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

April 27, 2009 - Susan Ivey is chairwoman, president and chief executive of Reynolds American Inc. (RAI) will release first-quarter 2009 financial results on Wednesday, April 29, 2009. RAI President Susan Ivey

Yesterday in the Lorillard Tobacco Q1 2009 Conference Call Marty Orlowsky (Chairman, President and CEO of Lorillard) was asked to comment on their smokeless program.

Orlowsky: Well, I think we're experiencing a similar pattern as some of our competition as marketing or test marketing [SNUS] products. It's a relatively low level of interest that's being expressed by the consumers and we're just monitoring the situation as we move forward. I really don't have anything very specific to report. There have been no major changes to the consumer perceptions of that product.

Swedish Match makes a SNUS product called Triumph for Lorillard. The Lorillard salesman tells us that Triumph SNUS sales have gone poorly and it doesn't cost Lorillard anything to sell this pouch tobacco. Triumph SNUS..

UST, Inc executives prior to the company to be being acquired for the Altria Group. (UST Inc. was a holding company for its principal subsidiaries: USSTC and International Wine & Spirits Ltd.. USSTC is the leading producer and marketer of moist smokeless tobacco products.)

Dan Butler, former President of USSTC (United States Smokeless Tobacco Company) is very disappointed with the progress of the SNUS segment in total. The entire segment itself has gained very little traction, and we had plans to be more aggressive. Frankly, we are revisiting those because the size of this market and how slowly it's developing -- it's so tiny and taking so long to gain any traction. We've got almost seven years of experience with Revel SNUS (has been discontinued)and our competitors out there now for a couple of years -- we're struggling whether this segment is really going to take hold or not and whether an American consumer is really interested in this form of tobacco or not. (Within Altria Butler is president, U.S. Smokeless Tobacco Company (USSTC), the world's largest manufacturer and marketer of smokeless tobacco.)

Murray Kessler, former Chief Operating Officer of UST, we are very disappointed in the total performance of whether -- they call it Snus or we call it spit-free. We've been testing this thing now for seven years. The newer entrance [entrees], if you go back, is now, in original markets, is over two years, and it is not gaining the traction, given the level of investment that's been put there. Kessler has stated in the past that "Nine out of 10 smokers that try smokeless still reject the product." (Kessler is now Vice Chair of Altria Group, Inc.)

Reynolds American (RAI) for some reason still remains upbeat regarding Camel SNUS. A Reynolds spokesperson David Howard tells people that the company is confident in the performance of Camel SNUS. Howard: "Based on our learnings since test marketing, clearly we believe that it is viable product. We were pleased with results in terms of sales, and in terms of feedback from...smokers as well as our retail customers." It is a product that "we think is going to perform very well down the road."

In May 2008 R.J. Reynolds Tobacco (RJR) test marketing of Camel SNUS went from eight to 17 metropolitan areas.(s It Justified - R.J. Reynolds Tobacco Adding Test Cities for Camel SNUS Soon after Reynolds announced that Camel SNUS will be rolled out nationally early in 2009.

RJR has tried just about everything: from providing coupons, to stationing people at bars and c-stores, to running ads in various publications. Where has this got them - surely they've given away more cans of Camel SNUS than have been paid for. Now based on information from a c-store owner the RJR salesperson for the last 3-weeks has given him at no charge 25-cans of Camel Snus Frost and asked for him to pass them out to those people that may be interested in giving it a try. Well - the owner can't even give the stuff away, even to dippers finally (he tells us) someone came into to the store and asked for Camel SNUS Original flavor and when asked was willing to take a bunch of the free cans.
(Lots of news briefs in support of our point of view in the archive, here's a couple: C-store+ update..Camel SNUS, Camel ORBS and other news..; C-Store Update - How bad are Camel SNUS sales??) The flooding of the market with free cans of Camel SNUS doesn't seem to work.

RAI spokespeople to justify Camel dissolvables have stated that some smokers didn’t care for loose tobacco or pouched smokeless products, particularly ones they had to remove from their mouth after use - like SNUS. R.J. Reynolds has dropped the Camel SNUS Original and Spice flavors and now has two - Frost and a new flavor called Mellow and reduced the number of pouches per can from 20 to 15.

Altria/Philip Morris (PM USA) When Marlboro SNUS and Marlboro MST were introduced then Citigroup's Tobacco Analyst Bonnie Herzog told investors that PM USA will fully cement its place in the smokeless segment using the power of the Marlboro brand (8/21/2007). Well this did not HAPPEN.. Nik Modi, a UBS tobacco analyst has stated, "The Marlboro brand name is not as transferable as many originally believed." The guys that know the smokeless tobacco category tell us history clearly shows that it is difficult to extend brands from one category to another. (Marlboro MST / Marlboro SNUS - Philip Morris USA (PM) Trying to Paint a Rosie Picture..)

PM USA has been much more cautious with Marlboro SNUS. They have expanded into a new test market in Arizona during the first quarter of 2009 and the product was revamped based on consumer-driven insights and learnings from test markets in Dallas and Indianapolis. The new Snus contains new packaging, product enhancements and pricing, according to the company. We will have much more information on Marlboro SNUS after World Tobacco Free Day - May 31, 2009.

Taboka, PM USA's first attempt at a SNUS product had poor sales and was discontinued.

Reports from Canada indicate that the test marketing of du Maurier SNUS by Imperial Tobacco of Canada (a wholly owned indirect subsidiary of British American Tobacco) have not gone well.