Reynolds American may or may not be the single most impactful company in North Carolina’s commercial history. After 150 years, it is unquestionably the most resilient.

Its longevity rests on tobacco — the state’s most consequential product. “If it hadn’t been for tobacco, North Carolina would be West Virginia,” says Gene Hoots, a retired Reynolds executive and the leading living authority on the company’s past. “I don’t know what our state would have done without it.”

Founded in Forsyth County by Richard Joshua Reynolds in 1875, Reynolds American is now part of British American Tobacco (BAT Group), which operates in roughly 180 countries.

Like at its start, Reynolds is adapting to changing consumer tastes. This time, the change means newer product categories are slowly displacing the cigarette business that defined the company through much of the 20th century.

Business North Carolina interviewed Wade Huckabee, Reynolds’ strategic planner, for this account of the company’s 150-year arc and the shifting marketing of tobacco and nicotine. Reynolds’ significance to North Carolina and Winston-Salem — and its persistent resilience — stand out.

Since 1875 the company has weathered antitrust probes, public condemnation over the health effects of its product, leadership that missed major opportunities and a notorious 1980s CEO whose self-indulgence and golden parachute drew global ire.

But the human side matters first. Tobacco’s long-term economic benefits touched millions of North Carolinians: Duke University, Wake Forest University and their health systems; the Duke Endowment; Reynolds-backed foundations; and the sturdy factory buildings now reused as offices and condos in downtown Winston-Salem.

Thousands of farm families also benefited from the federal tobacco allotment program that began in 1938. Hoots’ family in Yadkin County was among them, surviving on a farm of fewer than 10 acres growing what was then the most profitable legal crop.

“The allotment allowed small farmers to survive through the Depression until the late 20th century,” he says. “Otherwise, my family would have gone to California and been characters in a Steinbeck novel. Where would people have found employment in North Carolina, especially in eastern North Carolina, which became the heartland because they had big, flat fields?” Today the company still buys from about 700 growers, many in North Carolina.

There is a tragic side as well. No other legal product has caused more harm than cigarettes, Dr. Dana Carroll, an epidemiologist who leads the Masonic Cancer Center at the University of Minnesota, told a Minnesota Public Radio podcast. Chronic tobacco use is the leading preventable cause of 18 cancer types, heart and lung disease and premature death in the U.S., according to the center.

Those effects touched Huckabee personally; he named three close family members who died of smoking-related illnesses. That history made him hesitate when Reynolds offered him a vice president job in strategy and planning in 2016. At the time he was a senior executive at Keurig Dr Pepper in Dallas and had previously worked in strategy and investor relations at Hanesbrands in Winston-Salem.

Debra Crew, a top Reynolds executive who joined from PepsiCo, Mars, Nestle and Kraft in 2014 and later became CEO, described her own thinking to Huckabee. “She was incredibly eloquent and offered a great deal of personal conviction for what this industry was really all about,” he says. “Once I got on the ground, I got to know everyone and things like that only continued to dispel the misperceptions I had, certainly of Reynolds within the industry, but the industry in general.”

Huckabee, now senior vice president of strategy and transformation, refers to the company’s effort to move away from traditional cigarettes. He notes that his relatives who smoked didn’t have access to “viable compelling products” that might have extended their lives.

Cigarettes still fuel the profits of BAT and its global rivals — more than 1.2 billion people continue to smoke — but the industry argues its future depends on shifting smokers to vaping, pouches, e-cigarettes and other products that researchers generally consider far less harmful.

“I think that we’re in a new era and that the new categories that are available today, at least the ones manufactured, marketed and sold by the responsible industry, are going to be the destination for this consumer landscape,” Huckabee says.

Storied past

Reynolds and other big tobacco companies have pursued that destination for decades. Richard Reynolds’ company went public on the New York Stock Exchange in 1922, four years after he died of pancreatic cancer. Over the next six decades it grew into a powerhouse on the strength of the Camel brand, introduced in 1913, and later the Winston filtered cigarette and the Salem menthol brand, launched in 1954 and 1956.

John Whittaker, who joined in 1913, became president in 1948 and board chairman in 1952, is credited by Hoots as the company’s most influential executive after R.J. Reynolds. “He brought the company into the modern age,” Hoots says, noting progressive labor moves such as integrating factories and adding profit-sharing that made Reynolds workers some of the highest-paid manufacturing employees in the state. Management used high pay as a reason to discourage unionization.

Whitaker and other leaders were fiercely loyal to their hometown. In 1964, Reynolds was the only one among the 60 largest U.S. public companies by revenue to be headquartered in the South, according to the Reynolda House Museum of Modern Art’s “Camel City” exhibit.

Winston-Salem rose as a business center: Wachovia grew into a major Southeastern bank and Womble Carlyle Sandridge & Rice became the state’s largest law firm. At its peak Reynolds employed more than 23,000 in the Winston-Salem area.

That hometown focus also meant the company largely skipped an earlier push into international markets that its rival Philip Morris seized with Marlboro. “They ate our lunch,” Hoots says.

Later Reynolds leaders, Hoots argues, “didn’t have an abiding faith in tobacco. Some of them were even embarrassed by it because it had a sort of country, down-home Grand Ole Opry image.” They pursued diversification and missed tobacco’s extraordinary profitability.

From the mid-1960s through 1985, R.J. Reynolds Industries spent $19 billion on non-tobacco businesses including Sea-Land, Del Monte, Heublein and Canada Dry, Hoots says. The 1985 purchase of Nabisco and a headquarters move to Atlanta set the stage for the $25 billion leveraged buyout by Kohlberg, Kravis, Roberts & Co. in 1988.

That era became the stuff of books and TV, centering on RJR Nabisco CEO Ross Johnson and his controversial exit with a severance reportedly exceeding $50 million. Hoots says the non-tobacco assets were ultimately sold at a cumulative loss that equated to a negative 2% annual return over 20 years.

Meanwhile the tobacco core remained highly profitable. In 1999 RJR Nabisco sold Reynolds’ global tobacco business for $8 billion to Japan Tobacco and split into separate food and cigarette companies. Reynolds later returned as a public company in Winston-Salem.

In 2004 Reynolds American was formed by merging Reynolds with the U.S. operations of BAT, which took a 42% stake. In 2017 BAT bought the remainder of the Winston-Salem company for $49 billion.

New categories

The 1998 Master Settlement Agreement required major tobacco companies to pay $206 billion to 46 states to cover smoking-related healthcare costs. North Carolina’s share, $4.57 billion, helped state government and funded the Golden LEAF Foundation, which supports economic development in former tobacco-dependent areas.

The settlement hit industry finances and barred youth-targeted advertising and sports sponsorships such as NASCAR. It also funded a $1.5 billion anti-smoking campaign credited with cutting U.S. adult smoking from 24% in 1998 to 11.6% in 2022, according to the American Lung Association. The stated goal is under 5%.

Reynolds’ combustible cigarette business remains extraordinarily profitable compared with most consumer products and supplies the multibillion-dollar funds the company says are required to transform its business.

“It’s hard for people to reconcile,” Huckabee says. “But, yes, we have this [traditional] business that is a large business, and has a very large consumer base. What that business provides is the resources by which we can invest in new products and do other things to accelerate that smoke-free vision.”

That investment is showing up in North Carolina: Reynolds has committed $200 million to Triad-area manufacturing, mainly to shift toward smokeless products, added roughly 500 jobs in two years and now employs more than 2,000 locally. This fall it launched a worker-training program with Forsyth Tech Community College.

“You think of tobacco as old school, but Reynolds is a forward-thinking company that really cares about North Carolina and Winston-Salem,” says Mark Owens, CEO of Greater Winston-Salem Inc.

The shift has been slower than expected. In 2018 BAT projected new-category revenue of 5 billion British pounds by 2025; more recent estimates put it near 3.65 billion pounds — under 20% of BAT’s revenue. CEO Tadeu Marroco now aims for more than 50% of revenue from smokeless products by 2035.

Philip Morris has made faster progress, with roughly 40% of revenue from smokeless products, largely due to its IQOS tobacco-warming system. BAT has a competitor, Glo, which is not sold in the U.S.

In vapor and oral categories, Reynolds is stronger, analysts say. Vaping uses a pen-shaped device to inhale an aerosol; oral products usually mean discreet nicotine pouches placed in the mouth.

Reynolds’ Vuse vape, launched in 2014, has vied with Juul for market leadership. Vuse sales slipped as many consumers turned to what Reynolds calls “illicit” vapes and hemp-derived CBD products that face less regulation. “It doesn’t go much further for a lot of consumers than if it’s for sale, and I’m able to buy it right, then it must be a legal product,” Huckabee says. “There are all sorts of unscrupulous people around the world that are happy to make a product just because they think consumers will buy it.”

Vape shops proliferated in states like North Carolina where regulation lags. In November, a congressional bill that reopened the government included new restrictions on CBD-related products, set to take effect in late 2026.

Reynolds is urging federal regulators to block illegal vapes at the border, wants states to maintain approved-product directories and supports banning flavored vape juices that appeal to younger consumers. In states with stricter laws, Vuse volume is growing, company officials say.

The Vapor Technology Association, representing many smaller firms, disputes some claims by Big Tobacco and calls for industry-wide promotion of vaping as a safer alternative to cigarettes, reflecting a growing public health consensus, says Executive Director Tony Abboud.

Velo velocity

Investors have taken notice of Reynolds’ Velo nicotine pouches, which the company calls “the fastest-growing brand in the fastest-growing segment.” About 135,000 U.S. stores carry Velo, benefiting from Reynolds’ distribution scale. Velo competes with Philip Morris’ Zyn; neither product contains tobacco like traditional chewing tobacco or snuff.

In the U.S., Velo’s consumer adoption “has gone exponential,” Huckabee says. “Consumers like the nicotine experience and getting the stimulation they are seeking. But they are not burning anything, not creating ash or an odor that can fill up rooms or a car.”

Because the pouches are discreet and portable, the stigma of smoking fades, he adds. “Nicotine pouches are probably the safest way to consume nicotine, with vapes being second,” Robert Kennedy Jr., secretary of Health and Human Services, said earlier this year. “But the thing we really want to get away from are cigarettes.”

Reynolds’ aim of “transforming tobacco” is gaining traction as its smokeless products become more appealing. Combined with sophisticated distribution and improving AI tools, Reynolds increasingly knows what consumers buy, when and how much they will pay — a vast trove of data.

Even so, Huckabee cautions that consumer tastes often outpace corporate plans and regulation. “You can’t force consumer behavior,” he says.

Investors appear confident in the transition: BAT shares gained more than 50% over the past year through mid-November.

That momentum is visible in Winston-Salem, where Reynolds has become more engaged locally, says Owens. “When you walk around the city, you see employees with Reynolds badges who are engaged. There’s an energy and vibrancy right at play in the community that wasn’t necessarily the case four or five years ago. They are not just looking back on this 150th year, but looking forward.” ■

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This article was adapted from an original report published on businessnc.com. All rights belong to the original publisher.