Dissolvable Tobacco Products Appealing To Women

Adult female buy cigarette online users have proven an elusive consumer group for manufacturers' smokeless/smokefree products, particularly — and especially — if they involve spitting.

However, R.J. Reynolds Tobacco Co. reported recently its Camel dissolvable cheap cigarette online products, which do not require spitting, are gaining traction with females in its test markets of Charlotte and Denver.

Reynolds said the flavored, finely milled discount cigarettes products serve as an alternative to cigarettes, giving adults a discreet option in venues where smoking cigarettes is banned out of concern for secondhand smoke cigarettes exposure.

Reynolds' dissolvable products include:

* Camel Sticks, a stick of pulverized tobacco, with flavoring, similar in shape to a toothpick.

* Camel Strips, tobacco film strips that dissolve in the mouth.

* Camel Orbs, similar in shape to Tic Tacs.

Of the adult smokers who bought Camel Sticks, Camel Strips and Camel Orbs in the test markets during September and October, adult females represented 45 percent of the consumers, according to Reynolds. Of all tobacco consumers, 31 percent of the buyers were adult females.

By comparison, adult males constitute 85 percent of the users of moist snuff and Camel Snus.

"We have seen a noticeable appeal and interest of the dissolvable products with adult female tobacco consumers," Reynolds spokesman David Howard said.

Stephen Pope, an industry analyst and managing partner of Spotlight Ideas in England, said Reynolds may have discovered a niche with adult female tobacco users.

"Clearly the figures for the dissolvable products make for fascinating reading and actually show that here could be a product that, if handled correctly, could well offer an opportunity for a special female-targeted product that could be as significant as Virginia Slims was for Philip Morris," Pope said.

The dissolvable products "could prove to be the first viable smokeless tobacco products for females," wrote Bonnie Herzog, an analyst with Wells Fargo Securities LLC. During the early to mid-20th century, female consumption of dip snuff was fairly common in a more rural Triad.

The closest the dissolvable products are available to the Triad is Lake Norman and Mooresville. The products are sold in three mint styles, as well as a variety pack.

Reynolds has not said when the national roll-out of the products will happen.

The dissolvables could play a pivotal role for Reynolds' transformation into a "total tobacco company" that emphasizes smokeless tobacco sales as cigarette volumes continue to decline amid regulatory and societal pressures.

The transformation is daunting for Reynolds considering there are 42 million adult smokers in the United States compared with 8 million adults who consume moist snuff and 3 million adults who consume snus. Camel Snus, a spitless, smokeless tobacco, holds about 70 percent of the U.S. snus market share.

However, about 50 percent of the 1 million U.S. adults who successfully quit smoking cigarettes turn to smokeless products, Herzog wrote.

"The relative risk of these products vary greatly, with smoking cigarettes likely causing the most risk to consumers and dissolvables likely causing significantly less risk," she said.

"Over time, we expect the FDA will play a pivotal role for consumers as the relative risk of these products becomes public."

Howard said Reynolds has no plans to expand testing of the dissolvable products beyond Charlotte and Denver. Reynolds exited test markets in Columbus, Ohio; Indianapolis; and Portland, Ore., after two years in December 2010.

Herzog's comments were part of an overall favorable review of Reynolds that also noted its productivity gains, the increasing popularity of its Camel Crush cigarette style and the growing niche for its Natural American Tobacco products, particularly internationally. Camel Crush has a capsule that can be squeezed to release more menthol flavoring.

"Bottom line, we believe Reynolds American has transformed itself into a much leaner, more focused, total tobacco company," Herzog said.

"Given the halo effect of Camel and Pall Mall's momentum, the company should be able to generate greater returns for shareholders."

Jeff Middleswart, portfolio manager for the Vice Fund of USA Mutuals, said having the Camel and Marlboro brands in dissolvable products is likely to intensify the debate among advocacy groups.

One set says that smokeless tobacco products serve as gateways for teenagers to cigarettes. The other set sees the products as a way to reduce the risk of tobacco use compared with cigarettes.

"Anything tobacco will create criticism — it's just the way of the world," Middleswart said. "A new product that has the potential to gain market share is going to be a target."

John Spangler, a professor of family and community medicine at Wake Forest University School of Medicine, said he found it "disturbing that any smokeless tobacco product is now becoming popular among women."

His concern is that the dissolvable products may encourage women to use smokeless tobacco for the first time.

"It is unclear if dissolvables will truly be harm-reducing on a population basis," Spangler said.

"For example, as many as half of smokeless tobacco users also smoke, providing evidence that, instead of aiding smokers to quit, smokeless tobacco actually helps users maintain their nicotine addiction in situations where smoking cigarettes is banned, such as work places, airplanes, etc."

"Then, when they are in situations where they can smoke cigarettes again, they will smoke cigarettes the same amount as previously."

Reynolds has marketed the appeal of smokeless products in those scenarios, to the point of conducting national and regional ad campaigns for Camel Snus timed for whenever a new smoking cigarettes ban goes into effect or with the recent Great American Smokeout.

The convenience factor of the dissolvable products, as well as potentially being less stigmatized in society, are likely to appeal to women, Pope said.

"The ability to light up or even dispose of a smokeless pouch is not so easy," Pope said. "The dissolvable product, perhaps with menthol or other flavored twists, has the potential to be a home-run product for the female segment."

Matthew Myers, president of the Campaign for Tobacco-Free Kids, has called on Reynolds to permanently pull the dissolvable products and to stop pushing tobacco products that he said enticed children and discouraged smokers from quitting.

Myers has said the dissolvable products appeal to children because they are easily concealed and colorfully packaged, shaped and flavored to resemble mints or gum.

Even though the Food and Drug Administration acknowledges Reynolds is targeting the dissolvable products at adults, legislators in some states are trying to ban them even though they are not sold there.

In October 2010, GlaxoSmithKline, which sells the nicotine-replacement therapy products Nicorette and NicoDerm, requested that the FDA take Reynolds' dissolvable products out of test markets.

"Smokeless tobacco products are currently being marketed without clear evidence of their safety," Glaxo said in a statement. The Reynolds products are being reviewed by the FDA's Tobacco Products Scientific Advisory Committee.

Howard said Reynolds has made adjustments to the packaging, marketing and product mix of its dissolvable products.

"The packaging is now larger and looks more like packaging of other types of traditional tobacco products, and is a different color," Howard said. "The packaging still carries language 'keep this product out of the reach of children.' "

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Soffer V. R.J. Reynolds

Rod Smith's fire-breathing, jury-searing performance yesterday convinced a Gainesville jury to award $5M damages to the survivors of Maurice "Mickey" Soffer late last night. The jury found RJR liable on negligence and product liability claims, but ruled in favor of the defendant on concealment and conspiracy claims. Because the the concealment and conspiracy claims failed, the jury did not reach the issue of punitive damages.

Smith told the jury in his opening statement, "In the years before the meeting in New York [when the Tobacco companies secretly met in 1953 at the Plaza Hotel to plan their public relations campaign], there was a teenager in high school in Philadelphia. His name was Mickey Soffer, and he joined the rest of his generation there in high school beginning to smoke cigarettes R.J. Reynolds cigarettes. Indeed, R.J. Reynolds' planned campaign of deception and denial was waged throughout Mickey Soffer's entire adult life -- right up to the final months in which he died after a horrible struggle, and his eventual death, from lung cancer."

"In 1994" Smith continued, "the tobacco executives of this country met again all together. This time they weren't behind closed doors meeting in secret. This time they were in front of the United States Congress testifying to the American people. This time they were swearing under oath to God and the country that what they were saying they believed. This time in 1994 before Congressman Waxman the question was whether or not they believed their product to be addictive...Ladies and gentlemen, in this courtroom we will prove to you that they not only knew that nicotine was addictive, they had been counting on it as a way to market their product and keep people smoking cigarettes for more than 40 years. There was no surprise in the question about the addictiveness of nicotine, and we will prove in this courtroom that they lied about it."

For R.J. Reynolds, Randy Baringer (Womble Carlyle) told the jury, "This case is ultimately about one thing, and one thing only, and that is Maurice Soffer and the choices he made about smoking cigarettes. It's about why he chose to start, it's about why he chose to continue to smoke cigarettes for as long as he did, and it's about why he chose to quit when he finally did."

Baringer warned the jury that "Mr. Smith...ignored the crucial question of, did any of what he showed you or any of what he talked about actually affect Maurice Soffer in terms of the decisions he made about starting to smoke cigarettes or continuing to smoke cigarettes or to quit smoking cigarettes. But all of the questions that you're going to be asked at the end of this case when you get that verdict form are going to focus precisely on Mr. Soffer, and only Mr. Soffer. And as you will hear it's the plaintiff's burden of proof in this case to establish a link between the conduct or the documents or whatever they allege Reynolds did wrong and his decision to continue to smoke, which ultimately led to his developing lung cancer."

In his closing argument, Smith told the jury, "They knew what was in tobacco smoke, and they knew they couldn't get rid of it, but they told the American people otherwise...The strategy was this: Deny -- no matter what the science, no matter what the epidemiology, no matter what the surgeon general says, no matter what the AMA says, no matter what the scientists and the universities find -- just keep denying -- so you can keep selling these cigarettes store as long as we can sell them, as many as we can sell, we'll come up with new ideas to market this product -- just keep denying."

"Folks, Reynolds says that everyone knew about addiction and smoking cigarettes hazards. Apparently everyone on earth, that is, except, well, R.J. Reynolds and their co-conspirators. And I don't expect today that they will at long last come forward and say, 'By the way we were blatant liars in the 1950's, 1960's, 1970's, 1980's, 1990's -- and by the way we did it for the purpose of having people rely on our blatant lies to their detriment.'"

"We know at least seven people who must not have known about the addictiveness of nicotine not all that many years ago," Smith said, and then re-played the 1994 tobacco executive testimony before Congress. "Can you believe it?" Smith continued, "They brought a historian who said everyone in the world knew about addictiveness. Well I picked seven who didn't."

"Ladies and gentlemen, they are going to try to make this case about one thing: they're going to say it's about Mickey's poor choices. Well that's untrue. First, both of our experts recognize that an addicted smoker makes a choice, has a responsibility to make choices. Nobody says they don't. But they also say it is not a free choice."

In his own high-energy closing, Baringer asked the jury, "What evidence was there that advertising had anything to do with why Mr. Soffer started to smoke cigarettes or continued to smoke?...He took discount cigarettes from his mother...parental influence is a strong indicator of whether someone will start or continue to smoke, and Mr. Soffer's parents smoked. Peers are a strong influence on whether someone starts to smoke," and not one witness testified that they were aware of any way in which advertising had influenced Mr. Soffer.

Moreover, the development of filtration could not have influenced Mr. Soffer's decisions, said Baringer, because Mr. Soffer smoked unfiltered cigarettes, and even tore the filters off of filtered cigarettes. "The whole story that they tell you about filtration is all about other people, because ladies and gentlemen it has nothing whatsoever to do with Maurice Soffer...You want to talk about a smoke cigarettes screen? This is an irrelevant side show that they spent all kinds of time with Dr. Burns talking to you about when they know full well it had nothing to do with Maurice Soffer."

In his closing rebuttal, Smith pounded home his message, "This case in the end is about one thing -- one thing only: -- was he addicted. Because after that, it's an easy answer for you. And every company should have the obligations in every board room not contrive and connive in a way that they can lie for fifty years to sell their product to the people they know that are most vulnerable: the addicted and the adolescent. Those ought to be the people they try to help."

The jury found that Mr. Soffer's addiction to online cigarettes was the legal cause of his death, and that RJR's negligence and defective products were also a legal cause. The jury allocated 40% of the fault to R.J. Reynolds, and 60% to Mickey Soffer, and awarded $1M in compensatory damages to Mr. Soffer's widow, Lucille Soffer, and $2M each to Mr. Soffer's two children, Rochelle Soffer and Joseph Soffer, for a total compensatory damage award of $5M. The total award will be reduced to $2M based on the fault allocation.

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Tobacco Payment Suit Goes To Trial

A county judge heard Monday a claim by Mississippi Attorney General Jim Hood that the State has received "substantially less" than it should have under a settlement agreement with tobacco company R.J. Reynolds.

According to the Mississippi Press, Jackson County Chancery Judge Jaye Bradley presided over the non-jury trial, which is expected to last two days.

Hood filed the lawsuit in February 2010. He alleges that R.J. Reynolds Tobacco Co. "overstated" its 1997 base-year profit and has failed to report shipments of "free," "continuity," and lost or stolen cigarettes.

The tobacco company was part of a master settlement agreement in 1997 that included 46 states and was led by then-Mississippi Attorney General Mike Moore.

Mississippi, which was represented by now-jailed attorney Richard "Dickie" Scruggs, had a separate agreement from the 46-state settlement.

"When it shipped these cigarettes, R.J. Reynolds necessarily anticipated that they would be consumed by smokers in the United States and all or virtually all of them were in fact consumed in the United States, thus contributing to Medicaid and other costs that the Mississippi Settlement payment amounts were intended to offset," Hood wrote in the lawsuit.

"Under any plausible meaning of the term, these cheap cigarette online were 'shipped for domestic consumption,' and they should have been included in the Actual Volume figures reported by R.J. Reynolds."

The attorney general says R.J. Reynolds should be required to report the actual number of cheap cigarettes it shipped for domestic consumption in each year beginning in 1997 and to include in such figure the promotional, free, "continuity incentive," and lost or stolen discount cigarettes it failed to report.

Then the correct amount the State is entitled to receive under the settlement can be calculated, Hood says.

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New Camel Cigarettes Blue Seattle Pack

Congrats Seattle smokers! Soon, when you take a pull off that sweet and smooth Camel stogie, you can read the pack and learn how awesome you are for living here (and, if you keep smoking, perhaps dying here too). Tobacco giants R.J. Reynolds just launched a new city-themed ad campaign that decorates cig packs with metro-specific art from cities like San Francisco, New Orleans, Austin and Seattle. Unfortunately, Gov. Chris Gregoire is none to pleased with the mention.



The effort is actually part of a contest in which smokers can win trips to any of the 10 sponsored cities.



Gregoire is only the latest state or city official to get puffy about the Camel Cigarettes new campaign. San Francisco City Attorney Dennis Herrera and Public Health Director Mitch Katz sent a letter to R.J. Reynolds demanding they remove the Haight Street imagery from its San Francisco-themed pack. Same thing in New York, where the Brooklyn pack inspired New York City Health Commissioner Thomas Farley to send a similar letter. Even in Las Vegas, where a person can simultaneously drink, gamble and have sex with a prostitute 24 hours a day, folks are pissed off about the ad campaign.



Seattle's art features a downtown scene including Mt. Rainer and a parody of the Pike Place Market "Public Market Center" sign that instead reads: "Camel Since 1913."

It also has this über-cliche paragraph summing up what the city is apparently all about, while referring to Seattleites as "alternatives:"



"Home of grunge, a coffee revolution and alternatives who'll probably tell you they're only happy when it rains. It's the smell of vinyl in that hidden record store, that worn T-shirt and a ticket stub with a scribbled phone number -- all with the bold spirit of our Gold Rush ancestors who didn't think twice before breaking free for the glowing future ahead."



Gregoire fired off this statement early this week in response to the campaign:





"I am alarmed and disappointed at R.J. Reynolds' new marketing campaign which exploits the name and image of Seattle to recruit young smokers. Special edition cigarette packs featuring Washington landmarks, including the Pike Place Market and Mt. Rainier, are being co-opted to sell a product that is responsible for killing about 7,500 people in our state every year."





The governor also implied that the new art was being marketed toward kids, though that argument is typically made whenever a tobacco company rolls out a slick new ad that turns heads.



As mad as the governor is, one can't help but wonder if she would have felt rather slighted if R.J. Reynolds had snubbed Seattle and made a custom cig pack for, say, Portland instead.

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