Reynolds American is consolidating the manufacturing operations for its Vuse digital vapor cigarette. Currently, production is split between R.J. Reynolds Tobacco Co.’s factory in Tobaccoville, North Carolina, USA, and a contractor in Kansas.
Going forward, all production of Vuse will occur at Tobaccoville, pursuant to a services agreement between R.J. Reynolds Tobacco Co. and RJR Vapor Co.
“Vuse is currently the top-selling electronic cigarette in the convenience store channel, and we are very pleased with its success to date,” said Susan M. Cameron, president and CEO of Reynolds American. “As the vapor category continues to develop, we need to make sure our manufacturing operations are efficient and cost-effective in meeting anticipated demand.”
In May of last year, Reynolds American announced a multimillion dollar investment for higher-speed, more efficient e-cigarette manufacturing equipment at R.J. Reynolds Tobacco’s Tobaccoville manufacturing center. The new equipment is now online, enabling the company to consolidate Vuse manufacturing, reducing its manufacturing footprint and generating cost efficiencies.
As a result of the consolidation, in the third quarter Reynolds expects to take asset impairment and exit charges of approximately $100 million on a pretax basis.