It would be either one of the most cynical diversifications ever—or a brilliant stroke of synergy.
If a report in The Wall Street Journal is correct, America's second-largest seller of cigarettes may soon be peddling products that help people quit smoking. The Journal reported on Nov. 9 that Reynolds American (RAI), the distributor of Pall Mall, Camel, and Natural American Spirit cigarette brands as well as smokeless tobacco, is in "advanced talks" with Niconovum, a Swedish manufacturer of nicotine replacement products such as gum and mouth spray…
The move would mark the first time that a big tobacco company also sold smoking-cessation products, according to industry analysts. But it would be in line with the industry's efforts to diversify as cigarette purchases shrink in the U.S. One analyst referred to a purchase of Niconovum as a "cheap hedge" against the smoking decline.
"This is just a distraction from what their core business is, to still make the most profit from cigarettes—which, by the way, is the most lethal product they sell," says Richard Hurt, director of the Nicotine Dependence Center at the Mayo Clinic in Rochester, Minn. "Nothing surprises me about tobacco companies anymore, they really just continue to morph every time they get the chance to do so."
BusinessWeek by Esme Deprez, 11/10/09