BAT to Develop ‘Safer’ Nicotine Products for Long-Term Use

British American Tobacco Plc (BATS), the maker of Lucky Strikes, created a unit that will seek to develop nicotine products for people wanting an alternative to cigarettes as governments aim to reduce smoking.

Nicoventures Ltd. plans to develop tobacco-free nicotine products, Kate Matrunola, a spokeswoman for London-based BAT, said today. The unit employs four people and will discuss with regulators what sort of products might work, she said by phone.

“It’s not for cessation,” Matrunola said. “There is an unmet need out there for consumers” who don’t want to quit.

Tobacco companies have spent decades trying to develop a safer alternative to smoking, including RJR Nabisco Inc.’s 1988 test of Premier, a smokeless cigarette. Star Scientific Inc., based in Glen Allen, Virginia, said March 23 that a decision by U.S. regulators cleared the way for it to start selling tobacco lozenges. The global market for cigarettes excluding China, which is largely closed to foreign tobacco companies, will probably shrink by 2.5 percent in 2011, BAT Chief Executive Officer Nicandro Durante said Feb. 24.

Restrictions on advertising and marketing may be a challenge to smoking substitutes, according to analysts.

“The biggest obstacles will be regulatory,” Erik Bloomquist, an analyst at Berenberg Bank in London, said by phone. “The mindset in much of public health around tobacco is quit or die, not harm-reduction.”

Snus Ban

Adrian Marshall, who previously led a program at BAT that sought to develop less-risky alternatives to cigarettes, will head the unit. Two of the other employees previously worked at Swedish Match AB and one worked with smoking cessation brands in the U.K., according to Nicoventures’s website.

The U.K. tobacco company and Swedish Match have lobbied the European Union to lift a ban on selling snus, a moist form of snuff legal in Sweden, in other countries in the region.

Nicoventures said it aims for the products to give smokers “much of the experience they expect to get from a cigarette.”

“The grail is a product that replicates as closely as possible the sensations and rituals of smoking,” Berenberg’s Bloomquist said.

Altria Inc. said Jan. 31 it will try selling new smokeless products in test markets throughout the U.S. About a quarter of smokers are interested in smokeless tobacco alternatives to cigarettes, according to the Richmond, Virginia-based company.

BAT’s other harm-reduction projects continue, and the company’s “core business” remains tobacco, Matrunola said. The maker of the Kent and Pall Mall brands said in April 2009 it was beginning clinical tests on a cigarette prototype that might have fewer health risks. BAT will provide more information on the tests “soon,” Matrunola said, without elaborating.

BAT shares rose 7 pence, or 0.3 percent, to 2,538 pence as of 9:46 a.m. in London.

To contact the reporter on this story: Tom Mulier in Geneva at tmulier@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net.

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