Camel Crush Gets Bold

Published in CSP Daily News

R.J. Reynolds goes national with first line extension in three years; releases Q2 earnings

WINSTON-SALEM, N.C. -- R.J. Reynolds Tobacco Co. is expanding its Camel Crush line nationally with Camel Crush Bold.

Bold's tobacco blend is the same Turkish-Domestic blend as in Camel Filter cigarettes. And as with Camel Crush, the filters of the Bold cigarettes contain a capsule that releases a small amount of menthol in the filter when squeezed. (Camel Menthol cigarettes also use the technology to provide extra menthol.)

According to Richard Smith, a company spokesperson, the Bold cigarettes provide adult smokers "the opportunity to experience full-flavor non-menthol [image-nocss] with 'menthol on demand'."

In testing, Camel Crush Bold had high appeal with smokers of both Camel and competitive brands, and smokers liked being able to decide when or if they wanted to add the menthol taste, according to Smith.

"From our initial feedback in the development of Camel Crush, leading up to its national expansion in 2008, having a full-flavor option has been something adult tobacco consumers have told us they would be interested in," he told CSP Daily News.

As to why the company is launching another menthol cigarette as the U.S. Food & Drug Administration (FDA) Center for Tobacco Products continues to consider the future of menthol, Smith said, "FDA has expressed its intent to base its tobacco regulations on sound science, and with thought given to the fact that millions of adult smokers are interested in menthol cigarettes."

He added, "We believe that based on the published literature, there is no scientific basis to treat menthol cigarettes differently than regular cigarettes. Camel Crush Bold is a viable option for adult smokers to consider."

Daniel Delen, Reynolds American Inc. CEO, pointed out in Friday's earnings call that RJR would "continue to build momentum" with the national expansion, and that it marks R.J. Reynolds' first new national cigarette line extension since Camel Crush went national three years ago.

"The company expects this new style to drive additional growth and further broaden the appeal of the Camel brand," he said.

During the earnings call, Delen also said that Camel's second-quarter cigarette market share was steady at 7.8%, with menthol being a key driver. Camel's share of the growing menthol market incrased by .3 of a percentage point in the second quarter to 2.1%.

Pall Mall, the company's second growth brand, increased its market share by 1.5 percentage points to 8.5% for the quarter, driven by a "blend of quality and value."

R.J. Reynolds field trade-marketing organization now also serves American Snuff, which has benefited the Grizzly brand due to RJR's strength and scale, Delen said. Grizzly's offtake share in the second quarter increased by 1.9 percentage points from the prior year, and now holds a 27.4% share of market. The Grizzly brand also will have activities to celebrate its tenth anniversary by September.

RJR's second-quarter adjusted operating income was $562 million, down $6 million from the prior-year quarter. CFO Thomas Adams said higher cigarette pricing, productivity improvements and growth-brand gains were offset by the decline in support and nonsupport cigarette volume.

Winston-Salem, N.C.-based R.J. Reynolds Tobacco Co., an indirect subsidiary of Reynolds American Inc., is the second-largest tobacco company in the United States, manufacturing about one of every three cigarettes sold in the country. The company's brands include six of the 10 best-selling U.S. cigarette brands: Camel, Pall Mall, Winston, Kool, Doral and Salem.