R.J. Reynolds Tobacco Co. (RJR) has signed a technology-sharing term sheet with British American Tobacco (BAT) that provides a framework for collaboration and mutual cross-licensing of vapor product technologies through 2022.
The term sheet is the first step in reaching a definitive agreement under which RJR and BAT will collaborate to develop next-generation vapor products. Specifics of the agreement are still being negotiated by the companies, who have a goal of reaching a definitive contract by the end of the year. The collaboration will include a process for joint research and development activities, as well as cooperation on regulatory, scientific and manufacturing issues related to vapor products.
“This proposed technology-sharing agreement makes great business sense as we lead the transformation of the tobacco industry, allowing us to continue to deliver innovative, high-quality vapor products to adult tobacco consumers seeking smoke-free alternatives,” said Debra Crew, R.J. Reynolds’ president and chief commercial officer.
R.J. Reynolds Tobacco Co.’s Camel Orbs, Sticks and Strips dissolvable products have struggled to gain consumer traction even after spending four years in five test markets, according to a story in The Winston-Salem Journal.
Company spokesman Richard Smith said that the Camel dissolvables remain in limited distribution in the current test markets of Charlotte, North Carolina, and Denver, Colorado, but that “there are no plans for any marketing beyond these channels.” Camel Snus, by contrast, stayed in test markets for only two years, from April 2006 to October 2008, before its nationwide distribution began.
Smith said the company found from its conversations with adult consumers that “while there’s strong interest in the [dissolvables] category, a different product form may present a better option over the long term.”
John Spangler, a professor of family and community medicine at Wake Forest School of Medicine, said he is not surprised that the dissolvables have not spurred demand because he believes that “the market for spit-less, noncombustible tobacco is probably already taken up by snus.”
Bill Godshall of Smoke Free Pennsylvania said the “test markets weren’t good” and RJR’s use of child-resistant packaging may have been detrimental for sales as the products are “impossible to open without scissors.”