Contact l Sitemap

home industries issues reasearch weblog press

Home  » Industries » Tobacco

TOBACCO: Altria Drops New Filter Cigarettes, In Strategy Setback


by VANESSA O'CONNELLThe Wall Street Journal
June 23rd, 2008

The nation's largest cigarette maker, Altria Group Inc.'s Philip Morris USA, has failed in yet another attempt to sell Americans on a potentially safer cigarette, pulling the plug on Marlboro Ultra Smooth, a version of Marlboro that used a high-technology filter.

The product failure highlights the U.S. cigarette giant's challenges in finding a source of growth to offset a worsening decline in U.S. cigarette sales. In the past, Altria could offset revenue decreases in the U.S. business with growth overseas, but Altria recently spun off its Philip Morris International operations.

Now Altria derives virtually all its revenue from Philip Morris USA, whose sales volume fell 4.6% last year, worse than the 4% decline in the overall U.S. cigarette market. (The company says "underlying" sales volume for 2007, adjusted for calendar differences and other factors, declined by 3.6%.) Philip Morris USA executives say they expect cigarette sales overall to decline at an annual rate of between 2.5% and 3% in coming years. (See related article.)

To generate growth, Philip Morris has put effort into engineering reduced-risk products -- so far without much success. Marlboro Ultra Smooth was the product of a top-secret Philip Morris project internally code-named SCOR, or Smoke Constituent Reduction, and included an activated carbon filter that delivers nicotine but with potentially less exposure to the carcinogens of conventional cigarettes.

Other failures include the Accord, which uses a battery-powered holder to primarily heat, rather than burn, tobacco. Deemed too strange for U.S. smokers to embrace, it was discontinued in 2006 after nearly a decade of consumer research.

In January, Philip Morris withdrew a so-called smokeless product, Taboka Tobaccopaks. The "spit-free" product is tobacco in small pouches known as snus (rhymes with "goose") placed between cheek and gum. The company continues to test Marlboro Snus.

It has also been working on moist snuff, a category that has been growing overall. A market test of Marlboro Moist Smokeless Tobacco, begun in Atlanta in October, was recently expanded to surrounding counties. But Philip Morris has had to slash the price of the product sometimes known as "Marlboro in a can," sometimes to as little as $1 a tin, down from the hoped-for $3.

Marlboro Ultra Smooth, which had been sold in Atlanta, Tampa, Fla., and Salt Lake City for more than three years, drew little attention from consumers. Philip Morris USA, which had hoped to market the cigarette as a reduced-risk smoke, stopped making new shipments to its wholesalers April 1. Remaining stock is still on sale. Its other cigarettes with the new activated-carbon filters -- the Marlboro Ultra Lights in Phoenix and North Dakota, and Basic Ultra Lights in Washington state -- also were just discontinued, the company said.

"We basically conducted tests in these markets and generally learned that there was low consumer acceptance...presumably because they didn't think the taste and flavor was acceptable," said an Altria spokesman, Brendan McCormick.

Several other cigarette makers have struggled to develop "reduced-risk" smoking products without success. Most used obscure brand names -- Eclipse, Quest, Advance -- that haven't caught on with consumers.

These efforts have been under scrutiny by state governments. Vermont, with assistance from attorneys general in California and other states, sued Reynolds American Inc.'s R.J. Reynolds over its marketing of Eclipse, claiming the company doesn't have evidence to back up its health claims. Ads for Eclipse, which mainly heats rather than burns tobacco, say it "may present less risk of cancer" than traditional cigarettes. A Reynolds spokesman said its claims for Eclipse are "supported by credible and reliable information."

Write to Vanessa O'Connell at vanessa.o'connell@wsj.com





This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.