WINSTON-SALEM, N.C.-- The subject of putting tobacco under the control of the federal Food & Drug Administration (FDA) has divided the industry. Such regulation may also end product innovation, according to Forbes magazine.
The report cites Reynolds American Inc.'s Camel Snus, the spit-free flavored pouch of pasteurized tobacco sold chilled in tins, as an example of the kind of innovation may be the last of its kind after this year's tobacco regulation bill, sponsored by Senator Edward Kennedy (D-Mass.), turns into law. The legislation is expected to easily [image-nocss] pass through the Senate on Tuesday or Wednesday, after getting cleared by the House in April, and then quickly get a presidential signature.
After test runs in Columbus, Ohio, and Portland, Ore., three years ago, R.J. Reynolds Tobacco Co., Winston-Salem, N.C., now sells Camel Snus in 100,000 locations nationwide. A tin of 15 costs $4.50.
The bill has divided the industry. Altria Group Inc., which makes market-leading Marlboro cigarettes though Phillip Morris USA, Richmond, Va., helped write the bill, which critics say will institutionalize that company's market share. The No. 2 tobacco maker, Reynolds American, which makes Camels through RJR, has been waging the battle against it.
Altria is testing Marlboro Snus in Dallas and Indianapolis.
Kennedy's bill would allow the FDA to play gatekeeper to tobacco products like snus and newer smokeless tobacco lozenges and sticks. The legislation also contains language preventing tobacco companies from saying that smokeless tobacco is less hazardous than cigarettes.
Supporters argue that the FDA will finally be able to study cigarette ingredients, said the report. And by toughening regulations, it could in the long run reduce smoking rates, it added.
Reynolds would not disclose sales, Forbes said, but the company recently invested in a new snus factory. Analysts say its spit-free Camel Snus looks like a surprise hit in an innovation-challenged industry, the report added. Snus users tend to be quitters or banned-at-work smokers who need a fix, the magazine said, but who do not like wearing patches or chewing products such as Nicorette, it said.
"We do believe it's a viable product offering or we wouldn't have gone nationwide with it," Reynolds' David Howard told the magazine.
A new hit product would be a boon for Reynolds, which has seen its cigarette market share fall, the report said. Last year, Camel sales dropped 4% to 23 billion cigarettes. Company revenue fell for the first time since 2003.
Undiversified tobacco companies stand to lose if there were a mass migration to smokeless products like snus, the report said. Another loser would be the federal government, which now collect $1 a pack in taxes on cigarettes.
Hostility toward Reynolds' smokeless strategy came out during the Kennedy tobacco bill's mark-up session last week, said the report. "The best marketers, and particularly the people who make Camels, they really do stay a step ahead of the sheriff," said Sen. Sherrod Brown (D-Ohio). Brown considers snus and another new Camel invention, dissolvable nicotine mints called Orbs, as transparent attempts to market tobacco to children.
What's ironic, said Forbes, is that the product works much like a nicotine replacement for quitters. A 2007 Lancet study of 280,000 Swedes from 1978 to 2004 found no increased incidence of oral or lung cancer among snus users, but a "tentative" risk of increased pancreatic cancer. Sweden has the lowest lung cancer rates in Europe, since so many adults there opt to use snus instead of smoke. A study in the medical journal Harm Reduction last year found that snus is a "pathway from smoking, not a gateway to smoking," the magazine said.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.