UST to Try Out Skoal Dry

Will take on rival with test of spitless product in Austin

Published in CSP Daily News

NEW YORK -- UST Inc. said it is planning to test a new smokeless tobacco product in Austin, Texas, going head to head with Reynolds American Inc.'s (RAI) new Camel Snus product being test marketed there, reported Dow Jones MarketWire.

UST President and COO Murray Kessler said Thursday the company is launching Skoal Dryspitless tobacco in small pouches placed in the mouthwithin the next few weeks. He also said UST will test Skoal Dry in another market that he declined to identify for competitive reasons. [Analyst Bonnie Herzog of Citigroup will discuss [image-nocss] OTP and other recent developments during Tobacco Update, a CSPNetwork CyberConference on Tuesday, May 16. Click here to register.]

Kessler declined to provide pricing and other details when he made the announcement at a conference hosted by Goldman Sachs & Co. in New York.

UST has been testing another spitless, smokeless tobacco product, Revel, for about four years, said the report. Kessler acknowledged Revel hasn't been the "home run" he'd hoped for, mostly because the product doesn't have the consumer awareness it needs, in part due to restrictions on tobacco advertising. Still, UST believes it is helping to gain new customers from among cigarette smokers, and the company will continue to test the product, he said.

Skoal Dry should take advantage of Skoal's strong brand recognition, and it uses new technology that represents an evolution of Revel, he said. UST has recently filed patent applications for the technology, Kessler said.

As reported in CSP Daily News, Reynolds last month announced its entry into the smokeless tobacco market with the purchase of another major player, Conwood, and with the introduction of Camel Snus. Altria Group Inc.'s (MO) Philip Morris USA last week also announced it plans to introduce a smokeless, pouch product, Taboka.

UST is a holding company for its principal subsidiaries: U.S. Smokeless Tobacco Co. and International Wine & Spirits Ltd. U.S. Smokeless Tobacco is a leading producer and marketer of moist smokeless tobacco products including Copenhagen, Skoal, Red Seal and Husky. Other consumer products marketed by the company include premium wines sold nationally through the Chateau Ste. Michelle, Columbia Crest, Conn Creek and Villa Mt. Eden wineries, as well as sparkling wine produced under the Domaine Ste. Michelle label.