With organic (internal) development in the smokeless tobacco arena failing look for Philip Morris USA to expand through acquisitions..

February 4, 2008 - The initial entry in the Snus category Taboka Tobaccopaks did not preform well and is being pulled in the only test market of Indianapolis. Contrary to what Louis Camilleri, chairman and CEO for Altria tells us about Marlboro MST (moist smokeless tobacco) tobacco analysts indicate that the product is not doing well. Marlboro Snus being test marketed in the Dallas/Ft. Worth area and in Indianapolis starting in March has not sold well and the majority of smokers have rejected this alternative tobacco product. Tobacco companies are in agreement for SNUS to catch on and be a strong seller it's going to require more public awareness and education. Remember nine of 10 smokers who try smokeless tobacco reject the product. In September 2007 Swedish Match the maker of Red Man chewing tobacco entered the premium price snuff market for a second time with Red Man Premium Moist Snuff (tagline "An American Experience"). It will be interesting to see if this moist snuff item catches on. Tobacco industry history clearly shows that it is difficult to extend brands from one category to another even if it happens to be the name Marlboro the most popular cigarette in the world or Red Man, the No. 1 loose leaf chewing tobacco. To gain a foothold in the tobacco flavored cigar category good citizen PM USA recently acquired John Middleton, Inc. maker of Black & Mild (B&M) Cigars (second largest selling machine-made cigars in the United States)which is very popular with young African Americans. B&M is the most popular brand of cigars for smokers 12 and older. Nearly a quarter of 18- to 24-year-old blacks in the Baltimore smoke B&M cigars. "The newest addition to the B&M cigars combines the character of wine with the smooth taste and wonderful aroma that is vintage Middleton pipe tobacco." (See ad that appeared in the Sunday (2/3/2008) Raleigh News & Observer.) It has been rumored that once the spinoff of PMI happened PM USA may acquire Swedish Match (Svenska Tandsticks). Besides Red Man Premium Moist Snuff Swedish Match already competes in the price value tier with Timber Wolf and the deep discount tier with Longhorn. There is also a good chance that Reynolds American Inc (RAI) will try to buy the cigar manufacturer, Swisher International. (TobaccoWatch.org)