RAI - Camel menthols with menthol capusle in filter - March 2010..

February 5, 2010 - Susan Ivey, Reynolds American Inc. (RAI), Chairman of the Board and Chief Executive Officer in the Q4 2009 Earnings Call Transcript stated that company expects further growth from the recent expansion of its innovative capsule technology (found in Camel Crush) to Camel’s two core menthol styles and next month (March 2010) the company will add exciting new packaging to further raise awareness and competitive trial on these menthol styles.

Starting March 1, 2010. That's the official launch date of the latest line extension from R.J. Reynolds Tobacco Co.'s Camel brand: menthol cigarettes containing a menthol burst capsule that enhances menthol flavor when squeezed.

The new cigarette supplanted Camel Menthol cigarettes in August 2009 and evolved from the "wonderful success" of Camel Crush (launched September 2008), according to Brian Stebbins, senior marketing director for Camel cigarettes. Crush also contains the menthol capsule, but squeezing it turns that cigarette from nonmenthol to menthol. "Whenever we launch something new, we try to find out who's interacting with it, who likes it, who doesn't like it and who has an idea of how to make it even better," Stebbins told CSP Daily News.

"We identified that there's a pretty large group of adult menthol smokers who are interested in the capsule technology, but they want to see us use it differently," Stebbins said, adding that they want to use it to use it to make menthol cigarettes "even fresher and even cooler at the moment of their choosing, or on demand."

The soft launch in August included "very minimal communication on packs and on the website for those who were interested." Stebbins added, "And the idea there was to let those smokers who already choose Camel Menthol have an opportunity to experience the innovation first, let them experience the product first, let them let us know what they think and the response has been very positive."

As for March 1, Stebbins said, "That is where we actually go out and try and tell the story to a broader audience about the innovation on Camel menthol." The launch will mean a new look for the packaging, retail communications, retail merchandising and a "very solid" launch promotion program—including direct mail, emails and person-to-person engagements in bars, nightclubs and festivals.

Stebbins described the new packaging as having "a fresher, cooler color pallet that menthol smokers respond very nicely to" and said it will also "tell the story of the product within," using the Camel mascot. Stebbins also said the name of Camel Menthol Lights will change to Camel Menthol Silver; Camel Menthol will keep the same name. He added, "We will still have a couple of menthol products that are in the market that will not have capsules in them, but they are not a primary marketing emphasis.... That really just kind of depends upon the business opportunity in those markets and retailer choice about what they carry."

He said the product's demographics are wide ranging. "Our testing indicates that the adult smokers who are interested span different age groups, they span different brands that they buy from today and it's male/female. It's a very broad opportunity, and I think that's mostly because it's a provocative innovation. We're talking about a category, menthol cigarettes, where there's a lot of sameness, and Camel cigarettes is the exact opposite of that."

According to a January 17, 1997 New York Times article, Reynolds briefly tested a menthol version of Camel in 1966, but never sold it nationally. Camel Menthols were nationally launched in 1997.

I think the 'new news' here is menthol is growing considerably in the category, and to be frank, until we had introduced Camel Crush, Camel wasn't getting its fair share of that growth," Stebbins said.

Although menthol is "expressly permitted" under the recent flavored cigarette ban, there has been concern in the industry. David Howard, an R.J. Reynolds spokesperson, told CSP Daily News, "Obviously, as [U.S. Food & Drug Administration (FDA)] regulations take effect, one of the things is that there will be a committee looking into menthol.... And certainly, whatever information is needed from us, we're going to cooperate for any information that they need or assistance that we can provide in that study. But at this time, menthol is specifically not part of the flavored bans and permitted by FDA regulations.... And certainly, we believe it's a viable product category, obviously; it's a very large and growing category with adult smokers."

According to the National Survey on Drug Use & Health Report, published by the Office of Applied Studies, Substance Abuse & Mental Health Services Administration, on Nov. 19, 2009, among past-month smokers, the rate of smoking menthol cigarettes increased from 31% in 2004 to 33.9% in 2008. Past-month smoking of menthol cigarettes was more likely among those who were recent smoking initiates (i.e., began smoking in the past year) than among those who were longer-term smokers (i.e., initiated use more than a year ago) (44.6% vs. 31.8% respectively).

Reference: Menthol March Camel menthol cigarettes with additional flavor capsule to officially launch March 1 by Linda Abu-Shalback Zid, CSP (Convenience Store/Petroleum) Daily News, 2/5/2010.