What was the reasoning behind this by the country’s leading cigarette producer? David Sutton, PM USA’s manager of media affairs, told Smokeshop recently that with the tobacco industry declining and with limits on the company’s ability to grow cigarette revenue, PM USA needs new ways to grow by expanding its business.

“We have chosen an ‘adjacency’ growth strategy, looking at potential moves into complementary tobacco or tobacco-related products,” he said. “To be successful, we recognize that we need to grow revenues in a manner that is consistent with the business strategies that have made us a successful company to date.”

Two New Snus’

When it sought a smokeless product, the company turned first to snus, which is new in the U.S. but well established in Sweden, the country where it was invented. Snus is generally smokeless, pasteurized and spit-free. PM USA calculated that a product like this might be just what some smokers in the U.S. are looking for.

“We know th!t some adult smokers in the U.S. are interested in smokeless tobacco alternatives,” said Sutton. “However, many adult smokers who might consider taking up smokeless tobacco find some characteristics of existing smokeless products unacceptable.”

Those characteristics include the need for spitting, the appearance of the product, its texture and taste and its packaging. PM USA set out to address these concerns by providing them with an acceptable alternative to existing smokeless products.

The initial product was not a Marlboro snus, but instead another snus product called Taboka that is being test marketed in Indianapolis, Indiana.

It is a spit-free smokeless tobacco product marketed in a pouch called a Tobaccopak and sold in regular and menthol versions. Twelve pouches are sold in a package called a Slidepak. The company intends for Taboka to be merchandised in the cigarette category, behind the counter.

Although initial reports indicate the market test has not gone well, Sutton insisted that PM USA is still behind Taboka. “We have learned a lot from the Taboka test market and are applying those learnings to the Marlboro Snus test market,” he said. “Taboka remains in test marketing.”

But the snus product causing the most excitement right now is Marlboro Snus, which Philip Morris USA introduced into test marketing in the Dallas/ Ft. Worth, Texas area in August.

Marlboro Snus is sold in the same Slidepak packaging as Taboka, and is also filled with 12 pouches. There are four offerings of this product: Rich, Mild, Mint, and Spice.

As for Taboka, Philip Morris hopes that Marlboro Snus will be merchandised in the cigarette category of retail outlets, behind the counter.

Trying to Compete in the Moist Snuff Market

With two new entries into the snus market, PM USA then turned to moist snuff. It announced in August that it will test market Marlboro Moist Smokeless Tobacco. Test marketing was set to begin in Atlanta, Georgia in October with an anticipated retail price of around $3 a can, about midway between the highest-priced and lowest-priced products in the market.

Marlboro Moist Smokeless will come in two flavors - Original and Wintergreen - and two varieties - Long Cut and Fine Cut. The container will be a distinctive metal can, and the product will be sold in individual cans and five-can logs.

Smokeless tobacco is the largest tobacco category behind cigarettes, said Sutton, and it has been growing for a number of years.

“Our research shows that branding is very important in this category and that adult moist smokeless tobacco consumers believe that the Marlboro brand stands for flavor and premium quality,” said Sutton.

Unlike the snus products, PM USA does not expect that Marlboro Moist Smokeless Tobacco will attract a lot of cigarette smokers, although they would certainly be welcome to try it if they chose to. Rather, the company is banking that the product will make an impression on the existing MST market.

Snus Introduced in Canada
Meanwhile, British American Tobacco’s subsidiary, Imperial Tobacco, launched an 18-month test market of a snus product of its own at 230 retail outlets in Edmonton, Alberta, which began in September.

The company did not initially release the name of the product but it was reported that the brand name would be Du Maurier. It was also noted that Edmonton accounts for 40 percent of Canada’s smokeless market.

For Imperial, too, the market seemed to be current cigarette smokers.

“A growing body of research indicates that snus offers those who continue to smoke an option with substantially reduced health risks compared with smoking,” the company said in its introductory statement. “It is one of Imperial Tobacco Canada’s priorities to successfully bring to the Canadian market a product that has been observed to be a less harmful alternative to smoking and attempt to make this choice available to those adult smokers who choose not to quit.”