RICHMOND, Va. — Cigarette maker Reynolds American Inc. is taking its Zonnic brand nicotine gum nationwide, challenging the pharmaceutical industry's hold and pricing power of the market for products to help people stop smoking.
The nation's second-largest tobacco company announced the expansion plans Thursday following test markets in Iowa and Nebraska over the last two years following its 2009 purchase of Swedish company Niconovum AB, which makes nicotine gum, pouches and spray products. The move by the maker of Camel and Pall Mall cigarettes and Grizzly smokeless tobacco comes as tax increases, health concerns, smoking bans and social stigma cut into demand for cigarettes and more smokers try to quit.
Smoking is the leading cause of preventable illness and death in the U.S. and is responsible for the majority of the nation's lung cancer deaths. It's also a factor in heart attacks and a variety of illnesses. More than 42 million U.S. adults smoke cigarettes and about half try to quit every year, according to the Centers for Disease Control and Prevention.
The company is offering Zonnic in a smaller package and lower price than what's typically available in the nicotine replacement market and more in line with the cost of a pack of cigarettes — lowering the buy-in price for smokers who want to take a shot at quitting.
Zonnic is being sold in packages of 10 pieces in mint, fruit and cinnamon flavors in two different nicotine strengths for about $3.70 per pack, compared with the national average price for premium cigarettes of $5.80 for a pack of 20. Other nicotine gums that are sold in packs of a minimum of 20 pieces for about $10 and are offered in packages of up to 300 pieces.
"We want to invite people who have made the decision they want to quit to find the best solution for them to achieve that goal," Tommy Payne, president of Niconovum USA Inc., said in an interview with The Associated Press. "We're quite serious about it and hopefully we'll be successful with it."
While Payne notes there will be critics, "the only thing that we ask is that we're judged by our actions ... even if you don't like past behaviors" from some of Reynolds American's operating companies, he said.
According to market researcher Euromonitor International, the U.S. nicotine-replacement therapy market accounts for nearly 40 percent of the $2.4 billion in global annual retail sales, which grew nearly 3 percent over the last year. By comparison, retail cigarette sales worldwide grew 3 percent to $721.6 billion in 2013 but volumes fell more than 1 percent to about 5.71 trillion cigarettes.
While the U.S. is the world's third-largest consumer of cigarettes, retail volume sales have dropped 22 percent since 2007, indicating a strong movement to quit smoking, Euromonitor analyst Mark Strobel wrote in a report earlier this year. The growing health and wellness trend, as well as educational campaigns, tax hikes, and restrictions on smoking, have all helped to drive sales of nicotine replacement products.
It is also the most mature and competitive market, led by store brands and GlaxoSmithKline, the seller of nicotine-replacement therapy products under the Nicorette and NicoDerm CQ brands, Strobel said.
Reynolds' foray into the nicotine replacement market is bolstered by moves by the Food and Drug Administration last year to improve quit rates using the products designed to help people stop smoking by supplying controlled amounts of nicotine to ease the withdrawal symptoms. In recent years, a number of stakeholders in public health have noted that smokers that are trying to quit would relapse if they stopped using the nicotine-replacement products after a suggested time period, and they'd abandon their attempt to quit if they had a cigarette while using them, the agency said.