Reynolds American developing alternative tobacco products

Published on August 22nd, 2012 00:00

Reynolds American Inc. has been known as the vanguard company in innovative tobacco products for many years. The focus on that direction has become evident again in early August, when Reynolds American revealed its earnings report for the second quarter.

Reynolds American Tobacco products

Daniel Delen, Reynolds’ President and CEO said that the company is preparing to launch new smoke-free products within several months, including nicotine-replacement therapy products, vapor-emitting products (resembling electronic cigarettes) and nicotine extract products, like lozenges.

In the meantime, the company has reported a 35 percent growth in net revenues that totaled $443 million. Reynolds is also getting ready to introduce new styles of cigarettes that heat tobacco, resembling Eclipse, which was launched in 1996 and is still available upon request of retailers.

Pat Shehan, who owns Tarheel Tobacco, a chain of retail stores, says that RAI is set to launch electronic cigarettes, named Vuse, and smoke-free pouches under Viceroy brand, in a limited number of markets.

David Howard, spokesman for Reynolds American, refused to comment on the issue, stating that the company would not comment, since the things are still in work at the moment.

According to presentation, Vuse would be a ready-to-use electronic vapor cigarette, without assembly or charging needed.

Focus on Sales Potential

Despite Delen admitted during shareholders meeting, that the interest in electronic cigarettes is growing among consumers they have witnessed “high levels of trial versus modest levels of conversion.”

Delen noted that suggests to Reynolds that proper electronic cigarette products have not been presented in the segment yet. Therefore, this is really where the company’s efforts and focus are turned to.

In addition, Reynolds president said that the newest smoke-free products are the latest step in the tobacco giant’s conversion in what they call “a total tobacco company.”

“We intend to offer a wider range of different products in various price categories, along with evolving trends in the preferences of adult tobacco users,” Delen added.

Among Such innovative products, branded under the flagship Camel brand, there are Camel Crush with revolutionary menthol-capsules, dissolvable Camel orbs, sticks and strips and Camel Snus.

“In addition to our long-term plan to change the tobacco industry and lower the harmful effect of smoking, Reynolds American has been applying a lot of effort to create new innovative products, since we believe there will be a considerable demand and growth potential in such products,” Delen said.

Bonnie Herzog, Wells Fargo Securities senior analyst, said Reynolds American’ ability and desire to develop innovative tobacco products should be continued. “It is one of the company’s major competitive advantages to ensure shareholder value in the long run,” she admitted.