Lorillard Pushes into OTP

Like RJR and PM USA before it, cigarette maker to develop smokeless products

GREENSBORO, N.C. -- Like the next domino to fall, Lorillard Tobacco Co. has joined its larger competition in plans to enter the smokeless tobacco business in the near future, entering into an agreement with Swedish Match North America to jointly develop and market a line of smokeless products in the United States.

The companies anticipate that an initial product offering may be launched on some basis of geographic distribution in the not too distant future.

Like its larger rivals Philip Morris USA and Reynolds American Inc., Lorillard [image-nocss] is trying to find different ways to reach consumers concerned about the health risks of smoking. While smokeless tobacco can also cause cancer and other health problems, the risks are generally perceived as being lower than those of cigarettes, according to a Reuters report.

Earlier this year, No. 2 U.S. cigarette-maker Reynolds American, Winston-Salem, N.C., bought Memphis, Tenn.-based Conwood, the second-largest U.S. smokeless tobacco company, adding brands such as Grizzly, a lower-priced product that is growing as the higher end of the market feels pressure, and testing a smokeless and spitless product called Camel Snus in Portland, Ore., and Austin, Texas.

Meanwhile, Altria Group Inc.'s Philip Morris USA, Richmond, Va., started selling Taboka, a smokeless and spitless tobacco pouch product, in a test market in the Indianapolis area in July. Tobacco stock analysts have also speculated that PM USA may have its eye on a future purchase of Greenwich, Conn.-based United States Tobacco Co., the leading smokeless tobacco company in the United States.

That seemed to make it a nature that Lorillard, the third-largest manufacturer of cigarettes in the United States, would find its way to Swedish Match, which is the third leading manufacturer of moist snuff in the United States. Richmond, Va.-based Swedish Match is the maker of such smokeless tobacco brands as TimberWolf and Longhorn moist snuff, and is a leading manufacturer of Other Tobacco Products, such as Red Man chewing tobacco, Half & Half pipe tobacco and White Owl and Garcia Y Vega cigars.

Greensboro, N.C.-based Lorillard Tobacco Co. manufacturers the Newport, Maverick, Old Gold, Kent and True brands of cigarettes.

On Wednesday, Swedish Match posted a better-than-expected third-quarter pretax profit, helped by gains in its cigar business. Reynolds American, which also reported quarterly results, said growth at Conwood helped drive an increase in the company's full-year profit forecast.

(See related story in this issue of CSP Daily News.)

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