R.J. Reynolds Tobacco Holdings, Inc. said it would increase its direct mail promotions as part of fundamental change in its cost structure and marketing that resulted in the layoff of 2,600 employees, or 40% of its workforce, Wednesday.
“We consider direct marketing to be one of the most effective ways to communicate with adult smokers directly,” said spokeswoman Carole Crosslin. She declined to elaborate.
The tobacco giant will also cut back free-product promotions, and rework its retail discounting.
According to news reports, the Winston-Salem, NC company has already started making $800 million worth of cuts, including the job reduction, which it expects to yield about $300 million in savings this year.
Like top competitor Philip Morris USA, Reynolds has seen its business hit by lower cost, generic cigarettes and higher cigarette taxes. The company’s shipments were down 12.2% in the first half of the year.
Reynolds hopes the layoffs will cut costs by $1 billion by the end of 2005.
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