RJR spent $1B on a smokeless cigarette — Premier tasted foul and vanished in months

In 1981, RJR Nabisco CEO Tylee Wilson approved $68 million in secret funding — without board knowledge — to develop a 'smokeless' cigarette that would sidestep the growing anti-smoking movement. The result was Premier, a heated-tobacco product: instead of burning tobacco, a carbon tip was lit to heat processed tobacco and flavour beads, producing a nicotine aerosol with almost no smoke and no ash. The project was kept from the board for five years, discovered only when chairman J. Paul Sticht was told by his driver, who had heard about it from a plant worker.

Premier was introduced in October 1988 in Arizona and Missouri. Smokers rejected it almost immediately. Less than 5% of smokers who tried it liked the taste. The device was frustratingly hard to draw on, the carbon tip required a special lighter, and lighting it with a sulfur match created a chemical reaction that produced what F. Ross Johnson — Wilson's successor — described as 'like a fart.' Japanese researchers who tested it were blunter: 'This tastes like shit.' A study in JAMA confirmed it could also be used to deliver crack cocaine, drawing the attention of the FDA and activists.

Premier was pulled from test markets within months of its launch. RJR had spent between $300 million and $325 million developing it, and total losses were estimated at $800 million to $1 billion. The story of Premier's secret development and spectacular failure is documented in Barbarians at the Gate, the definitive book on the RJR Nabisco leveraged buyout. RJR later tried again with Eclipse in the 1990s, which also failed commercially. The heated-tobacco concept eventually found success two decades later with Philip Morris's IQOS.