20101208 tobacco 35
Tobacco leafs are drying on November 2, 2010 at a farm in Saint-Laurent-la-Valee, southern France. - 


JEREMY HOBSON: There is no safe amount of cigarette smoke. That'll be in the findings of a report coming this morning from the U.S. Surgeon General's office. In the last five years, cigarette sales have fallen 17 percent. And that has the tobacco industry turning its attention to smokeless tobacco products.

Marketplace's Jennifer Collins reports.

Jennifer Collins: These days, smokeless tobacco is more than the stuff you chew. It also comes in small tea bag-like packets. Gilbert Ross is medical director of the American Council on Science and Health.

Gilbert Ross: Then we also have Orbs, tobacco lozenges, basically, that dissolve in your mouth.

Orbs are sold under the Camel label. Tobacco giants are investing heavily in smokeless products. They're hoping that smokers who quit cigarettes will pick up tobacco of another sort under the same brand. Morningstar analyst Phil Gorham says sales of these products are growing around 7 percent a year.

Phil Gorham: People who are quitting are migrating into this category, but it's a pipe dream to think that smokeless tobacco will eventually become the key revenue driver.

Gorham says that key revenue driver will continue to be cigarettes. And smokeless products may face tougher regulations. The Food and Drug Administration is looking at products like Orbs. They look like candy and could lure kids to take up tobacco -- smokeless or otherwise.

I'm Jennifer Collins for Marketplace.