ADVANCE, N.C. -- Joe Camel was cool.
Now R. J. Reynolds Tobacco Co., which uses the cigarette-smoking dromedary to sell its Camel brand, is marketing a new line of smokes it hopes will be even cooler.
The brands belong to Moonlight Tobacco Co., a fledgling Reynolds unit that started selling the cigarettes this month, hoping to breathe new life into declining U.S. sales.
With such offbeat names as Sedona, City, Politix and B, the tobacco arm of RJR Nabisco Holdings Corp. is using a tactic that has worked well for U.S. brewers: set up entrepreneurial units within the company to develop brands that flaunt an underdog image.
RJR gave two of its marketing executives a small advertising budget, use of RJR's cigarette-production facilities and a one-room office at a distribution center in Advance, N.C., 20 miles from RJR headquarters in Winston-Salem.
The result: Moonlight Tobacco, named for the founders' initiative to develop the product outside the normal corporate structure.
"This is not RJR as usual," said Kirk Hermann, who, until he co-founded Moonlight this month, was senior marketing manager for RJR's Salem, Vintage, More and Now brands. "We're a very different group of folks with a very different approach to the market."
With Moonlight, RJR is following the lead of big U.S. beer companies, which saw some young consumers' disdain for major brand-name marketing lead to huge success for microbreweries.
Craft beer "upstarts," like Red Dog and Red Wolf, are made by the nation's two largest brewers, Philip Morris Cos.' Miller Brewing Co. and Anheuser-Busch Cos.
Big tobacco companies are hoping the smaller-is-cooler formula will work for them, too.
"They have a lot of old brands that need to be renovated," said Tom Pirko of BevMark Inc., a beverage and food industry consultant. "Sometimes it's easier to take a number of new brands . . . and see if they have a winner."
Mr. Hermann says Moonlight's seven brands have been distributed to 20 locations in New York City and Chicago, and they'll be sold in Seattle next month. The company doesn't expect to announce sales figures for the next few months.
RJR has been losing U.S. market share while other companies, especially industry leader Philip Morris, have been gaining. Philip Morris makes Marlboro, the country's best-selling brand.
RJR's market share for the 12 months ended in June fell to 25.9 percent from 48.3 percent in the same period a year earlier, said John Maxwell, an industry analyst at Wheat First Butcher Singer.
Philip Morris's share, mean while, rose to 45.5 percent from 43.6 percent, Mr. Maxwell said.
RJR has lost market share because it hasn't matched Philip Morris's Basic discount cigarette brand, analysts said. And, while RJR's Camel advertising was successful at getting young customers, it hasn't had the draw of the Marlboro Man and has faced criticism from consumers.
RJR has been phasing out ads with Joe Camel. The cartoon became a lightning rod for consumer ire after complaints that tobacco companies target children. A study found that as many children recognize Joe Camel as recognize Mickey Mouse.
"If they can get the young person, they'll be developing product loyalty in people who'll carry those habits later on in life," said Roy Burry, an analyst at Oppenheimer & Co.
Mr. Hermann is emphatic that Moonlight's ads target adult smokers. Yet, the company plans to advertise in youth-oriented magazines like Spin, Rolling Stone, Interview and Details.
In line with its underdog image, Moonlight's magazine ads don't mention RJR's name. The packs do, and so does a paper insert describing how the company was founded, Mr. Hermann said.
Mr. Hermann said Moonlight is "proud" of its ties to RJR. "We just don't want to take the focus off Camel, Winston, Salem, or Doral, our large brands," he said. "That's why we're set up as an independent operation."
"Everybody is looking at different niches they can tap into the market with," said Rebecca Barfield, an analyst at CS First Boston. "RJR is just looking to see if this is going to be the big one."
RJR isn't alone in exploring that niche. Cigarette king Philip Morris last November started test-marketing Dave's, whose ads feature a yuppie-turned-tobacco-farmer taking on the establishment with his product.
Philip Morris won't divulge sales figures from the three cities where it's selling the discount brand, nor say if it will market Dave's nationwide.