• The New York Times, Wednesday, August 9, 2006 1:15 PM

Tobacco marketers, seeking new consumers in the face of smoking bans and declining cigarette consumption, are developing new smokeless tobacco products they plan to begin test marketing soon. But industry watchdogs have already begun attacking the products, armed with information about health risks and charges that the products are aimed at teens and young adults. Companies participating in the test markets include Philip Morris USA, R. J. Reynolds Tobacco Co. and the U.S. Smokeless Tobacco Co., the industry leader in the segment. Smokeless tobacco products "are another way for cigarette manufacturers to diversify the mix and improve their margins," says Bonnie Herzog, a Citigroup analyst. She says the operating margins of smokeless tobacco products can be 10 percent to 25 percent higher than cigarettes because of higher prices and cheaper manufacturing and promotion. The new products include Taboka from Philip Morris, Skoal Dry from U.S. Smokeless Tobacco and Camel Snus from R.J. Reynolds.

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