E-cig expansion an example of Reynolds CEO’s influence


FILE PHOTO: Reynolds American Inc. CEO Susan Cameron pulls out her personal Vuse e-cigarette during a press conference Friday, May 23, 2014 at the company’s Tobaccoville plant. (Walt Unks/Journal)

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WINSTON-SALEM, N.C. — Susan Cameron was asked Friday whether she has tried Vuse, an electronic cigarette that could hold the key to Reynolds American Inc. remaining a viable competitor as a 139-year-old company.

Cameron, just 23 days back as chief executive and president, smiled like someone who had been asked to try their favorite entree, according to the Winston-Salem Journal.

“Yeah, absolutely,” Cameron said. “I’ve tried it, I’ve used it and I think it is spectacular.”

Vuse e-cigs are designed and assembled domestically, with the nicotine liquid that produces the vapor made in Winston-Salem. Reynolds committed Friday to developing a turnkey production operation at its Tobaccoville plant, adding at least 200 full-time jobs over four years.

Although it should be expected that Cameron would be supportive of her own e-cig product, she said she’s also aware of the biggest challenge facing the category – consumers going beyond trial to adoption.

In the past, Cameron said she smoked Reynolds’ Eclipse brand, a non-burning cigarette. The company was unable to gain federal regulatory approval for a claim that it may pose less risk of cancer, chronic bronchitis and possibly emphysema, compared with other cigarettes.

Although Reynolds, under Cameron’s previous leadership, championed the theme of “transforming tobacco” 10 years ago, Vuse could be the first internally derived product that puts that initiative into high gear.

As a result, Cameron felt comfortable with tagging an addendum to the phrase, saying Vuse could play a role “in transforming lives.”

“The concept of focusing on a full range of products for consumers who choose to use tobacco, and to focus on opportunities to reduce harm, and opportunities to offer transformative products, was part and parcel of that strategy,” Cameron said.

“I feel delighted I could come back and reinforce that strategy even as the company has taken great strides in the three years I was gone. So, of course, it played a role in my coming back.

“Vuse is the perfect complement for those who chose to consume tobacco and those who don’t,” Cameron said.

Cameron said it is too early to say whether e-cigs could supplant traditional cigarettes as its top-selling product.

“It is a matter of how many people will take to Vuse as a way to enjoy nicotine without consuming tobacco,” Cameron said. “It will continue to evolve and grow, but how far and how fast, we don’t know yet.”

Cameron took the occasion to offer some reasons for abandoning retirement and re-entering the corporate world.

Cameron, 55, retired as Reynolds’ chairwoman in December 2010 and as its chief executive and president in February 2011, to spend more time with her husband, Russell, and family, and on philanthropic efforts.

When Daniel Delen, Cameron’s successor and now predecessor as chief executive and president, told Reynolds’ board of directors of his retirement plans, Cameron was asked if she was up for a second run.

“I must admit I did think about the long hours … the hard decisions … and the long hours I would log on airplanes and sitting in conference rooms,” Cameron said.

“But I also thought about the extraordinary place and time in which this company finds itself. We are literally poised on the brink of a change that has the potential to transform an entire industry.”

“I thought about the opportunity to bring game-changing products to a marketplace that is hungry for new alternatives.

“At the end of the day, how could I say ‘no’ to an opportunity like that? Today is one of those days that I am very, very glad I am here.”

Cameron said she has been motivated in part by a business school idiom that “If a product is selling like hotcakes, make more hotcakes.”

Cameron said she can be so confident in Vuse’s national prospects because sales and response to Vuse in Colorado and Utah “has far exceeded our own management team’s expectations.”

“We have got a big winner on our hands.”

When it comes to other elements of Reynolds’ future, Cameron was tight-lipped about the rumored $80 billion bid for Lorillard Inc. and a potential takeover of Reynolds by its largest shareholder, British American Tobacco Ltd.

She hung tight to the company’s policy of not commenting on rumors and speculation even as fierce debate swirls among analysts about whether a Reynolds-Lorillard deal could win federal regulatory approval, and whether BAT would need to contribute a significant financial backing for the deal.

Bonnie Herzog, an analyst with Wells Fargo Securities, said the chances of a deal are at 90 percent, while other analysts have the odds much lower because of the regulatory challenge and how much Reynolds may have to take on to pull off the purchase.

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