Philip Morris USA (PM) continues to stumble in the smokeless tobacco arena..

January 12, 2008 - Taboka the first product in PM's adjacency growth strategy had has poor sales and will be discontinued, Marlboro SNUS introduced in August, 2007 now available in about 4,000 stores in the Dallas area has not been widely accepted and now there are problems with Marlboro Moist Smokeless Tobacco (MST) that was introduced into the Atlanta test market in October 2007.(TobaccoWatch.org) On January 10, 2008, Davenport & Company, a Virginia investment firm, released a research report analyzing the recent test launch of Altria's (NYSE: MO) MST. The price for a can of Marlboro Moist Smokeless Tobacco was initially set at $3, a dollar cheaper than either of UST's popular brands -- Copenhagen and Skoal (each worth more than $1 billion at retail - TW) -- which are consistently priced at $4 per can in the area. As Davenport's checks went around to different convenience stores in the Atlanta test market, they surprisingly discovered that many stores had to lower their prices on cans of the Marlboro brand to $1.50. The retailers said they had to cut the price on the Marlboro brand as the product was either already old or just about to be, and needed to be sold or thrown away. Almost every retailer (Wal-Mart was the exception) that was testing the Marlboro product said they saw noticeably slow sales, despite the smokeless tobacco product being brand new. Most retailers also noted a strong brand loyalty for UST's products: clerks would specifically ask customers buying smokeless tobacco products if they would try the new Marlboro brand for a cheaper price, but the majority of the consumers would respond 'no' and ask again for their favorite brand. Going on, retailers noted to Davenport's checks that they had seen little or no return buyers out of the consumers who did try the Marlboro Moist Smokeless Tobacco. In fact, one store said it had not sold a single can of the Marlboro product for two weeks, at a time when UST brand sales remained solid. Initially, consumers seemed some-what interested in the Marlboro product and would at least ask questions about it, but as the trial period went on, fewer and fewer buyers of tobacco would inquire about the new Marlboro product. ( Altria's (MO) New Product Not Up to Snuff, StreetInsider.com, January 11, 2008 11:55 AM EST) Related Marlboro MST news briefs: January 4, 2008 and August 21, 2007. There has been speculation that PM might acquire a smokeless company to gain a foothold in the category.