Part 2: CSP Survey: Which New Tobacco Products Are Scoring?

July 13, 2010 - Camel Snus continues to ride a wave of loyal national support as R.J. Reynolds extends its marketing focus to oral tobacco consumption. In an exclusive CSP-UBS tobacco survey, retailers praised Camel's Snus product as well as Camel Crush, the company's customizable cigarette that contains a small blue menthol capsule within the filter.

More than half of the 50-plus respondents cited the snus segment as a strong nascent [emerging] player that is slowly gaining recognition and consumer acceptance.

Another winner was Marlboro, which scored well with its Marlboro 72, Marlboro Special Blend and Copenhagen Wintergreen smokeless tobacco. "Marlboro Special Blend and 72s have done exceptionally well in our area with an attractive price," an Arkansas operator said.

Others receiving praise included Liggett's private-label lines, Star Scientific's Stonewall spitless, Reynold's Natural American Spirit and the broader smokeless tobacco category.

"Camel is doing a great job in building awareness for the Snus category," said UBS tobacco analyst Nik Modi. "PM USA had great traction with its Marlboro Special Blend, but we wonder how the brand will respond to a pull back in promotional support."

Of course, there is the flip side. That does not mean these products will not succeed or find their niche, but at this time, they are not yielding the gains retailers had hoped. Likewise, some products that generally scored favorably, like Camel Snus or Marlboro Special Blend, also garnered a few detractors.

The most cited on scoring poor traction was Marlboro Snus, Altria's foray to extend the dominant cigarette brand into the oral, spitless tobacco line.

"Marlboro Snus followed the footsteps of RJR and Camel Snus," said an East Coast merchant. It "has the brand name, but not the quality or perceived freshness (like Camel Snus) to back it up and help grow sales."

It is interesting to note that tobacco analysts felt the Marlboro name could not miss in the smokeless category. Citigroup tobacco analyst Bonnie Herzog 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). (More on Marlboro MST & Marlboro Snus..)

Another retailer praised the performance of Marlboro's Special Blend, but, like UBS's Modi, feared some of the sales were attributed to discount pricing. "When on deal it sells but off deal the customer leaves the product behind," said a Connecticut operator. "I am concerned that PM's line extensions on Marlboro have the consumer confused. I worry about 'opening Pandora's box.' When the deep-discount deals end on a new Marlboro facing I find that customer, for the first time, is willing to look at other 'deals' that may not be Marlboro deals."

A few respondents said the whole line of spitless is underperforming, a couple dismissed Camel Snus and one dismissed the entire notion of electronic cigarettes. And another retailer dismissed virtually all new products, lamenting, "most all new innovation has seemed to be anemic."

Part 1: CSP survey of retailers - strength of top selling cigarettes..

Reference: CSP Exclusive: Which New Tobacco Products Are Scoring? Retailers weigh in on hot and cold items in CSP-UBS Surve by Mitch Morrison, CSP (Convenience Store/Petroleum) Daily News, 7/13/2010.