Sales of smokeless tobacco products, widely sold by companies such as Altria Group Inc. through brands like Copenhagen and Skoal, have risen in the United States even as cigarette sales have dropped.
Lorillard did not provide details of the [image-nocss] new moist smokeless tobacco product it will sell, but told the newspaper that an existing joint venture with Swedish Match to develop a new snus tobacco product for the United States had been terminated. Snus is a nearly 200-year-old Swedish product. In 2006 Lorillard entered into a joint venture with Swedish Match North America to develop and study the possibility of marketing a tobacco product for the U.S. market called Triumph Snus, the report said.
Snus differs from most smokeless tobacco products because it is created through a special pasteurization process. It comes in small pouches and does not require spitting. On a conference call cited by the Journal, Lorillard said the snus product did not make gains in the test markets in the United States and that it may not have been the right time for the product in North America. Lorillard appears to be betting that Americans will continue to lean toward traditional formulations like moist smokeless tobacco, as opposed to newer forms they are less familiar with said the report.
Other companies are still saying they believe snus has a future in the United States. Altria and Reynolds American Inc. have launched snus products, but sales of these products have generally stayed relatively small, according to the Journal. Both of these companies, however, said they are expanding the reach of their snus products.
A spokesperson for Reynolds American, David Howard, told the paper that the company has been very pleased with sales of its Camel Snus product and believes that it is a "viable" product.
The company rolled out Camel Snus nationwide in first-quarter 2009 after putting it in test markets for almost three years. "It's a small market, but we believe there is potential growth for that market," Howard said. An Altria spokesperson, Brendan McCormick, told the paper that the company is pleased with the results of its Marlboro Snus product in test markets and will be expanding it nationally at the end of March.
Swedish Match sells its flagship snus brand General in the United States, as well as another brand called Catch. These were sold outside of the Lorillard joint venture and will continue to be sold in the United States. Swedish Match will also continue selling the moist smokeless tobacco products, such as its Red Man and Timberwolf brands, it already sells in the United States.
"We remain committed to the U.S. market," Lars Dahlgren, CEO of Swedish Match told the Journal. The company said the dissolution of the Lorillard joint venture has no bearing on its snus joint venture company with Philip Morris International Inc. That venture aims to distribute snus products outside of the United States and Scandinavia.
Lorillard dominates the market for menthol cigarettes. Lorillard's Newport brand represents the bulk of its U.S. sales, and its U.S. volume fell 6.5% during the quarter, though its U.S. market share rose to 10.32% from 9.86%
Greensboro, N.C.-based Lorillard is the third-largest manufacturer of cigarettes in the United States. In addition to Newport, the Lorillard product line has five additional brand families marketed under the Kent, True, Maverick, Old Gold and Max brand names. These six brands include 41 different product offerings which vary in price, taste, flavor, length and packaging.
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