A Spitless Chew from Camel

PM USA and RJR testing first smokeless products

Published in CSP Daily News

WINSTON-SALEM, N.C. -- A week after Reynolds American took a plunge into the smokeless-tobacco pool, R.J. Reynolds Tobacco Co. and Philip Morris USA dipped their toes into the OTP waters this week with the beginning of tests on their first smokeless products.

For RJR, the new product is Camel Snus, a smokeless and spitless tobacco product that will be introduced in two markets this month. Meanwhile, PM USA will test market a smoke-free and spit-free tobacco pouch product called Taboka. In this story, CSP Daily News will focus on the RJR product. Tomorrow, [image-nocss] we will feature the PM USA test.

Beginning this month, RJR is test marketing Camel Snus in Austin, Texas, and Portland, Ore. The launch of the test comes less than a week after RJR's parent company, Reynolds American, announced its intent to purchase the Conwood smokeless-tobacco company.

Camel Snus comes in small pouches, packaged in a round tin container, according to a product fact sheet from RJR. Snus is a different kind of smokeless-tobacco product from moist snuff; it is pasteurized, whereas moist snuff is fermented. Snus also contains less moisture and salt than moist snuff.

Camel Snus will be sold at select retail outlets in the test markets. Additionally, the Camel brand will communicate with adult consumers of tobacco products in age-restricted venues (bars and nightclubs) offering them the opportunity to sample Camel Snus.

The test markets are consistent with R.J. Reynolds' desire to offer a variety of differentiated products to adult tobacco consumers, according to the fact sheet. They will enable Camel to gain valuable learning regarding the product and its acceptance among adult consumers of tobacco products in the United States.

Tobacco analyst Bonnie Herzog of Citigroup, New York, said she will watch the snus test cautiously. Although we are overall encouraged by Reynolds' announcement about launching a Camel Snus product, we do admit there are likely some risks associated with this idea, she wrote in a recent industry note. Therefore, we are pleased that Reynolds is moving slowly and will not rush into a national launch unless it makes sense. Risks of launching a Camel Snus product will depend on the acceptance of this product, and if unsuccessful, could this potentially hurt the brand equity of Camel. Given the company's very limited test market, we believe this risk is low.

The product is manufactured in Sweden. During the test market, three styles of Camel Snus will be made available for adult consumers: Original, Spice and Frost.

At retail, Camel Snus products will be housed in chilled containers to ensure freshness. During the test market, retail point-of-sale materials will contain images of the Camel Snus products and indicate to adult consumers that Camel Snus is available at that location, according to the fact sheet.

During the test market, Camel will provide age-verified adult smokers the brand interacts with at age-restricted facilities (bars and nightclubs) the opportunity to sample Camel Snus. Adult smokers who provide proof of age and certify that they are a smoker who wishes to participate in the promotion and receive communications from a tobacco company, will be given two tins of Camel Snus.

Age-verified and certified adult smokers on the Camel brand's database, and who participate in the sampling promotion, will have access to an age-restricted Web site, www.SnusCamel.com. The Web site will provide information on Camel Snus, retail locations where it is sold, FAQs and a Contact Us section. A money-back offer is also available to adult consumers if they are not satisfied with the product.