Source: biz.yahoo.com
Author: Vinnee Tong

Reynolds American gave details to investors Monday about its latest smokeless tobacco products, saying that it would begin selling Camel brand dissolvable tobacco products in mid- to late January in three trial markets.

The nation’s second-biggest tobacco company said that dissolvable strips, orbs and sticks — made from finely milled tobacco — will be sold early next year, starting in Columbus, Ohio; Indianapolis; and Portland, Ore.

They come in fresh and mellow flavors. Among their biggest selling points for smokers, who have fewer and fewer places to light up, is that there is no spitting and nothing left to throw away.

Cigarette companies are trying to find new ways of selling tobacco as cigarette demand has fallen because of smoking bans, health concerns and social pressure. They are focusing more on cigars and smokeless products such as moist snuff, chewing tobacco and snus.

Anti-tobacco groups objected last month when Reynolds first said it would begin selling dissolvable tobacco.

“These new products pose serious threats to the nation’s health,” a statement from the Campaign for Tobacco-Free Kids said then. “They are likely to appeal to children because they are flavored and packaged like candy, are easy to conceal even in a classroom and carry the Camel brand that is already so popular with underage smokers.”

Reynolds, which sells Camel, Kool and American Spirit cigarettes, defended the new dissolvable tobacco in part by saying the products come in child-resistant packs.

The company’s dissolvable tobacco products come in three shapes. Orbs are pellets that last about 15 minutes; strips last five minutes or less; and sticks, which are shaped like a toothpick but slightly bigger, last about 15 to 20 minutes. They are likely to cost less than cigarettes, spokesman David Howard said.

“We’re very excited about the potential of these modern smoke-free products,” Brice O’Brien, a senior vice president of growth and innovation, told investors at a conference on Monday.

O’Brien said it was too early to tell if dissolvable tobacco would prove to be a breakthrough innovation, like menthol or filtered cigarettes. But he said focus group testing on adult smokers showed greater interest for dissolvable tobacco than for snus.

Snus is teabag-like pouches that users stick between the cheek and gum. Reynolds, which first started selling snus in April 2006, plans to launch Camel Snus nationwide, also in the first quarter.

Reynolds American’s bigger rival, Altria Group-owned Philip Morris USA, is pursuing sales of smokeless products just as aggressively. Altria bought John Middleton Inc., the maker of Black & Mild cigars, in December 2007. Its pending acquisition of UST Inc., the U.S. market leader in smokeless tobacco, is expected to close during the first week in January. UST sells Skoal and Copenhagen products.

Winston-Salem, N.C.-based Reynolds has owned the Conwood smokeless tobacco business since May 2006. It sells moist snuff under the Grizzly brand.