Vector Delays Quest Rollout; RJR To Cut Jobs

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Vector Delays Quest Rollout; RJR To Cut Jobs

NEW YORK -- Vector Group Ltd. has delayed the national launch of its Quest low- and no-nicotine cigarettes and instead will sharpen its marketing within the seven-state test market where it rolled out the brand in January, according to the Associated Press.

The company will decide later when it will launch Quest, as well as a menthol version to be released later this year, based on what it learns by further studying sales, according to the Associated Press.

"We intend to utilize the information that we have obtained over the past six months on the Quest non-menthol product and more specifically target our focus in the seven state market in the coming months,'' the Miami-based company said in a quarterly filing last week to the Securities and Exchange Commission, according to the Associated Press.

Quest is made with genetically modified tobacco and lets smokers choose their level of nicotine. The brand is made with two levels of reduced nicotine and one without the tobacco component that is considered addictive, the report said.

Although the company says Quest contains only trace amounts of nicotine, it makes no claims that the cigarette reduces carbon monoxide or the chemicals that increase the risk of cancer. Smoking also is linked to heart disease, emphysema and birth defects, according to the report.

R.J. Reynolds Tobacco to Cut Jobs

In other tobacco company news, employees at R.J. Reynolds Tobacco Co., the nation's second-largest cigarettemaker, could lose their jobs as early as next month, RJR's parent company has told workers, according to the Associated Press.

Rumors about layoffs at the Winston-Salem, N.C.-based company have swirled around the city for months. Mayor Allen Joines said the community was bracing for the announcement from R.J. Reynolds Tobacco Holdings Inc., the report said.

A committee of chamber of commerce members and others from the business sector has been formed to deal with the changes and needs layoffs would bring, he said, according to the report.

Gary Shoesmith, an economics professor at Wake Forest University, said if the company cuts several thousand highly paid positions it will have a "severe and long-lasting impact on the Winston-Salem economy," according to the Associated Press.

That's because tobacco jobs have a strong multiplier effect, he said.

"For every 1,000 jobs lost, the total effect will be 2,500," Shoesmith said.

Carol Crosslin, spokeswoman for RJR, said Tuesday that the company will try to match job cuts with those employees interested in leaving the company, the report stated.

"This is not a voluntary job elimination program," she said in a telephone interview. "The decisions in which jobs to eliminate will be based on business needs, according to the news report.

Last month, RJR said its quarterly profit and sales fell sharply from year-earlier levels because of increased competition from discount cigarette brands. Lower sales and higher promotional costs helped drive down RJR's profit 67 percent in the second quarter, the company said.

The tobacco company behind the Winston and Camel brands also warned its earnings could be below its earlier forecast for the full year and said it expected to announce a restructuring charge in September or October, according to the Associated Report.

RJR reported net income of $70 million, or 83 cents a share, for the April-June period, down from $211 million, or $2.29 a share, a year ago.

Sales were down 16 percent to $1.43 billion from $1.71 billion a year earlier.

RJR, second in U.S. cigarettes to Altria Group's Philip Morris USA division, also lowered its earnings forecast for the full fiscal year when it released its earnings in late July, according to the report

Excluding future restructuring charges, RJR said it now expects net income for the full fiscal year of $235 million to $250 million, or $2.78 to $2.96 a share. In April, it forecast a profit of $250 million, or $2.96 a share, for the full year, the report said.