reinforced by a 1991 study published in the Journal of the American Medical Association [2] showing that more children 5 and 6 years old could recognize Joe Camel than could recognize Mickey Mouse or Fred Flintstone, (the Fred Flintstone character was also once used to sell R. J. Reynolds cigarettes) and alleged that the Joe Camel ad campaign was targeting children, despite R. J. Reynolds' contention that the campaign had been researched only among adults and was directed only at the smokers of other brands. In response to this criticism, RJR instituted "Let's Clear the Air on Smoking," a campaign of full-page advertisements consisting entirely of large type text, which denied the charges and declared that smoking is "an adult custom".
In late 2005, R. J. Reynolds opened the Marshall McGearty Lounge in the Wicker Park neighborhood of Chicago as part of a marketing strategy to promote a brand of "superpremium" cigarettes and counteract local smoking bans in restaurants and cafes that took effect in 2006. The lounge, which offers thirteen varieties of exclusive "hand-crafted" cigarette, along with alcohol and "light food", has been "well received" in the neighborhood and by the targeted upscale market, according to company officials. The lounge has since been closed due to Chicago indoor smoking restrictions were put in place.
The company planned to open a second location in Winston-Salem in the summer of 2007, but scrapped those plans within weeks of opening, citing the increasing number of smoking restrictions in public places by state and local governments. [3]
[edit] Brands
R. J. Reynolds brands include Camel, Kool, Winston, Salem, Doral, Eclipse, Export A and Pall Mall. Brands still manufactured but no longer receiving significant marketing support include Barclay, Belair, Capri, Carlton, GPC, Kamel, Lucky Strike, Misty, Monarch, More, Now, Tareyton, Vantage, and Viceroy. The company also manufactures certain private-label brands. Five of the company's brands are among the top ten best selling cigarette brands in the United States, and it is estimated that one in three cigarettes sold in the country were manufactured by R. J. Reynolds Tobacco Company. In 2006 R. J. Reynolds acquired the rights to the smokeless tobacco products Kodiak and Grizzly dip.
[edit] Facilities
The company's headquarters are located in the Reynolds Building in Winston-Salem. Built in 1929, the 20-story building was built by the same architects (Joshua Edwards and Chad Edwards) who later designed the Empire State Building in New York City.
R. J. Reynolds' largest plant, Tobaccoville, a 2 million square foot (190,000 m²) facility constructed in 1986, is located in the town of Tobaccoville, North Carolina near Winston-Salem.
The company's Whitaker Park plant, located in Winston-Salem, was built in 1961 and is about 1 million square feet (90,000 m²).
Macon manufacturing, located in Macon, Ga., resides in a 1.4 million square foot (130,000 m²) facility built in 1974. This manufacturing plant was formerly known as Brown & Williamson, which was purchased by Reynolds and eventually closed in 2006.
The company also has tobacco-sheet manufacturing operations in Chester, Va., and Winston-Salem; leaf operations in Wilson, N.C.; tobacco-storage facilities in Blacksburg, S.C. and Richmond, Va.; and a significant research-and-development facility in Winston-Salem.
Among these facilities, R. J. Reynolds employs approximately 6,800 people.
R. J. Reynolds' subsidiary R. J. Reynolds Tobacco Foreign Sales Corporation is established in the British Virgin Islands to optimize its tax liability.
[edit] References
- ^ "Senior exec won't go to jail in massive fraud case", CBC News, May 4,2006
- ^ Fischer PM, Schwartz MP, Richards JW Jr, Goldstein AO, Rojas TH. Brand logo recognition by children aged 3 to 6 years. Mickey Mouse and Old Joe the Camel. JAMA. 1991 Dec 11;266(22):3145-8. PMID 1956101
- ^ "RJR drops plan for downtown smoking lounge", Winston-Salem Journal, June 9,2007
