RAI CEO comments on the launch of Camel Dip and Camel SNUS market..

April 30, 2009 - From Question-and-Answer Session: Reynolds American Inc. (RAI) Q1 2009 Earnings Call Transcript.. Susan Ivey - Chairman, President and Chief Executive Officer of RAI.


Analyst: Over the past few years, you've talked about Camel being really appropriate for Snus, now that you're going into the traditional market MST, just curious as to what the initial consumer research that you've done around the transferability of the Camel brand has come up with so far? And I understand, obviously, test market is on its way but just curious on your initial thoughts there.

Susan Ivey: Sure. I'll talk a couple of minutes about Camel Dip. Our consumer research is actually very encouraging. The consumers validate that Camel has a strong heritage in tobacco pleasure, and that we believe the Camel trademark can bring innovation into the premium category of moist. So, we will go into a couple of test markets, Colorado and Florida this summer and get a read on that. As you heard me describe, we have a wide cut, and we have some innovative packaging which we hope will bring some new life to the premium segment, and at the redefined premium segment price point.

Analyst: Susan, quickly on that, what is, in your view, the difference between the Camel brand and the Marlboro brand? Clearly, Marlboro was a flop. So, I just wanted to see if you had an opinion on that.

Susan Ivey: I believe that Camel has proved through its national expansion of Snus and the learning's that we had in those lead markets can encompass total tobacco. Most important aspect is to ensure that you have a great product in the segment, and using Conwood's expertise in product development for moist, and the Camel trademark, we believe it is a winning combination.

Susan Ivey: So we continue to be confident in Camel's ability to grow, and to grow outside of its traditional cigarette portfolio with Snus, and as you heard today, we're going to test some Camel Dip.

Will the Camel trademark succeed where the Marlboro trademark failed..



Analyst: One last question on Camel Snus. Is the national rollout complete now? Is Snus in every point-of-sale where you want it to be?

Susan Ivey: I would say almost. The national rollout is almost complete. Obviously, as we were rolling it out in the first quarter, the price changes happened, and of course, the trade marketing teams had to help the retailers get through those price changes. But we are national. We're not in every store in every city where we want to end up, but we continue to be encouraged.

We think the timing is also very good for adults who are looking for an alternative either when they can't smoke but also when you look at the price point of Suns because it is taxed at the moist-snuff level. It has a very compelling price point. We're out there with trial programs with Camel Snus and we'll watch that. It is early days, but obviously, we had the confidence to go national because of the result of our rollouts over the last couple of years, and we'll keep you posted.

In an answer to another question CEO Ivey stated "that 40 percent of moist users are dual users (dual use between a smokeless product and cigarettes). It is a big number."

Related news breif: How's SNUS doing in the U.S. - will Susan Ivey tell us the truth??

Reference: Reynolds American Inc. Q1 2009 Earnings Call Transcript, Seeking Alpha, 4/29/2009.