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NYSE: RAI $60.73   +0.02 (0.033%)
Tobacco Harm Reduction

Product Innovation

RAI and its operating companies are committed to reducing the harm caused by smoking. To that end, we have focused on the development of products that present or may present less risk than cigarettes. A substantial body of scientific research has shown that smokeless tobacco products present significantly less harm than cigarettes. Additionally, there is a growing body of evidence on other non-combustible tobacco products, such as vapor products and other innovations, that leads us to believe that these products may reduce harm to smokers who switch to them. RAI’s operating companies have long been recognized as the innovation leaders in the tobacco industry. Emerging product categories that offer the potential to reduce tobacco harm allow us to be growth leaders in expanding markets that also offer potential for higher margins.

RAI and its operating companies are transforming the tobacco industry from one dominated by traditional cigarettes to one offering a range of products that meet the changing expectations of adult tobacco consumers. We believe this approach is in the best interest of adult tobacco consumers, stakeholders and society as a whole, while providing our businesses the best opportunity for success.

 


Research and Development Spending

 20112012201320142015*
Expenditures on R&D
($ in millions)
$69$62$72$88$107
R&D as a percent
of net sales
0.81%0.75%0.87%1.04%1.00%
*In 2015, net sales increased substantially due to the acquisition of Lorillard, lowering R&D as a percent of net sales.

 

RAI’s operating companies have long been regarded as the innovation leaders in the tobacco industry. However, our companies are not interested in innovation for its own sake. Rather, they are working to address industry trends and emerging consumer preferences. For the past decade, we have been focusing research and development efforts, as well as acquisitions, to create a broad portfolio that includes tobacco products that may present less risk, aligned with changing consumer preferences.

Our companies employ 175 individuals with scientist in their title in research and development, and scientific and regulatory affairs functions.

In early 2016, RAI created a new subsidiary, RAI Innovations Company (RAIIC), in which RJR Vapor Company and Niconovum, USA will now reside. As a service company, RAIIC will focus on product development and innovation in the vapor and nicotine product areas with the operating companies commercializing these next generation products. We believe this restructuring will further streamline new-product development, diversification and speed to market in these high-growth product categories, allowing RAI to more efficiently meet the rapidly evolving preferences of adult tobacco consumers and continue its leadership position in transforming the tobacco industry.