Cigarettes: B&W leads lower-toxin pitch

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The industry once mum about the health risks associated with smoking is on a mission to bring reduced-toxin cigarettes to market, representing a rare shared priority among tobacco rivals.

The new products, however, are unlikely to help the industry recoup its 3.2% decline in cigarette shipments last year (see chart). Most industry observers believe low-toxin smokes will be niche brands, at best.

Brown & Williamson Tobacco Corp. and Vector Tobacco made forays into the low-toxin segment with the launch of Advance Lights and Omni, respectively, on the same day last November.

Advance, carrying the tagline "All of the taste ... Less of the toxins" is available only in Indianapolis. Omni, tagged "Reduced carcinogens. Premium taste" is sold nationally. Both are premium-priced like Marlboro, Camel and Kool.

Any new segment takes time to develop, especially one requiring considerable consumer education. Part of the Indianapolis test for Advance is to measure consumers' understanding of the message being delivered. Vector has found consumers to be confused by its message. Sales of Omni have been slower than expected, Chairman-CEO Bennett LeBow told analysts during a May earnings call. Vector is limiting its ad spending until the completion of lab tests that might allow the marketer to make more definitive statements about potential health claims. Mr. LeBow says Omni's current tagline could change, since many consumers don't understand what "reduced carcinogens" means.

At this point, both Vector and B&W maintain there's no such things as a safe cigarette, but they have said publicly that bringing reduced-carcinogen products to market was the responsible thing to do. The companies don't attach any health claims to Omni or Advance and include warnings indicating that reducing toxins hasn't been proven to reduce harm.

Potentially reduced-risk smokes aren't a new idea. R.J. Reynolds Tobacco Co. launched Eclipse-which heats instead of burns tobacco-in a test market in 1996 and re-introduced the cigarette in 2000 after scientific testing enabled it to claim that Eclipse may present lower risks. But it remains in test in Dallas-Fort Worth, Texas, although it is available via direct mail in 38 states. Philip Morris USA's tobacco-heating smoking "system" Accord hasn't progressed from its Richmond, Va., test market entered in 1998.

For smokers to consider switching, the alternatives must resemble traditional smokes, says Rob Campagnino, a Prudential Securities analyst, and "Accord and Eclipse failed because they make consumers do something different," he says.

Philip Morris is linking marketing reduced-risk cigarettes and advocating federal regulation, the latter by lobbying the Food & Drug Administration to regulate tobacco. Until cigarette companies can "demonstrably show proven, reduced risk," low-toxin cigarettes won't garner a significant following, Mr. Campagnino says. "You're going to have to make some health claims, and to make health claims, you're going to need the" FDA.

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